Long before the pandemic spurred an unprecedented wave of enterprise digital transformation, B2B customers sought the ability to buy through various channels, just as they already enjoyed as consumers. It’s only natural that B2B buyers in tech and telecom, in particular, have come to expect their suppliers to deliver on that promise, given the sector’s leading role in driving the seismic shifts of recent years. These decision makers are embracing companies that provide a seamless and personalized omnichannel experience and increasingly turning their backs on those that don’t.
Three years have passed since this new “omnichannel” era was ushered in, and B2B providers in tech and telecom are ahead of the curve in satisfying the heightened expectations of their buyers. A sizable majority feel that this modernization effort is paying dividends—73 percent of tech and telecom companies agree that their sales model is more effective at reaching and serving customers overall compared to a year ago, and 76 percent believe that it is more effective at acquiring new customers (versus 68 and 71 percent, respectively, for overall B2B companies). Furthermore, the approach appears to resonate with their customers; 65 percent of tech and telecom companies say that their customers have given positive feedback on the number of channels they have (versus 60 percent overall). Lastly, the results show it’s working; tech and telecom B2B companies that provide the best omnichannel experience are seeing their market share jump by at least 10 percent annually, while those that fail to do so are losing share on a regular basis.
These are just some of the findings from this year’s global B2B tech and telecom go-to-market (GTM) pulse survey of approximately 750 decision makers across 13 countries, a subset of McKinsey’s annual broader B2B Pulse survey, which uncovered similar trends across sectors (for more details, see sidebar, “About our research”).
Despite those encouraging signs, tech and telecom B2B providers should beware—buyers can tell the difference between a provider fully committed to this sophisticated model and those just going through the motions. Our research found that to succeed, B2B sellers in tech and telecom must be fully invested in omnichannel and personalization, regardless of how uncertain the current macroeconomic climate may be. Furthermore, tech and telecom companies’ accelerated adoption of new sales tactics and integrated omnichannel motions is accompanied by growing pains that need to be managed in the coming years; for example, 43 percent of their customers are confused by channel conflict during the sales process, compared to 38 percent across industries.
This means that a holistic, multifaceted approach to modernizing B2B selling is no longer optional. Mastering just one or two modern sales and marketing tactics will help, but it won’t pay the full rewards that the outperforming tech and telecom B2B companies realize by simultaneously employing five major modern sales and marketing tactics: deploying advanced sales technology, delivering hyper-personalization, increasing hybrid sales teams and capabilities, growing their presence and tailoring strategies on third-party and their own marketplaces, and achieving e-commerce excellence across the full marketing and sales funnel. Companies that become proficient at all these methods reap the benefits of a multiplier effect—they are twice as likely to enjoy more than 10 percent market share growth than companies that only optimize one (Exhibit 1). While tech and telecom B2B winners are outpacing other sectors across all five tactics, the bar within the tech and telecom sectors has been raised significantly. To succeed, companies will have to continue to evolve and improve these more sophisticated techniques.
Key survey insights
Companies have long resisted calls for a seamless B2B buying experience similar to that of the B2C world by pointing out obstacles such as complexity, technical requirements, deal sizes, and the number of decision makers. Those arguments no longer hold water, and as our survey found, a personalized, omnichannel experience on par with B2C is now table stakes for B2B players to succeed.
We also identified several other clear trends:
- The “rule of thirds” holds. Even with the growing appeal of alternative channels, B2B customers in tech and telecom and across sectors haven’t turned away from traditional sales interactions. In fact, despite the temporary move away from in-person encounters during the height of COVID-19, they still generally prefer an evenly divided mix of traditional, remote, and self-service channels, such as in-person sales reps, inside sales, and e-commerce, respectively (Exhibit 2).
- By a wide margin, e-commerce is now considered the most effective sales channel in tech and telecom. Fully 42 percent of tech and telecom respondents view it as the best option, ahead of in-person sales (19 percent), video conference (15 percent), email (8 percent), online chat (8 percent), and telephone (7 percent). By contrast, our cross-sector survey found a smaller gap between the top digital and traditional channels, with 35 percent choosing e-commerce and 26 percent citing in-person deals. Many tech and telecom buyers also view online commerce as a more appealing option than offline across five key buying criteria: product availability (45 percent), pricing (44 percent), shipping and delivery options (45 percent), “on call” customer support (45 percent), and personalized recommendations (43 percent). And while tech and telecom companies across regions ranked e-commerce as the most effective channel, the strength of that conviction varies geographically: the United States leads the way with 47 percent of tech and telecom companies holding that view, followed by Asia at 38 percent and Europe at 36 percent. Finally, for outperforming tech and telecom companies, e-commerce means more than digital self-serve channels such as their own websites. Around half of them have already built an online marketplace, compared with just 15 percent of companies losing share.
- Customers are getting more comfortable with large e-commerce transactions. Until recently, the potential for channel conflict has been the biggest obstacle to more B2B players investing seriously in e-commerce: 44 percent of tech and telecom respondents said it was the “single biggest reason” that they have not considered selling online (versus 38 percent across sectors). But the sales growth opportunity may now be too valuable to ignore. Similar to last year, 67 percent of decision makers are prepared to spend more than $50,000 on a single e-commerce transaction in B2B (compared to 61 percent for all sectors), with the share prepared to spend more than $500,000 at 32 percent (versus 29 percent across sectors). This opportunity differs quite a bit by region, with the United States and China leading the pack (39 percent and 69 percent of buyers in the respective countries are willing to spend more than $500,000), while Europe lags at 22 percent.
- Capturing this opportunity in e-commerce requires a significant commitment to funding and new tactics. Despite the uncertain macroeconomic environment and overall tighter corporate spending, 70 percent of tech and telecom companies have increased their budget for e-commerce activities in the past year, with about a third seeing an increase of 4 to 10 percent and another quarter experiencing a jump of 11 to 25 percent. Furthermore, tech and telecom companies have adopted many e-commerce-centric tactics to optimize their online operation, such as introducing an online-exclusive product or service, optimizing promotional pricing, and introducing value-added services (24 percent, 21 percent, and 20 percent adoption, respectively).
- Tech and telecom companies are leading the charge in hybrid sales teams. Few sectors have as eagerly embraced the hybrid sales model as tech and telecom, where almost three-quarters (71 percent) of market share winners have deployed the mix of in-person and remote roles, compared with 57 percent for all industries. As for market share losers, just 38 percent of those tech and telecom underperformers are turning to the hybrid sales approach, about the same as their cross-sector peers. Large enterprises aren’t the only beneficiaries of the dynamic model; small to midsize companies with higher hybrid adoption rates also experience more significant share gains.
- Hyper-personalization is a critical differentiator. The most successful B2B companies know that they can no longer rely on standard, account-based marketing to communicate with customers. To gain market share, they use advanced technology and analytics-driven insights to target decision makers with customized messages and offers, factoring in their specific needs, profiles, behaviors, and interactions (both past and predictive). Twice as many tech and telecom winners (63 percent) as laggards (32 percent) have adopted such highly personalized marketing.
These trends suggest that the pandemic-driven shifts in channel usage were not a temporary blip but rather the start of a long-term, fundamental realignment. This raises several important questions for tech and telecom B2B companies, most notably: How are a select group of market share winners staying ahead of the pack? And what does it take to keep up with them?
What outperformers do differently
With the current global macroeconomic uncertainties, it is natural for many companies to have concerns about making additional investments in their sales organizations. However, the most successful B2B companies understand that such a moment of uncertainty can be the ideal opportunity to continue to expand their commercial resources and improve their omnichannel experience. Seventy percent of B2B outperformers (those reporting at least a 10 percent market share gain) had intended to increase their investments in sales organizations this year, while only 28 percent of share laggards had similarly bullish plans. Rather than simply plowing more of what they put into these critical roles, the outperformers are thinking differently and more holistically about how they evolve these roles and sell across the ecosystem of channels (and across the entire marketing and sales funnel).
In particular, B2B winners in tech and telecom focus on five crucial actions.
1. Adopt advanced sales tools
For a B2B company, constantly innovating and employing new sales technologies and analytics capabilities is essential for outperformance. Three-quarters of tech and telecom market share winners have already adopted advanced sales tools, 60 percent more than laggards. These tech and telecom winners are also 9 percent more likely than peers in other sectors to have adopted the tools, demonstrating the higher bar that tech and telecom companies have needed to reach to succeed.
Looking forward, tech and telecom companies cannot afford to rest on their laurels, as 36 percent of companies are planning to continue to invest in advanced sales tools and adopt the next generation of cutting-edge sales technology, such as automatic call logging with next-best actions, tools that prevent customer churn, or automation chatbots. These plans lag other sectors, where 45 percent are planning on investing, but that difference primarily reflects how much other industries have to invest in playing catch-up.
2. Shift account-based marketing to hyper-personalization
Taking a page from their B2C counterparts, the most successful B2B companies across industries increasingly use analytics and other sophisticated tools to communicate with customers in a highly personalized way. Tech and telecom companies remain ahead of the pack in adopting these sophisticated marketing tactics that leverage hyper-personalized targeting and content (15 percent more likely than all B2B companies). However, there is a considerable variation in the adoption within the sector; tech and telecom market share winners are twice as likely as laggards to implement this tactic (62 percent versus 31 percent).
This success in moving to hyper-personalization has not happened by accident. Tech and telecom companies have accelerated their ability to adopt and execute these tactics by investing in the tools and capabilities required to scale them effectively. Forty-four percent of tech and telecom companies have already invested in advanced technology that helps enable personalization, such as AI/ML, smart workflows, robotic process automation, and others (compared to 40 percent across industries). This investment is fast becoming a necessary ingredient for success, with 63 percent of tech and telecom winners investing here (double the share of laggards). Furthermore, 48 percent of tech and telecom companies have invested in new capabilities to help drive and execute personalization actions (compared to 42 percent across industries).
3. Roll out hybrid sales teams and capabilities
Of all the advanced sales tactics that B2B winners use, hybrid sales teams is where tech and telecom has a clear lead over most other sectors. Omnichannel sales models that combine human and digital channels have become table stakes in tech and telecom, with 55 percent of all companies in the sector already embracing this approach to some extent, compared to 47 percent on average for all other industries. The gap is even wider when it comes to B2B outperformers; 71 percent of tech and telecom winners have leveraged hybrid sales (with laggards at 29 percent) versus 57 percent for cross-sector winners (with laggards at 43 percent) (Exhibit 3). This approach is likely to become more common; 69 percent of tech and telecom companies expect the size of hybrid teams to grow in the next six months.
4. Leverage third-party marketplaces
Third-party B2B marketplaces are another sales tool that tech and telecom has utilized more extensively than other industries. Nearly half of all companies in tech and telecom highlight that they develop distinct strategies for each marketplace to maximize their strengths and weaknesses. Among the biggest tech and telecom market share winners, this increases to 64 percent versus 45 percent of share laggards (Exhibit 4). By contrast, 51 percent of outperformers across all sectors use similar third-party marketplace tactics, compared with 24 percent of laggards.
Among third-party marketplaces, tech and telecom has a slightly higher adoption of the two major players—Amazon and eBay—compared to all B2B providers (90 percent and 50 percent, respectively, versus 88 percent and 47 percent); on Amazon, in particular, a greater share of tech and telecom companies have used winning tactics such as developing a unique pricing strategy or targeting customers and markets not served by other sales channels. Furthermore, tech and telecom also leads in adopting industry-specific marketplaces, with 41 percent adoption (compared to 38 percent across all industries). On the other hand, while Alibaba and other regional marketplaces are popular with tech and telecom companies (34 and 21 percent), these adoption rates lag other sectors (39 and 23 percent, respectively).
5. Invest in company-owned marketplace
Just as they are making more use of third-party marketplaces, tech and telecom B2B companies are increasingly launching their own marketplaces as another sales channel. Adoption of company-owned marketplaces in the sector increased by more than 10 percent last year, from 50 to 58 percent. This includes companies that have already built their own marketplace (30 percent) and those with plans to develop their own (28 percent). Across all sectors, 26 percent of companies have already built their own marketplace, and another 26 percent have plans to do so. Building a company’s marketplace is one of the differentiators between market share winners and laggards in tech and telecom. About 48 percent of tech and telecom share winners have already created their own marketplace versus 16 percent of laggards.
Globally, tech and telecom companies’ usage of owned marketplaces is by no means uniform. European countries (22 percent) are lagging behind the rest of the world, with Brazil (49 percent) and the United States (37 percent) leading the way.
How to win: Commit, innovate, and deliver
Understanding what B2B tech and telecom customers really want and how outperforming enterprises deliver on those desires is merely the start. Knowing how to use those insights to turn a lagging or just-average company into a market share winner is an even more formidable challenge. Based on our work and experience, we have identified three core moves sales organizations can take to begin that journey in the right direction.
1. Take an all-in channel approach
Succeeding in an omnichannel world requires excelling in all channels, from in-person and hybrid to inside sales, digital self-serve, and marketplaces. A multifront campaign means both optimizing strengths and confronting weaknesses. In tech and telecom’s case, those weaknesses, or barriers, in scaling e-commerce activities include IT and development timelines, in-house talent, and pricing strategies. Shoring up these critical areas will take investment and innovation. Commitment and patience are equally important, particularly during the transition periods and when dealing with channel conflict issues or hiccups.
But the rewards are clear. Close to 40 percent of the largest tech and telecom share winners introduced new channels, and just under 50 percent said they ramped up experimentation to determine which sales channels were most effective; for all sectors, roughly the same amount introduced new channels, but only 35 percent said they had done more experimentation. The head of e-commerce of a major hardware and services provider highlighted that “the business model, from a digital standpoint, can change to our advantage…and pretty much every other business model we have doesn’t allow us to have a direct end user connection.”
2. Invest in innovative and practical technologies
The most successful B2B tech and telecom companies treat every customer as a unique individual with distinct interests, preferences, likes, and dislikes. Figuring out what those specific attributes are and using them to inform every communication and interaction is essential for ensuring that the right message, call to action, and set of products and solutions are presented to customers at each stage of the buying journey. Having the right tools and technologies in place is a critical enabler of this level of personalization. For instance, decision makers use predictive technology to connect the end-to-end marketing and sales funnel and prioritize leads, allocating them to the best channels and individual sellers. They also rely on automated, integrated marketing and sales systems that would be difficult to monitor and maintain with managerial efforts alone.
3. Focus on flawless execution and seamless orchestration
A significant challenge in the omnichannel environment is orchestrating the B2B buying experience so that all channels deliver the same high-level experience to customers. The key is ensuring customers can intuitively and seamlessly transition back and forth across all channels without repeating the same information. Companies winning market share have realized that delivering on that promise and winning customer loyalty in the process requires a top-flight hybrid sales leader who can manage the complicated interactions of the various channels by being available both in person and through remote sales technologies, virtual demonstrations, and digital relationship management.
Over the past few years, omnichannel has steadily emerged as customers’ preferred buying model. The pressing question now is how companies can successfully meet market expectations. Tech and telecom winners are growing market share by simultaneously building up hybrid sales teams, embracing personalized marketing and sophisticated sales tools, and increasing their presence on both third-party and company-owned marketplaces. Those companies that can’t adapt to this new environment and learn from the outperformers may find themselves the victims of those exact, evolving market expectations.