Accelerate Your Journey To Modern Commerce

A Forrester Consulting Thought Leadership Paper Commissioned By PROS April 2017 Accelerate Your Journey To Modern Commerce Use Dynamic Pricing To Serve Frictionless, Transparent, And Consistent Experiences Across All Sales Channels

Table Of Contents 1 2 4 6 8 9 Executive Summary Modern Buyers Demand To Be Served On Their Terms Companies Struggle To Provide Frictionless And Personalized Experiences Across Channels Modern Commerce Is The Backbone For Easy, Effective, And Personalized Selling Key Recommendations Appendix Project Director: Andia Vokshi Market Impact Consultant Contributing Research: Forrester s Application Development and Delivery research group ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/ consulting. 2017, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com. [1-13PO6OG]

The dynamic of B2B sales has changed, and buyers now demand to be served when and how they prefer. Modern commerce is an imperative in the digital era. Executive Summary The dynamic of business-to-business (B2B) sales has changed, and buyers now demand to be served when and how they prefer. Companies have tried to address this by enabling customers to purchase across their various sales channels, including direct, indirect, and self-service, but even then the competition for those customers has grown. Companies have tried to address the need of these more empowered buyers on a one-off basis, creating disjointed processes and experiences. By using dynamic pricing science, companies will be able to shift to a modern commerce strategy that provides their customers with personalized offers and pricing, improves the buying experience, and maximizes revenues. In January 2017, PROS commissioned Forrester Consulting to evaluate the current state of B2B sales at US and European organizations, the challenges these organizations face, and their path to a modern commerce strategy. KEY FINDINGS B2B buying preferences force changes in selling strategies. B2B buyers are increasingly digitally savvy and self-educated. This means they prefer to not interact with a salesperson when gathering product or service information, tracking deliveries and shipping times, and buying a product or service. As a result, B2B sellers are addressing the changes in B2B buyer preferences by adjusting selling models to shift toward a modern commerce strategy. Achieving modern commerce goals is difficult. Not embracing modern commerce means losing customers and partners. However, companies struggle to make this move in strategy because they can t provide frictionless, consistent, and personalized experiences across channels. Modern commerce is an imperative in the digital era. Companies leverage a modern commerce strategy to improve customer experience and drive profitable growth. As such, adoption in this strategy is growing, with half of B2B sellers planning to embrace it in the near future. Shifting to a modern commerce strategy allows companies to provide their customers with personalized offers and pricing, improves the buying experience, and maximizes revenues. 1 Accelerate Your Journey To Modern Commerce

Modern Buyers Demand To Be Served On Their Terms Digital technologies and access to vast amounts of information have put power squarely into the hands of today s B2B buyers. They now control how and where to access information and ultimately where to share their wallets. In doing so, they increasingly leverage self-service channels for their convenience and ease of use. 1 B2B sales organizations are also noticing these trends in their sales engagements (see Figure 1): B2B buyers want to self-educate on products and services. Decision makers responsible for B2B sales strategy acknowledge that in the past three years, B2B buyers increasingly prefer to conduct their own research to self-educate rather than speak with a salesperson to learn about the product or service. B2B buyers reaffirm this presumption. In a survey with B2B buyers, Forrester found that they explicitly don t want to interact with a sales representative as their primary source of research. 2 B2B buyers choose to buy online. Sixty-five percent of B2B sellers have noticed that buyers favor purchasing on a website over interacting with a salesperson for the convenience factor. Although the selling organization sees this trend in B2B buying behavior, it is a bit out of touch and does not understand the full extent of it. Forrester s research shows that the ability to buy online is far more important to buyers, with 93% of them choosing to buy online when they ve already decided what to buy. 3 59% 93% 59% prefer not to interact with a sales representative as their primary source of research. 93% of B2B buyers prefer to buy online when they ve already decided what to buy. Figure 1 In which of the following ways, if any, do you think B2B sales has changed in the past three years? 65% B2B buyers increasingly choose to buy online 56% B2B buyers want to self-educate on products and services 53% The role of direct sales is increasing in importance in B2B sales 51% There's a rise in self-serve ecommerce websites 39% Traditional sales reps are being replaced by inside sales reps 34% Call center agents have risen in popularity 65% of decision makers responsible for B2B sales strategy believe B2B buyers increasingly buy online. Base: 300 US and EU B2B sales strategy decision makers Source: A commissioned study conducted by Forrester Consulting on behalf of PROS, March 2017 2 Accelerate Your Journey To Modern Commerce

SELLERS EXPECT THE FUTURE OF SALES TO BE OMNICHANNEL Despite this change in B2B buying preferences, different scenarios and needs force buyers to leverage multiple sales channels. The results from the survey indicate that B2B buyers rely on a mixture of direct, indirect, or self-service channels across each of the activities in their buying journey. In reality, these buyers depend primarily on salespeople under complex circumstances, such as when negotiating the price, understanding costly or complex purchases, and purchasing products that require installation or service. This shift chips away at the salespeople who are order takers as buyers seek more consultative sellers. In the future, more than a third of more simple activities like gathering product or service information, tracking deliveries and shipping times, and buying a product or service will take place by leveraging selfservice technologies. As a result of this change in behavior, Forrester estimates that just over 20% of all B2B salespeople will be displaced by self-serve ecommerce by 2020. 4 B2B COMPANIES MUST ADAPT TO THE NEEDS OF THEIR CHANGING BUYERS As buyers increasingly explore and leverage new channels, B2B companies need to be able to support these customers across a new and wider set of touchpoints. To address the changes in B2B buyer preferences, companies aim to respond by: Making the buying process more transparent. Even straightforward transactions can seem inefficient and complex when buyers lack visibility into the process. To remedy this, 54% of organizations are focused on making the end-to-end buying process more transparent. Unifying customer experience across channels. Today s consumers are on the go and frequently change channels or devices to complete their activities. But they still expect a seamless experience, regardless of where they re accessing information. To address these buying habits, over half of companies in the survey are working to create a unified buying experience across channels. Providing personalized offers and pricing. To deliver a great experience, businesses must fully understand their customers and deliver a unique, personalized experience. Fifty-one percent of companies in this study plan to address these needs by offering personalized offers and pricing to their customers. Enabling a frictionless and dynamic experience. Modern buyers get frustrated by prolonged, inefficient buying processes. Companies are responding by providing real-time pricing and availability and by enabling in-the-moment transactions. Nearly half of companies surveyed are focused on allowing their customers to buy in real time. These changes in selling models reflect a fundamental shift that companies are making toward a modern commerce strategy. Forrester defines modern commerce as a means of doing business where the buyer is in control, highlighted by frictionless, transparent, and consistent experiences across all sales channels and dynamic, personalized offers and pricing, powered by machine learning and data science. 3 Accelerate Your Journey To Modern Commerce

Companies Struggle To Provide Frictionless And Personalized Experiences Across Channels The top investment that firms make in customer experiences is in improving digital customer experiences. 5 This is no surprise considering today s buyers live online and are always connected. As such, they expect seamless interactions that they can pick up from any channel, whether they re working with a direct salesperson, a partner channel, or self-serving via a website or mobile app. Companies face hurdles like complex sales processes, supporting different sales processes in different channels, and enabling technology living in silos (see Figure 2). Ultimately, these challenges hinder companies from achieving modern commerce goals (see Figure 3): Almost half of decision makers responsible for B2B sales strategy admit they are experiencing difficulties with creating a buying experience that is consistent across all sales channels. Another 45% struggle to personalize offers or pricing for customers. Forty-four percent find it very difficult or difficult to make the buying process a frictionless one. Figure 2 Modern Commerce Challenges 47% Excessive touchpoints in the sales process 43% Different processes across channels 42% Disjointed solutions Base: 300 US and EU decision makers responsible for B2B sales strategy Source: A commissioned study conducted by Forrester Consulting on behalf of PROS, March 2017 Efforts to provide frictionless and personalized customer experiences fall short. Figure 3 How difficult is it to achieve the following modern commerce goals? ( Difficult/Very difficult responses are shown) 48% Consistent buying experience across all sales channels 45% Personalized offers or dynamic pricing 45% Fully transparent pricing and sales process 44% Frictionless buying process Achieving modern commerce goals is difficult. Base: 300 US and EU B2B sales strategy decision makers Source: A commissioned study conducted by Forrester Consulting on behalf of PROS, March 2017 4 Accelerate Your Journey To Modern Commerce

COMPANIES THAT CAN T EXECUTE A MODERN COMMERCE STRATEGY RISK LOSING THEIR CUSTOMERS AND PARTNERS Modern commerce is an imperative to survive in the digital era. Not executing on this strategy has serious implications for companies today, particularly with (see Figure 4): Customers. Most B2B sales strategy decision makers (53%) reported that the biggest impact would be realized in losing deals to competitors. And almost half believe they would see a decrease in customer loyalty and customer satisfaction. Partners. Almost half of decision makers indicated they would experience a decrease in partner loyalty as a result of not moving toward a modern commerce strategy. And over 40% reported they would also face increased channel conflict or channel cannibalization. Modern commerce is increasingly becoming an imperative. Figure 4 What are the implications of not moving toward a modern commerce approach? Losing deals to competitors Decrease in customer loyalty Low customer satisfaction Decrease in partner loyalty Increased channel conflict or channel cannibalization 53% 49% 48% 46% 43% Improved partner experience 3% Base: 300 US and EU B2B sales strategy decision makers Source: A commissioned study conducted by Forrester Consulting on behalf of PROS, March 2017 5

Modern Commerce Is The Backbone For Easy, Effective, And Personalized Selling The importance of modern commerce has been established, and there is now a consensus on a standard definition. To get ahead, 45% of companies have already embraced modern commerce, and 54% plan to embrace it within the next year. As a result, they are implementing many elements of modern commerce, including a mobile-enabled sales force, dynamic pricing, personalized offers, process and pricing transparency, and support for omnichannel sales. Companies see these efforts as a means to (see Figure 5): Create an easy and effective buying process. At the heart of modern commerce are the needs of the buyer. Seventy-nine percent of companies said that creating an easy and effective experience for buyers is an important outcome. Create an easy and effective selling process. Modern commerce also addresses the sales users, from both direct and indirect channels. Seventy-seven percent of companies cited creating easy sales processes for sellers as an important outcome. Deliver consistent experiences and offers. A core principle of modern commerce is the ability to serve buyers in their preferred channel. Seventy-seven percent of companies cited the ability to deliver consistent experiences and offers across channels as an important outcome. Elements of Modern Commerce A mobile-enabled sales force Dynamic pricing Personalized offers Process and pricing transparency Support for omnichannel sales AN EFFECTIVE MODERN COMMERCE STRATEGY IMPROVES THE CUSTOMER EXPERIENCE AND DRIVES PROFITABLE GROWTH Investing in a modern commerce strategy pays off. Decision makers responsible for B2B sales anticipate achieving numerous benefits as a result of investing in solutions to support a modern commerce strategy, but two areas stand out: Customer experience. Better customer experience and increased customer retention are the biggest benefits of leveraging a modern commerce strategy. Modern commerce directly improves ease and effectiveness of the buying process. These elements are key to improving the customer experience and, as a result, a company s ability to improve retention, enrichment, and customer advocacy. Profitable growth. Happy customers means returning customers, which equates to repeat business. Modern commerce allows companies to support all sales channels and provide dynamic pricing recommendations. By supporting newer channels like ecommerce, companies can lower their cost to serve, and by leveraging dynamic pricing, they can maximize their margins on each deal. Together they can win bigger deal sizes, convert more upsell and cross-sell opportunities, increase ecommerce orders, and accelerate organic growth. 89% 89% of B2B sales strategy decision makers agree that modern commerce puts the buyer in control; creates frictionless, transparent, and consistent experiences across all sales channels; and allows for dynamic, personalized offers and pricing, all powered by machine learning and data science. 6 Accelerate Your Journey To Modern Commerce

Figure 5 Personalize offers and pricing for customers Create an easy and effective buying process for customers Create an easy and effective selling process for direct and indirect sellers Deliver consistent customer experience and offers through all channels Better understand and utilize data to serve customers 7 Accelerate Your Journey To Modern Commerce

Key Recommendations Today s B2B companies can no longer rest on the laurels of how they have always done business. Buyers have evolved, and their experiences in the business-to-consumer (B2C) world are shaping their expectations in the B2B world. Companies must evolve with them. This means embracing a modern commerce strategy to work with them where they are and when they want, all while providing them personalized offers and pricing. To start on your modern commerce strategy, you must: Embrace the preferences of your buyers. The first step to any modern commerce strategy is to understand your buyers and what their preferences are. Their preferences will change depending on the buying scenario they are in. Use your findings to evaluate which channels you want to support and what kinds of experiences you want to deliver for your buyers. Deeply understand the sales processes of your direct and indirect channels. Just because there is a growing shift to self-service doesn t mean that your direct and indirect channels will go away. They still have a role to play in serving your customers, but these are your self-service channels and need to be in complete alignment. By understanding your sellers, you can better meet their individual needs while maintaining a consistent buying experience for customers. Unify your technology stack to deliver consistent, high-quality experiences. Sales and commerce are complicated. For many companies, CRM and ecommerce technologies have become mainstays, but they are often siloed. Unify the buying experience by working from the same product catalog and price lists to augment the buying experience relevant to each channel. Leverage machine learning and data science to differentiate. Transaction data is a goldmine for insights. Companies can use machine learning tools to automate solution and pricing recommendations that are unique to each and every customer they serve. 8 Accelerate Your Journey To Modern Commerce

Appendix A: Methodology In this study, Forrester conducted an online survey of 300 cross-industry organizations in the US, the UK, France, and Germany to evaluate the changes in B2B buyer preferences. Survey participants included decision makers in IT/technology management, sales/sales operations, marketing, operations, and finance/ accounting. Questions provided to the participants asked about the shift in B2B buyer preferences and how companies are addressing this shift. Respondents were offered incentives as a thank you for time spent on the survey. The study began and was completed in March 2017. Appendix B: Demographics In which country do you work? Which of the following best describes the industry to which your company belongs? US 50% UK 17% FR 17% DE 17% Manufacturing and materials Food and beverage Automotive Energy, utilities, and waste management 20% 17% 17% 15% Chemicals and metals 13% High tech 9% Consumer product manufacturing 6% Using your best estimate, how many employees work for your firm/organization worldwide? Using your best estimate, what is your organization s annual revenue (USD)? 7% 20,000 or more > $5B 6% 9% 10,000 to 19,999 $1B to $5B 16% 16% 5,000 to 9,999 $500M to $1B 17% 59% 1,000 to 4,999 $400M to $499M 23% 9% 500 to 999 $300M to $399M $200M to $299M 12% 19% $100M to $199M 5% $1M to $99M 2% Base: 300 US and EU B2B sales strategy decision makers (percentages may not total 100 because of rounding) Source: A commissioned study conducted by Forrester Consulting on behalf of PROS, March 2017 Appendix C: Supplemental Material RELATED FORRESTER RESEARCH Prescriptive Advice: The Salesperson s Crystal Ball, Forrester Research, Inc., March 7, 2017 Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015 9 Accelerate Your Journey To Modern Commerce

Appendix D: Endnotes 1 Source: Your Customers Don t Want To Call You, Forrester Research, Inc., February 29, 2016. 2 Source: Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015. 3 Source: Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015. 4 Source: Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015. 5 Source: Your Digital Experience Technology Strategy Starts With A Customer Journey Map, Forrester Research, Inc., December 20, 2016. 10 Accelerate Your Journey To Modern Commerce