The Rise of Digital First Sales Motion

This post is a summary of the discussion Richard Ellis had with Mike Fouts about the shift to a digital-first sales motion. Listen to this engaging discussion on our podcast page.

The digital-first sales motion is rapidly gaining traction as customers across industries and generations increasingly prefer self-driven buying experiences. This shift has been catalyzed by several key drivers, including evolving customer preferences, the impact of the pandemic, and generational shifts in buying behaviors.

At its core, digital-first sales is about meeting customers where they are and providing a low or no-touch sales lifecycle motion. This means empowering customers to navigate the entire journey on their own terms, from initially trying a product or service, to making a purchase, expanding their usage, and ultimately renewing their subscription or contract.

The digital-first sales lifecycle typically encompasses four key stages: try, buy, expand, and renew. Customers can seamlessly move through this cycle via digital channels, with minimal or no involvement from sales representatives. This self-driven approach aligns with the growing desire for convenience, transparency, and control over the buying process.

The COVID-19 pandemic accelerated the adoption of digital-first sales models as businesses and customers alike adapted to remote interactions and virtual selling environments. This disruption highlighted the need for companies to provide frictionless digital experiences that cater to evolving customer preferences.

Moreover, generational shifts have played a significant role in shaping the demand for digital-first sales. Younger generations, such as millennials and Gen Z, have grown up in a digital-first world and expect seamless, on-demand experiences across all aspects of their lives, including purchasing decisions.

By embracing a digital-first sales approach, companies can meet these evolving customer expectations, reduce customer acquisition costs, and foster long-term relationships built on trust and value delivery.

Managing a Digital-First Business Model

Transitioning to a digital-first sales model requires a significant shift in mindset and approach compared to traditional sales methodologies. Instead of relying on individual deal forecasting and sales stages, the focus pivots to a data-driven, analytical view of the business. Metrics such as conversion rates, time to conversion, and usage patterns become paramount in understanding and predicting revenue streams.

In this model, forecasting is less about tracking individual opportunities and more about monitoring the health of the overall business through data-driven insights. Rather than widgets or one-time transactions, the emphasis shifts to nurturing ongoing customer relationships and maximizing value realization.

One key advantage of a digital-first approach is the ability to efficiently serve smaller customers with a low-touch or no-touch sales lifecycle. For businesses where a significant portion of their customer base consists of accounts with fewer than 50 users, it becomes impractical and cost-prohibitive to deploy traditional sales resources. By embracing a digital-first model, companies can drive customer acquisition through an e-commerce motion, freeing up sales teams to focus on expansion and retention efforts within the existing customer base.

This transition requires a mindset shift for sales leaders accustomed to traditional methodologies. Instead of managing individual deal pipelines, the focus shifts to optimizing conversion rates, driving top-of-funnel volume and velocity, and leveraging data to identify expansion opportunities within the customer base. Successful leaders in this space must be comfortable with a data-driven, analytical approach to managing their business.

Optimizing the Customer Acquisition Funnel

In a digital-first sales motion, the website becomes the primary touchpoint for customer acquisition. As such, optimizing the website's usability and conversion funnels is crucial for driving successful customer onboarding. One surprising insight is the profound impact that seemingly minor design choices can have on conversion rates.

For example, when presenting product pricing tiers, the conventional approach would be to allow customers to self-select their desired plan level. However, research has shown that defaulting customers into the highest pricing tier, and requiring them to consciously downgrade, can dramatically increase conversions to premium plans. This counterintuitive strategy leverages principles of user psychology and choice architecture, gently nudging customers towards more valuable offerings.

Beyond pricing, every step of the digital acquisition funnel should be meticulously crafted to remove friction and guide users towards conversion. This may involve A/B testing different layouts, copy, and call-to-action designs to identify optimal conversion paths.

When measuring marketing's impact in a digital-first model, traditional metrics like cost-per-acquisition can be misleading. Instead, it's essential to factor in customer lifetime value (LTV). While initial acquisition costs may appear high, the compounding revenue from longstanding customers can yield impressive LTV-to-CAC ratios, justifying upfront marketing investments.

For example, if the average customer lifetime is six years, and the initial purchase is $1,000, the lifetime value would be $6,000 – even without any expansion revenue. With this LTV perspective, a $1,000 customer acquisition cost translates to a 6x ROI over the customer's lifetime, which is typically considered a healthy return.

Nurturing Digital-First Customer Relationships

In a digital-first sales motion, nurturing customer relationships takes on a different dynamic. With customers initiating their journey through trials, freemiums, or self-service purchases, the traditional sales approach needs to evolve. Successful nurturing in this context revolves around leveraging product usage data to have consultative conversations and employing value-selling techniques, potentially requiring an evolved sales hiring profile.

Product usage data becomes a powerful asset, revealing insights into how customers interact with your solution, their goals, and potential pain points. By analyzing this data, sales teams can proactively reach out with personalized recommendations, guidance, and support, positioning themselves as trusted advisors rather than pushy salespeople.

Value-selling techniques are crucial in this environment. Instead of leading with product features, sales professionals must articulate the tangible business outcomes and ROI that customers can achieve by expanding their usage or adopting additional capabilities. This consultative approach focuses on understanding the customer's unique challenges and tailoring the value proposition accordingly.

To excel in this consultative, value-driven sales motion, organizations may need to reevaluate their sales hiring profiles. While traditional hunters or inside sellers may have thrived in a more transactional environment, nurturing digital-first customers often requires a different skillset. Effective sales professionals in this context possess strong active listening abilities, product expertise, and a genuine desire to help customers succeed.

By embracing product usage data, value-selling techniques, and an evolved sales hiring approach, organizations can effectively nurture digital-first customer relationships, fostering trust, loyalty, and long-term growth opportunities.

Partnering in a Digital-First World

In a digital-first sales motion, traditional transactional reseller models become less relevant. Partners can no longer rely on margins from product sales, as customers purchase directly through eCommerce platforms. This shift necessitates rethinking partner incentives and value propositions.

To align with a digital-first approach, consider incentivizing partners based on meaningful customer usage and adoption metrics rather than transactional revenue. Encourage them to guide customers towards low-touch, self-service purchases that drive efficiency for both parties.

Additionally, services present a compelling opportunity for partners in this landscape. As customers expand their usage, they often require assistance with implementation, integration, and optimization. Partners can provide valuable consulting and professional services to facilitate seamless rollouts and drive greater product adoption within customer accounts.

Overall, a digital-first model requires redefining the partner's role. While transactional revenue streams may diminish, partners can pivot to become trusted advisors focused on maximizing customer value and retention through tailored services and support.

Aligning Sales Compensation

Compensation plans need to be carefully structured to incentivize the desired behaviors in a digital-first sales model. A misaligned compensation structure can actually de-incentivize reps from driving customers into the most efficient digital conversion paths.

You want your sellers to be motivated to guide prospects into self-service trials, demos and e-commerce purchasing flows whenever possible. These low-touch digital motions have major cost and efficiency advantages for the business. However, if comp plans are still heavily weighted towards traditional high-touch sales cycles with upfront commissions, reps may be inclined to pursue those paths instead.

The solution is updating compensation plans to provide balanced incentives for digital conversions and expansions. Reps should be appropriately rewarded when they successfully nurture digital signups into becoming paying customers. Their variable compensation should also be driven by growth within each account through digital expansion opportunities.

With properly calibrated comp plans, your sales team will be fully aligned with the goals of your digital-first model. They'll be motivated to get prospects into the optimal self-service experiences, while still having incentives to expand revenue within each customer account over time.

Enterprise Adoption Patterns

While digital-first sales motions are often associated with small and midsize businesses, we are seeing adoption across companies of all sizes, including large enterprises. Contrary to assumptions, size does not limit an organization's desire to begin their buying journey through low-touch, self-service channels.

Even multinational corporations are embracing digital-first approaches as an entry point, valuing the flexibility and autonomy it provides buyers. These customers appreciate having control over the initial evaluation and trial stages before engaging sales teams for deeper needs.

However, enterprises have unique requirements that must be addressed through the digital experience. They demand robust security, governance, and compliance capabilities. They need tools for managing deployments across multiple regions, business units and integrating with existing systems.

Successful digital-first vendors are designing their platforms with these large-scale customers in mind from the outset. They build in advanced authentication, data residency controls, role-based access, and audit trails. They offer options for dedicated hosting or air-gapped environments. Their solutions can scale massively while enforcing corporate policies and standards.

By anticipating the future needs of enterprises, digital-first companies can capitalize on the demand for frictionless buying experiences from businesses of all sizes. With a solid digital foundation, they can grow with customers over time, expanding into the broader enterprise ecosystem.

Measuring Marketing's Digital Impact

In the digital-first sales model, traditional marketing ROI calculations focused on cost per acquisition and initial transaction value become inadequate metrics. The paradigm shift requires rethinking how we measure marketing's impact over the entire customer lifetime.

With low-friction digital trials and purchases, the initial transaction may represent just a tiny fraction of the potential lifetime value. A customer acquired for $1,000 through digital marketing, with an average 6-year lifetime and opportunities for expansion, could yield $6,000 or more in lifetime value - a 6x return even before any expansion.

Marketing investments must be evaluated based on the long-term customer relationship, not just the initial conversion. Metrics like customer acquisition cost (CAC) should be weighed against variables like:

• Average customer lifespan
• Expansion revenue from upsells and cross-sells
• Customer advocacy and referral value
• Cost efficiencies of digital demand generation

Rather than optimizing for maximum conversions at the lowest cost, digital marketing needs to attract the right audiences primed for long-term value. The mindset shifts from transactional ROI to maximizing customer lifetime value.

Sales Enablement for Digital Excellence

In a digital-first sales environment, traditional tactics like cold calling and in-person meetings take a back seat. Reps must master virtual selling skills to effectively engage prospects through digital channels. Invest in training that equips your team with consultative selling techniques tailored for the virtual world.

A core tenet is asking insightful questions to uncover the prospect's challenges and goals. Reps need to position themselves as trusted advisors, not pushy salespeople. Leverage product usage data to inform your conversations and personalize the experience for each buyer. Guide them on how to maximize value from your solution for their unique needs.

Virtual product demos are now the norm. Upskill reps on best practices like screen sharing, handling objections remotely, and keeping prospects engaged through an online demo. Role-playing can help build confidence in this critical capability. Additionally, ensure reps understand how to effectively follow up and advance digital-led opportunities through your sales process.

With the right enablement program, your salesforce can flawlessly execute digital-first motions. They'll consult prospects on their terms, deliver compelling virtual experiences, and ultimately drive revenue through a modernized sales approach.

Transforming the Sales Tech Stack

In the digital-first era, your sales technology stack needs to evolve to support seamless self-service experiences, robust data capture, and subscription management capabilities. An integrated tech stack allows you to create a unified journey for buyers, from initial interest to purchase and renewal.

At the core is your website and e-commerce platform, which must provide an exceptional user experience tailored to your buyers' needs. Invest in intuitive navigation, clear product information, and frictionless checkout flows. Integrate your CRM and marketing automation tools to capture rich behavioral data and automate personalized follow-ups.

Empower buyers with self-service purchasing options, including try-before-you-buy models like freemium plans and product tours. Guide them through expanding their usage with upsell recommendations and in-app guidance. Streamline renewals by offering automatic subscription management, with options to modify or cancel plans on-demand.

By unifying your sales tech stack, you create a cohesive digital experience that meets buyers' expectations for convenience and transparency. Rich data insights inform every touchpoint, allowing you to continually optimize acquisition, conversion, and retention. A future-proof sales stack is the backbone of an exceptional digital-first selling motion.