Blog, Pricing

The Impact of Digitalization on the Commercial Function

By Stephan Liozu
July 11, 2019

Digitalization of the commercial function requires a significant investment in commercial intelligence. What is commercial intelligence?

Commercial Intelligence is the process of defining, gathering, analyzing and distributing accurate and relevant intelligence regarding the products, customers, competitors, business environment and the organization. This methodical programs affects the organization’s tactics, decisions and operations.

Digitalization and all the systems that go with it will bring no benefits without the proper information going through it. Remember that a fool with a tool is still a fool. A CRM system without complete and systematic customer data is useless. A pricing optimization solution with incomplete and uncleaned data will not make proper pricing recommendations. Finally, dynamic value-based pricing on an e-commerce platform needs real-time competitive information feeding the system. You get my point.

Systems, tools, and models form the engine of digitalization. Data fuels  the engine. And because of that, the role of all commercial functions has changed with the need for more complete, deep, and relevant information. Here, we also include the need for qualitative information which actually can bring lots of value when combined with quantitative information.

The Transformed Role of the Commercial Function

The need for commercial intelligence is real across all go-to-market functions in order to deploy value-based strategies. At every stage of the go-to-market process, commercial functions play a critical role in gathering information and conducting specific, value-based activities.

We are far  from the traditional sales role which used to focus on order taking. With digitalization, order taking has been automated in procurement software and e-commerce platforms. The sales function is transitioning to be more commercial. It’s wider in scope and much more connected to marketing and pricing. Additionally, other functions  are also very relevant to commercial intelligence including: sales ops, demand generation, customer sevice, customer success, and strategic account management.

The level of sophistication in what is asked of traditional sales force is amazing. The future is sales is moving towards a combination of commercial excellence and commercial intelligence. Could we call is “commercial excelligence”?

As you can imagine, the role of pricing within this new era of commercial excelligence is that of a turbo booster! Pricing enables sales with the right information and recommendation at the right time, for the right customer, and the right product. In that context, organizations need  transformation to include the following five considerations:

Both Forrester and Gartner continue to predict a revolution in the way traditional organizations are structured. That includes the inclusion of the pricing functions under the sales operations functions in order to work in full alignment. Imagine the power of the combination of technology, sales and pricing working together under one roof void of organizational silos and constraints. We also see the emergence of unique commercial team designs with the separation of transactional activities. This is why the account management function is booming right now. Digitalization is forcing discussion around potential functional redesign.

Implications for Commercial Skills

In my last blog, we discussed the impact of digitalization on pricing skills that are needed now and in the future. These skills were mostly soft skills to complement improving pricing science and technology. For commercial functions, the reverse is true. Sellers and developers have soft skills. They need to develop more hard skills to be able to manage technology and to understand data and its science. Here are some increasingly important hard skills:

You don’t need to turn  your sales force into data geeks. They need to understand and embrace the rationale of pricing and commercial decisions and how models  derive intelligent decisions however. The development of these hard skills is essential in building confidence and adoption of  digital tools across your teams.

The future is going to be about more collaboration and coordination between the sales and pricing functions. In the context of accelerated digitalization, both functions needs to be transformed at once. It is impossible to do a pricing transformation without doing a commercial transformation. And vice versa.

This is post is the conclusion of a four-part series. Read Stephan’s other posts: How to Leverage DigitalizationPreparing Your Organization for Digital Transformation and How Digitalization Impacts Pricing

  • commercial intelligence , digital transformation , digitalization , pricing

    Stephan Liozu

    Stephan M. Liozu, Ph.D. is the Chief Value Officer of Thales Group and is the Founder of Value Innoruption Advisors, a consulting boutique specializing in pricing, value, and change management. Stephan holds a Ph.D. in Management from Case Western Reserve University where he researched the topic of transformational change and leadership in pricing.