Let us imagine there are two different energy businesses. One company is clearly determined to achieve its sales goals, now and in the future and sees what needs to be done to win in the digital age. That company decides on a course of action. The company also has a management team that makes it clear to its own employees, too, that the energy business has to change at all levels, and the company’s employees are acquiring a basic level of digital literacy. Employees are quickly alerted to the fact that they themselves are the driving force behind the changes happening in the digital age.
This is quickly catching on, and so a new wind is blowing through the halls of the venerable company, new dynamics are developing and enveloping the whole sales organization, and the ever-growing digital business is also boosting the salaries of energy company sales representatives. There is a lot of interest in artificial intelligence, too, and the sales team now has acquired a solid base of digital knowledge and specialized knowledge of online marketing. Furthermore, the growing digital distribution business is enabling more talented younger employees to enter the energy business, high-performers who understand something about sales and digitalization. and social media marketing. The whole thing gains its own momentum, overcoming inertia. The company is growing organically, and to make targeted purchases in companies that can additionally support the growth course.
The other energy company is not so successful. Due to rigid structures and bad incentives, a fatal pessimism has set in, and there is an unwillingness of employees to learn new skills. This company is increasingly limited to trade fair appearances in order to reach new customers, otherwise on its network of regular customers.
You often hear in sales meetings: We know what our customers want!
The ravages of time are noticeable, but everyone is silent. It is the calm before the storm, the tides change, the storm approaches. The staff and its management are sitting on their business cards, waiting for the departure of bad weather.
THE DIGITAL AGE PUSHES ENERGY COMPANIES TO CHANGE THEIR APPROACH TO SELL TO B2B AND END CUSTOMERS
It has become clear as day that artificial intelligence will play a crucial role in adjusting the existing distribution structures that currently exist in the energy industry to a digitalized economy. I have outlined that in another previously on artificial intelligence. It is not appropriate to realign only a part of these structures, it will also be necessary to develop completely new concepts that are as sensitive to customer needs, and to engage with customers it will be necessary to do so through digital media.
A key part of this will be to retain customers early on, once the contact has been created, and for reasons of high competition, these companies will therefore have an advantage over their competitors because they not only have a wider reach, but also will see a higher viewer traffic on their websites, which increases their ranking on search engines. In doing so, it will become clear that companies that prepared early on for the digital age will soon dominate the entire energy industry. This process is being driven forward mainy as a result of international competition from other countries, where companies are now able to intervene in the German-speaking market and where production costs for various components required in the energy industry can be obtained much cheaper.
It causes discord because the corporate structures of German energy companies, both at local and supraregional level, are not designed to be competitive in a dynamic and IT-based digital economy that will become an integral part of the changing German energy industry. This is partly due to the false incentive systems that often prevail in these companies, and instead of deliberately transferring employees to work areas where they are needed more urgently and where they have the chance to continue their professional development, over-bureaucratization and an unwillingness to change in many of the larger but also smaller energy companies will bring management practises to a standstill.
IN GERMANY ENERGY BUSINESS WILL FACE MOUNTING PRESSURE FROM FOREIGN MARKET PARTICIPANTS BECAUSE OF DIGITALIZATION
We can imagine how energy companies will respond to such changes – by making superficial changes to their operating structures only to avoid making serious adjustments to company practises, in the hope of delaying necessary adjustments until the company is no longer affected. This can partly be explained by the fact that many older employees are only superficially aware of the new technologies but are unable to cope with them in depth. All in all, it can be said that a superfiscial understanding of the new technologies and their targeted use to generate benefits from them is present at all company levels.
This leads us to the real issue at hand, that is the timing of the digital transformation in the German energy sector. The more quickly external influences affect German energy companies, the faster and more profoundly are energy companies forced to realign their operating structures. The amount of pressure that is exerted on German energy companies depends above all else on the forcefulness of foreign companies, and their willingness to become actors in the European theatre of operations. They will drive the many German energy companies to a certain extent.
THE END GAME FOR ENERGY COMPANIES IN GERMANY
One can see that there is a kind of competition between the acceleration of digitization on the one hand, and the pressure exerted on German energy companies. At the end of the day, the pressure will be higher than the ability of energy companies to postpone real changes, and this is the point where serious structural changes in the economy will take place.
HOW ENERGY COMPANIES CAN CHANGE THEIR SALES ORGANIZATION TO MAKE DIGITALIZATION WORK FOR THEM
For sales, this not only means that a large part of the activities of the actual sales business, including the acquisition of customers and the maintenance of customer relationships, becomes digital. It also means that essentially more and more sales activity is running through computer-based networks, and we have to keep in mind that even ‘sales distributors’ need to demonstrate in-depth expertise in digital marketing and online media sales. The interface between marketing and sales will therefore be lower, but at the same time the requirements for distributors to possess intercultural skills will also be higher.
That will be the case because barriers to entry into foreign markets for German energy businesses will decrease, at the same time entry barriers for German energy companies in foreign markets will be steadily reduced. In addition, it is becoming increasingly important for sales people to communicate well between departments, which requires a mixture of interpersonal skills and the ability to abstract.
ENTREPRENEURIAL SKILLS WILL BE A REAL ASSET FOR SALES PERSONNEL
Due to the intensity of competition and concomitant speed of change happening in the industry, it is becoming increasingly important for sales people to think entrepreneurially and to be prepared for the dynamic demands of sales life. The combination of all these traits is very rare to have, and not easy to find, but is still urgently needed in the German energy industry in order to remain competitive.
Even though many energy companies do not see it that way because of the idea that they are operating in an over-regulated market and that the structures of the German energy industry deviate strongly from those in France, it is clear that these barriers between the individual European markets will become more and more secondary not least because of the integration of the European Union.
RECRUITING PRACTISES AND INCENTIVE STRUCTURES MUST CHANGE FOR ENERGY BUSINESSES IN GERMANY TO HAVE A FUTURE
It will be just as important to recruit talents at an early stage in the growth cycle of a company, and to introduce them to specific disciplines and subject areas, since younger employees in particular still have the initiative to change and adapt to the market conditions that prevail in digital-driven sales. They are also the ones who can work with large data sets, but also have the personal touch to sell the products of the energy companies on a communicative level to people of their age who increasingly have the financial means to buy these products from them, such as energy-saving devices. Of course, this requires a forward-looking HR policy in energy businesses.
A forward-looking HR policy must accept that there will be constant change in the sales cycle, the company structure, and that HR will set incentives for those employees who drive the energy business forward. This can be achieved, for example, by organizing the sales departments in smaller groups, in order to perform more varied tasks. Secondly, it is important that the in-house sales staff works directly for the outside sales staff, but the outside sales staff has to be more involved in line tasks in order to pursue a holistic goal to drive the energy business forward. The more revenue is made on the digital level, the more important this becomes.
TRAVEL COSTS OF ENERGY BUSINESSES WILL FALL BECAUSE OF VIDEO CONFERENCES AND DIGITAL MEDIA
Within energy companies, many areas of sales management can also be simplified by digitalization. Personnel incurs very high travel costs for the energy companies, these costs can be reduced if fewer trips are made and digital media is used to further restrict travel activities, provided that the customer is in contact with sales staff for the time being and that he has a good working relationship. The applies to the energy business internally, that over long distances video conferencing can be used to communicate with each other, which can further reduce costs.
OVERTHROW OF EXISTING STRUCTURES IN SALES ORGANIZATIONS OF EVERY TYPE OF ENERGY BUSINESS
However, this overthrow of existing structures goes much further. Especially because one can generate more value from the data, the customer’s data records. For example, an energy company could collect data, what is the calorific value of the procured material, such as coal in the case of fossil fuels, or in the case of waste incinerators, the calorific value of substitute fuels (where it is really worthwhile to capture such information due to the variability of the calorific values), and then set them in relation to the technical characteristics of the power plant at any given time. But it is equally advantageous to set these ratios in relation to the energy output, the amount of electricity that then flows into the grid and the heat that is generated.
In fact, a large part of the business activities can be automated, which has a huge impact on sales activities and will lead to more and more sales personnel being unable to carry out their previous lines of work. This inevitably leads to a gravitational shift in the sales organization, as sales personnel will take on a more and more entrepreneurial role, and in that salesmen become more deeply embedded in business development and marketing. Of course, it necessitates a deeper understanding of the digital world.
SUMMARY: HOW CAN WE GENERALIZE WHAT WILL HAPPEN NEXT; WHAT CAN ENERGY BUSINESSES EXPECT
Let us think about what all of this means: It is obvious to me that most companies will not follow this new trend, they will not adjust to artificial intelligence beyond a rudimentary level. Most companies, in my estimation, are more likely to be the followers of this structural development, and if the effort and pressure on the company as already stated in the previous part will have reached a critical mass, these companies will either be taken over by competitors which have a better digital model and are able to generate sales revenue more effectively in the digital age. Alternatively, these companies will be bought up by energy companies from abroad, and sales organizations will be restructured and internationalized to suit the customers' needs. It could well be that most customers are located in Asia, so the sales organization will become part of a global sales team. And here in particular East Asian companies have already shown a strong appetite to acquire European and in particular German energy technology companies. Another option is that these companies become nationalized, or they simply will go bankrupt. All of these options are possible. As a result, as pressure mounts, so too will the pressure on the few sales representatives who are able to contribute to the energy busines and drive sales, but on whom the burden will be heaviest. From a personal point of view, therefore, there is the risk that an ever smaller group of sales employees of an energy company will have to generate more and more sales, adapt to severer sales conditions and, above all, adapt to digitization in the energy business. At the same time these sales representatives will think and act as entrepreneurs. Of course, this leads to an inherent contradiction as it conflicts with business practises that have existed in Western Europe since World War 2 and the majority of workers who are aiming for a work-life-balance.
The actual question is, however, if fewer and fewer salesmen are in a position to generate sales revenue, because they possess a certain skill set that can be put to use in a sales organization, and the existing skills of a salesperson only form a basis competence on which which higher-level skills rest upon, and digital skills that sit on top of that skill base gain in importance, then it quickly becomes clear in which way every sales organization will develop in the long term, in the direction of a reduction of the sales staff who are employed in field service, but those who remain thereafter will conform to a ratio of 20%/80%, where 20% generate 80% of the sales. These individuals will be fully capable to run their own business as well, because they have the skills of an entrepreneur.
On the basis of what we have discussed so far, we can address the main issue at play here. How can we achieve a balance between digitalization, artificial intelligence, restructuring of the sales units and the employees working in the sales organization. How can we balance the demands that digitization places on the energy business without endangering its economic viability. We have to keep in mind that it is ultimately the sales organization that secures long-term sales for the company, and on the other hand, we have to train the sales staff in the best possible way to meet the requirements of digitalization in order to generate sales revenue and to preserve the energy business from long-term economic decline. This brings me to one of the most important insights of this article, that the remaining sales staff of that sales organization will necessarily be entrepreneurial, and to a certain extent has to act and act self-determinedly, and without which the restructuring of a sales organization to the digital age would be impossible, from my point of view is.
Whatever tools your business will use to increase customer share, be it youtube
, trade fairs
or other options available to your business, your organization will have to be one of the main leaders in the digital revolution that is coming to the sales industry in order to compete successfully and gain as much market share as possible, because from now on the winner takes it all. That is frightening in some ways, but opens up new vistas for individuals and organizations that are willing to challenge the status quo.
One thing is certain, change will come.