The Final Nail in the Coffin? Is Working from Home the end of Business Relationships?
Updated: Sep 11, 2020
Coffins and nails might not be the most encouraging of metaphors in these uncertain times. According to the Cambridge dictionary (the online version, of course), the meaning is… “an event that causes the failure of something that had already started to fail.” I’ve written (a lot) about the changing nature of business relationships, mainly from the standpoint of the B2B IT and services seller. We’d already begun to see the relationship dynamic change. The internet-enabled “self-guided” buyer took control of the process from the B2B sales professional of the 1980’s and ‘90’s. Buyers’ organizations appeared to take a more objective approach, trying to discourage the opportunity for personal influence and bias. Sellers have been juggling more complexity and less clarity while being moved to inside (as opposed to field) groups with the inevitable reduction in “face-time.” Maybe, the shift to "working from home" is accelerating the demise of this just as it is many companies and, industries.
Watching companies push back plans to re-open offices, and the Braves win a ninth-inning thriller before an "unpacked" stadium forces us to consider the future with a sense of unease, despite trying to adopt a positive outlook. We know that despite fatuous expressions like "the only constant is change," human beings like consistency and predictability. They are both in short supply. Business relationships are in the cross-hairs of change right now. The opposing forces are those of human behavior (the need to be social) versus practicality, safety, convenience, and the big one….cost savings. Social distancing is the contradiction that sums it up, but is it really just about dollars and sense?
The Story So Far
You know the story. Covid -19 (rightly or wrongly) forced everyone to shelter. White-collar knowledge workers (some of whom have been working from home for a while) adapted, although the numbers can be misleading. For example, only 5.2% of the U.S. workforce worked from home (pre-Covid) with any regularity, according to Quartz at Work. "The percentage of jobs that can be completed from home is rising fast," according to the University of Chicago economists Jonathan Dingel and Brent Neiman. They estimate that up to 37% of jobs in the United States can be plausibly done from home. With a working population of 160m, that means 60m jobs compared to 8m (pre-Covid) today. This has got the finance guys drooling over all the office space and travel expenses they can save. But after the initial praise and gushing over the "working from home thing," the attraction of the Friday Night “virtual happy hours” seem to have worn off. People realize that, like everything in life, we need to find balance. Working from home has its pros and cons and requires other ingredients to make it tolerable.
With the “white collar” worker adapting, everyone else is left out in the cold. Hence people now have replaced the "V" and "U" shaped recovery curves with the "K" shape, implying that people's fortunes will diverge. The “haves and the have-nots” is not a new idea. Despite early endorsements of the “novel” work from home ’20 epidemic – “it’s so convenient, I can spend time with family, I get more done (really?), there’s no commute”; enthusiasm is declining. Working from home is not what it’s cracked up to be, and the main reason is that it's lonely and boring.
Pass the Remote
The case for going remote is built around three main pillars (1) Financial (2) Prospect Alignment (3) Everybody’s fallen in love with working from home. The financial arguments are fairly straightforward, easily the most powerful, and will probably win out if past form is anything to go by.
The Forces of Finance:
As I said earlier, there’s maybe 50m jobs that can still be done from home. That’s a lot of real estate and other related office expenses that CFO’s are chomping at the bit to save. According to Uri Berliner’s NPR “article” “Get A Comfortable Chair: Permanent Work From Home Is Coming” from June 22, 2020, quoting Global Workplace Analytics, "a typical employer can save about $11,000 year for every person who works remotely half of the time." And workers can bank between $2,500 and $4,000 a year working remotely half time.”
There’s also a ton of T&E that the CFO’s will look to save. This will mean sales leaders will have a fight on their hands to justify getting sellers (physically) in front of buyers, in the form of the in-person sales call, or participating in trade shows, events, and even internal kick-off meetings, for example. Consulting companies will also come under the microscope. If you ever took a look around you when you were waiting at the gate on a Monday morning to board a flight, you’d have noticed swarms of earnest young men and women off to spend three of four days at some customer’s corporate office “consulting.” The CFO of the “customer” will be looking pretty hard at that T&E for sure.
Technocratic company leaders will see this as a good thing, as they can return to the belief that they need to build products and services that are so good they will now have to sell themselves. Some believe they could anyways, but technocrats generally have always struggled to see the value of salespeople. They will deny this, but if you spend time with technically, or financially oriented founders and CEOS, it's doesn't take long before their bland indifference to sellers turns into obvious skepticism as to what sellers “actually do?” This gives these types of CEOs the excuse they’ve been looking for to relegate the importance of sales. They’ll take the field out of field sales, replace them with more inside groups (as CFO'S have been doing for the last 20 years), condemning them to rely on a piece of equipment (the phone) that no one answers anymore anyway. At this point, feel free to mentally segue to a shot of the robot from “Lost in Space” crazily swinging his arms shouting “danger, danger.”
Supporting the move to remote is the alignment arguments, which are certainly more contemporary as their supporters will argue that they reflect the changing nature of buyer behavior. They are inevitably less tangible than the financial arguments, at least in the short term, but can have profound financial impacts longer term. We don’t dispute some changes, but we might wonder whether some of the changes in behavior are really new, or whether we’re once more seeing “old wine masquerading in a new bottle?” Better alignment with the prospect arguments go something like this:
The old “relationship” sales model has been evolving over the years, anyway. There has been a loss of trust as buyers perceive that they were misled by a good deal of "old pal" palm pressing and back-slapping in the restaurants, golf courses, and sports venues of the world. Buyers are now less willing to participate in the theatricals and charades of the past, particularly as companies have become more sensitive to their financial and legal obligations insisting on clear impartiality, or at least trying to. Buyers have gotten smarter, and companies created modern procurement departments, not just to streamline their buying process but also to remove the opportunity for emotion to bias buying decisions. So, buyers are now strictly focused on features and benefits, are more educated, and don't require the hand holding associated with the "relationship" seller. This type of process can be run perfectly adequately from the other end of a video call.
To go a step further, the behaviors, biases, and psychological factors of human decision making have always been unreliable, so we need to recognize this and move on past them. We’re emotional, inconsistent, and unpredictable, which has led to inferior decision making. In his book "Talking to Strangers," Malcolm Gladwell presents compelling examples of how poor we are at making sense of people we don't know and how we communicate thinking we’re receiving what they’re sending and vice-versa. The reality is that we see what we want to see and generally "default to trust." In one example, he uses Hitler’s ability to turn on the charm (a facet of many a psychopath) such that he would take people in, making promises that he never intended to keep. With one exception (Anthony Eden), it appears that those Allies who met Hitler fell for his assurances that he did not want war. Former British Prime Minister Neville Chamberlain is the most famous example. However, those that did not meet Hitler (like Churchill) judged him correctly. Hitler was convinced that war with Britain was desirable, inevitable, and winnable. If we never meet people, then they cannot influence our opinions with their intangibles. If we never meet, our judgment cannot be clouded by their charm, charisma and whether we "like" them or not. We are forced to focus solely on the plausibility and veracity of their proposition without our decisions being clouded by unconscious biases, which are only activated when we meet in person.
The buyer demographic is changing in B2B, and Covid-19 will prove an accelerant to that. Estimates vary as to the scale of changes in the workforce, but some economists, like the report from the Becker Friedman Institute at the University of Chicago, predicts that 42% of workers furloughed will never return. To make the situation more challenging, those that do get replaced by other humans will be replaced by members of a younger demographic group. According to Merit, – "73% of millennial workers are involved in decisions to purchase products or services for their companies”. And according to Trust Radius, “over 45% of B2B technology buyers are 25 to 34-year old's making them the single largest demographic followed by 30% in the 35 to 44-year-old age group.” These buyers are comfortable with the “self-guided” buyer journey, sourcing their own information, and making some decisions prior to consulting any sales reps from any companies. The implication is that inside sales and/or “field” sales working from home (what’s the difference?) can handle the demands of such a balanced, well informed, and impeccably objective prospect.
My Home Sweet Home
Apparently, everyone is in love with working from home. They’re finding that they can be 20% more productive, for example, according to a two-year Stanford University study quoted here in Inc. Magazine. People don't have to deal with the anguish of painful and time-wasting commutes while getting to spend more time with the family. It’s the best thing since canned beer, and it fits in with the other two arguments of finance and reflecting the modern behavior of the buyer.
The Human Season
On the other side, we have the opposing forces of simple human nature, including those of socialization, habit, and inertia. Despite all the forces of change, human beings are built a certain way and will generally continue to behave based on the hundreds of thousands of years of evolution. It’s hard to believe nothing will change, but we need to avoid the classic pendulum swing of trying to force a shift from one extreme, no one (or a small number of people) working from home to thinking everyone should work from home, all the time. We need some moderation.
People are People
We've heard many times that people buy with emotion and justify with logic. According to modern behavioral economists and psychologists, our decision-making abilities are clouded by illogic, bias, subconscious thoughts, and unpredictability. Add in the social side and need for relationships in many forms and we have a storm of emotions that are difficult to make sense of. Despite taking a dispassionate approach in business, we cannot help but be drawn to certain people, attracted by individual personalities, charm and charisma perhaps clouding our judgment. Social attraction is even hardwired into us. In his book The Brain, David Eagleman says, "Our inbuilt neural machinery drives us toward bonding with others. It urges us to form groups. This idea sheds light on the social world that surrounds us: everywhere, humans constantly form groups. We bind together through links of family, friendship, work, style, sports teams, religion, culture, skin pigment, language, hobbies, and political affiliation. It gives us comfort to belong to a group–and that fact gives us a critical hint about our species' history." Once more, we return to the idea that humans congregate, explaining our collaboration, which accounts for the supremacy of our species.
The point here is that you cannot resist all these years of evolution. Despite the profession of purchasing, the corporate rules that enforce impartiality, and the scandals of corruption, we can't deny human nature, which means we thrive in groups and more social environments, and that is NOT working from home. Belonging, esteem, and self-actualization (thanks to Mazlov) depend on relationships. It's how we are all wired, and to deny it is to deny we're human.
Tell Me Something I don't know.
The human side of things is not just about what’s hardwired (although some would argue it is). There’s also the intangible needs we possess that drive us to socialize. When these powerful forces are considered, all the corporate efforts to ensure impartiality start to look like a bunch of illusions and misdirection. Especially when you combine it with the excesses of many businesses these days. The corporate boxes and "debenture" seats at sports stadiums across the world are built specifically to enable the necessary “relationship building” and greasing of the wheels of industry, so I'm not swallowing this pure and pious version of the modern business world. And don't tell me they're for the employees. Even the most "enlightened" of entrepreneurs fill these suites with prospects and customers, leaving the staff to indulge when the "filler" fixtures wander into town. You know, like when UGA plays Troy State, or when a 4&10 Falcons team play the 5 & 9 Jacksonville Jaguars. Can’t wait.
Land of Confusion
Prospects are overwhelmed with choice out there. We're all under siege these days. According to this Forbes article from August 2017, we are exposed to anything from 4,000 to 10,000 marketing messages every day. We are fighting for a shrinking amount of mindshare with a growing number of competing messages, all being broadcast more often, with greater volume, making more outrageous claims. Patrick Kilgore from Hive9 explains this phenomenon in his July 2016 blog. Leaning on the much-quoted Sirius Decisions, Kilgore lists the following factors as having the most impact on overwhelmed prospects:
I. More competition for buyers' attention whose attention spans have dropped
II. The number of those participating in BtoB buying decisions having grown meaning you have to win more people over
III. Those people are busier than they used to be as companies continuously try to do more – with less.
IV. Decision cycles have lengthened with a new competitor emerging – that of No Decision Inc.
The point here is that there is (or at least “was”) an opportunity for the renaissance of the seller in a market drenched by ubiquitous products and services and marketing megaphones broadcasting similar and increasingly outrageous claims. Dave Cancel, the CEO of Drift, has said it best most recently, “Product differentiation, by itself, has become indefensible because today’s competitors can copy your better, faster, cheaper features virtually instantly. Now, the only thing they can’t replicate is the trust that customers feel for you and your team.”
With all this ubiquity out there, companies need to be investing in their sellers and giving them the freedom to be the most influential they can be. HOW they exert, that influence has changed. Yes, they must be able to show value, not just buy expensive dinners. They must be able to help prospects by “guiding” them through loud, raucous, confusing markets where trust has reached an all-time low. We said earlier that modern prospects think they need less "hand-holding" (or guidance.) But in these confusing, crowded markets, they actually need more. You won't do this as effectively sitting behind your desk, going from one video call to another. It’s still more effective to do this face-to-face, which means getting back into the field.
The Verto Vantage
Well, folks, this is shaping up to be quite a battle. Finance, "buyer alignment," and the love affair with working from home on one side versus the “human element” on the other. This is what we are seeing and what we think:
Don’t bet against finance. Never bet against finance. The modern era is replete with examples of finance having the most influence on management decisions. Return on shareholder value remains king, and cost reduction is the quickest way to get there. Office space and T&E represent the low hanging fruit right now. If you believe that your team is still best deployed in the field, as a sales leader, you will have to give "some" ground and then be prepared to fight for the budget to allow your people to visit prospects, so get ready to stand up for what you believe.
Stay balanced. We know that more sales activities, particularly the earlier stage prospecting and "handshake" type calls, will happen via video. We also know that you'll probably be dealing with more dispersed buyers, as your target companies adopt more work from home policies as well. But resist the temptation, or drift, to go exclusively remote.
There’s no question that the work from home “genie” is out of the bottle, and some of that is a good thing. Traipsing into the office every day is just a habit. In cities like London and New York, it's a significant inconvenience and wastes significant time. BUT it’s when people converge that ideas coalesce. In his book, “Where Good Ideas Come From," Steve Johnson talks about the history of innovation. He argues that for ideas to succeed, they and their owners need to collide with one another as well as other ideas. This happens where people are in close proximity. He argues that the “explosion of commercial and artistic innovation that emerged in the densely settled hill towns of northern Italy, the birthplace of the European renaissance” serves as a great example. “Once again, the rise of urban networks triggers a dramatic increase in the flow of good ideas. It's no coincidence that northern Italy was the most urbanized region in all of Europe during the 14th and 15th centuries…” Johnson also references the work of Kevin Dunbar, a McGill University psychologist. Dunbar tracked the conceptual changes that occurred over the course of projects in biology research. “By observing the activities within particular laboratories, Dunbar’s study showed that isolated Eureka moments were rarities. Instead, the most important ideas emerged during regular lab meetings where a dozen or so researchers would gather and informally present and discuss their latest work. If you looked at the map of idea formation that Dunbar created, the Ground Zero innovation was not the microscope. It was the conference table.”
What has this got to do with Verto’s business, you might ask, “I thought you were sales and marketing peeps?” That's right; we are, so workforce distribution and its impact on sales and marketing effectiveness are interesting to us. But here’s the thought to leave you with, and it's getting more serious every day. People keep saying we’re all in this together and "we're here for you," yet at the same time talk of "K" shaped recoveries where some win and some lose. In case you hadn't realized, no one is “here” for you, and we’re “not” all in it together. I'm afraid that's just fashionable, feel-good drivel. In their Wall St Journal article dated Aug 28, 2020, Patrick Thomas, Sarah Chaney, and Chip Cutter paint a bleak picture as furloughs turn into permanent displacements and job losses mount. The working from home change will save money in the short term, which companies will need, but if handled clumsily, it will cost them in the long run.
All that said, the "working from home deal" will become a sideshow if companies cannot preserve and survive. While cutting costs is necessary, so is securing and winning revenue. To win that revenue, you’ll have to find enduring, cost-effective ways of generating leads and building sales pipeline. At Verto, we help tech and services companies do just that. We use a formula of buyer intent data, lead generation, sales conversion tools combined with good, old fashioned “know-how” to close the gaps in sales & marketing, enabling you to reduce cost and win revenue. You're going to need to do more with less to stay "in it." We will help you do that.