Selling industrial IoT can be challenging
After several interesting meetings the last couple of weeks with founders, CEO’s and technical directors of small- and mid-sized industrial companies here are some notes on the most pressing topic I picked up – the challenge of landing sales contracts.
First a list of a observations and challenges, then below a short list of suggested actions:
- Broadly speaking, US industrial customers seems to be more receptive to discuss new cloud based IoT-applications than, a bit surprisingly and please challenge us on this, their German counterparts. It appears that the later seems still to prefer to see actual software and hardware at own sites. On the other hand, the German “Industrie 4.0” has become the topic of the day amongst many top German engineers and when Germans start to move, they will (eventually) move in quantity. In Scandinavia there is quite an interest but exporting to a second larger market comes fairly quickly given small domestic home markets.
- Many potential industrial IoT customers are of course occupied by daily businesses and, consequently, spend faily limited time on product and production development, as opposed to optimization, regardless the sales pitch. Engineer driven industries tend to focus on delivering customer projects, on design and engineering issues, on meetings with important client engineers, sub-contractors, partners, project teams and purchasers. Remaining time is spent on everything from intra-staff meetings to general travelling and the in-house accountant. It is challenging to sell a new IoT-application in competition with everything else on the table.
- All most any industrial sales situation leading to a positive result involves a triggering event on the customer side. A triggering event leading to a deal close could be a new Chief of Production, a needed revision of the plant layout, major investments in machinery, large customers putting pressure on production cost or quality challenges, to name a few. Without a triggering event, a deal close in new applications is quite challenging.
- Internal politics (within the targeted company) may also cause delays and other challenges, often to be named bad timing or simply erupting as endless meetings with limited or no progress. Sometimes a large partner style deal involving senior management is desired but more often it might be wiser to sweet a deal on a lower level of hierarchy, less exposed to internal politics or investment controller’s scrutiny. Say with a senior project manager, a plant manager or similar. A foot in the door is great. Over time that might even expand to that desired much larger flow of transactions.
- Not only potential clients might be challenging. Look inside. If you point finger at the client, three fingers point at yourself. Old fashion but surprisingly often overlooked sales methodology and client follow up is critical when aiming to scale the business.
So what to do? Not as simple as said but here are some advises picked up from various meetings with people in the business:
- Wait for the next recession, and then another 3-4 years after your targeted customers different investments in redundancies have all been made, and time to invest for grow will approach again…. Sad, but true. It will be brighter times ahead. Or:
- There are always potential customers more interested in new technologies than the average Joe. You just have to find them. Whether to become an intelligent, well-prepared sniper or using a double trigger side-by-side shotgun when finding those prospective buyers depends on the situation, the industry and the geography. Preparatory homework is necessary. Once landed however, you have an ambassador to use for further sales efforts so treat him with respect (and with the well-deserved ambassador discount).
- Be very clear on the value proposition. If possible, involve a couple of the most likely future customers in the product development or value proposition refining, and half is won. They have seen you and dedicated time to you and are increasingly likely to become that most wanted ambassadors.
- Another challenge that has surfaced is own sales staff sometimes engaging in “wrong meetings” not progressing sales forward. Balance the time spent on current customers and that on new prospects. Limited time on everything else to a bare minimum, and follow-up rigorously.
- Sometimes sales staff is missing. Right! At smaller and mid-sized industrial companies there is surprisingly common that the founder, the technical director, the parts guy’s or at best some “regional representatives” do the sales part. In parallel they spend time on other tasks as well, and no one is stressing the sales targets and do the much needed sales follow up, building pressure to deliver. Spend time and financial resources on a dedicated sales force and be very explicit about expectations. Either own staff, or partners that you managed tightly (which also requires in-house resources). There will be challenges handing over from sales to engineering/production, but deal with it. No sales; and you will die in glory. No growth and you will lose market share; and die in glory.
- Another challenge seems to be a shallow pipeline of true quality prospects. Keep track on each sales persons most-wanted customers, their rational, and follow-up regularly on progress. Dare to say no and move on. “Make the sales force work hard on stuff that matters, don’t work on stuff that doesn’t matter. Most people screw up the second part” (Sam Altman).
Thank you for reading. Please feel free to like, comment, share, tweet, email, etc. Hopefully the Pareto principle, also known as the 80-20 rule, will apply. I.e. 80% agree and 20% challenge me constructively.