Selling a Connected Widget: Traditional Manufacturers’ Transformation

By: John Stamos Manufacturing, Technology Sales

Software Solution Selling in the Traditional Hardware Product Space

It is an exciting time for many traditional manufacturing companies. The digitization of their businesses through the internet of things (IoT) presents a significant opportunity for reinvention through big data. But success in this environment requires a willingness to reevaluate what’s worked in the past and embrace the challenges of a digitized world–realigned business models, new job roles, enhanced skillsets and sales compensation considerations.

Opportunities to capitalize on the new technology are in abundance across the manufacturing space:

  • Industry 4.0 for industrial manufacturers to enable centralized asset monitoring or predictive maintenance and analytics
  • Building material manufacturers with new building automation capabilities
  • Agricultural applications to collect environmental conditions in a cloud-based architecture

Expanded offerings gives manufacturers new opportunities to present enterprise software with their manufactured products. Organizations are clamoring to capture these new and attractive revenue streams to better entrench themselves at key customers, increase their profitability, maintain their competitiveness in the market, and/or establish a predictable revenue stream. As organizations race to capture first-mover advantage, many are finding challenges to their business model: what worked for years, decades even, does not necessarily apply to monetizing data and insights through this enterprise software. As a result, organizations must reassess their go-to-customer strategy, structure and ultimately their management levers to achieve these objectives. This article (first in a 4-part series) explores the go-to-customer strategy reassessment: namely the need to realign revenue motions and value propositions to support new buyers with different buying processes.

New Buyers & Buying Processes

Primary decision-makers for enterprise software solutions are no longer the traditional buyers of yesterday that sellers targeted. First, integrating traditional hardware into the enterprise software infrastructure often requires purchasing authority from someone in the IT organization. This puts the buyer not only in a new functional area, but also it often requires executive level signoff due to the responsibilities involved in managing system-wide data and the integration with other enterprise-level systems.

As an example, a traditional factory automation buyer may be a controls engineer. This controls engineer likely has limited influence over the (MES) used to monitor and provide predictive analytics for their machinery on the factory floor. This purchasing decision typically filters high up in the IT organization, sometimes even the CIO. This is not only due to the capital investment required, but also due to the invasive nature of integrating to the company’s infrastructure.

The more multifaceted buying process results in more complex, and often longer, revenue motions where the seller requires additional competencies to navigate this “enterprise” sale. To further add to the complexity, in the case of a subscription consumption model, these revenue motions begin at the point of the initial sale and require a deliberate nurturing process. These subscription-based revenue motions follow the land, adopt, expand, renew model.

  • Land – This is the initial sale of the software solution.
  • Adopt – After the initial sale, the software must become an integral part of the process and an invaluable part of optimizing the customer’s experience. Optimizing the post-sales customer experience requires all possible users adopt the solution.
  • Expand – Continued ongoing success can often lead to revenue expansion through upselling enhanced offerings and capabilities or expanding usage through additional subscription seats.
  • Renew – With an effective adoption/expansion implementation, the contract renewal process should not only be a formality, but should also further drive cross-sell and upsell opportunities. This is critical in a subscription-based revenue model to maintain the revenue stream.

Revenue motions often require handoffs with clear and deliberate rules of engagement to ensure the sales process is optimized to the customer experience.

New Value Propositions

Sellers will have to adapt to the new buyers’ preferences by identifying and communicating relevant value propositions. Frequently the enterprise software solution enhances the deployment and usage of the hardware product, and by nature touches on potentially critical and impactful value drivers. Sellers should nuance these value propositions to align to all new buyer stakeholders. Specifically, sellers must effectively communicate these differentiated advantages at the right time with the right objective evidence—all of which requires time and effort through an understanding of the software functionality and benefits.

Additional Considerations
Besides recognizing the various buying processes and revenue needs of their customers, manufacturers should also consider the following to effectively monetize revenue opportunities through the digitization of hardware manufacturing:

Part 2: New job roles required to support sales execution

Part 3: Different skills and competencies, metrics to measure performance and considerations for the quota-setting process

Part 4: Sales compensation program considerations to attract talent and motivate software growth

Read Part 2 of this series.

Co-author: Priya Ghatnekar is a manager in Alexander Group’s Chicago office.

Contact an Alexander Group manufacturing leader.

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John Stamos

John Stamos is a manager in the Chicago office. John has experience working with companies in a variety of industries including manufacturing, high-tech, insurance and consumer packaged goods. His most recent engagements include a complete go-to-market strategy assessment, full-scale enterprise program design, job roles and competency model design, and detailed territory alignment.


Prior to joining the Alexander Group, John was a product marketing manager for Cognex Corporation where he conducted market analysis for international serialization initiatives in the pharmaceutical industry and oversaw the development of its configuration software. Prior to this role, John had territory account responsibility at Cognex, selling automation solutions to assist in the quality control and traceability in various industries including pharmaceutical, food and beverage packaging, automotive manufacturing, electronic component assembly and retail logistics. John has nine years of direct sales and distribution management experience.


John holds an MBA from the University of Chicago, Booth School of Business, and a B.S. in Mechanical Engineering & French from the University of Wisconsin-Madison.


 


Priya Ghatnekar

Priya Ghatnekar is a director in the Chicago office. Priya has experience working with clients across multiple industries, including manufacturing, high tech and financial services. Priya has worked on a variety of project types including revenue motions; sales coverage; job design; and multiple large, global sales compensation engagements. One recent engagement had her overseeing the execution of a sales transformation roadmap across three European and North American divisions.


Prior to joining the Alexander Group, Priya was an analyst at Towers Watson’s Investment Services group. She focused on defined contribution and defined benefit plans. She was responsible for developing and monitoring investment programs. Priya has also worked at both The Marco Consulting Group and EnnisKnupp & Associates. Priya holds a B.A. from The George Washington University and an MBA from Kellogg School of Management, Northwestern University.


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