How IoT Will Change Sales and Selling Products as Services

In this episode I am joined by Elisabeth Schloten, CEO at ECBM to discuss what implications will IoT have on the sales process. You will learn:

  • How IoT will change pricing and billing models for “industry 4.0” companies who historically have sold one-off products
  • How these new billing and pricing models will change sales culture and incentives
  • How industry 4.0 companies need to change their value proposition when they start introducing new pricing and billing models
  • How IoT will affect both direct and indirect sales
  • How marketing departments will be able to make better campaigns as the number of connected devices increases

 

[00:00:00] Thorstein Nordby: [00:00:00] Hello and welcome, today I'm joined by Elizabeth slogan. I hope I'm pronouncing that right? Yeah. See, at ECPM a little bit. Welcome. Thank you very much for having me. So could you tell me a little bit about what you do at ECPM and what type of clients you work with? We're a digital transformation company.

[00:00:18] Elisabeth Schloten: [00:00:18] We do projects mostly with IOT and machine learning, but also with other technologies. And our purpose is always to solve a very interesting customer problem and find the right technology to actually solve it. So we're not, product sales company. We will work. Really Muslim projects and, we have an independent and it's really all about solving an interesting problem.

[00:00:41] Okay. and we come from more from the sales and marketing side, and I think we'll see a big transformation in sales in the coming decade because of IOT. And it's creating a lot of new opportunities and challenges, not only on the technology side, but also on the sales and marketing side. I know up until now say some marketing have.

[00:00:59] No [00:01:00] attracted the buyer toast, the buyer product was purchased, and that was it. Then say some marketing would only get involved if the customer came back for a new product. Or of course that's over simplifying things a little bit, but, how, or what will IFC IOT connected devices mean for sales? what do you think the implications, IOT will have, on the sales process.

[00:01:21] I think it has big implications on SAS product projects, the way sales work, because what we do a lot with our customers is we develop new business models based on IOT or other digital technologies and the new services and new products that we developed with them. they are generally in terms of revenue model is quite different from what I used to sell before.

[00:01:42] A lot of what as modern business models is generally recurring revenue. So the customer pays every month, which is fun for the person who sells this kind of product. It's a fantastic revenue model that gets paid every month and you all have to deliver something. and, if you are used to selling pieces like a big [00:02:00] machine, and you used to get a lot of one off revenue, and if you change that model recurring revenue, or you add a service to this machine, you have to really think completely differently.

[00:02:10]you, first of all, the sales process becomes more difficult in some ways, because you have to explain a lot more what the services are about and why a customer should commit to it. And then also, there, the way the money comes in, just imagine you sell a big machine for 500,000 euros. and, in the future you sell something that brings in, I dunno, 10,000 every month.

[00:02:30] So you have a massive dip in revenue when you start selling things in a different way. And so you also have to think about differently how you incentivize and tell your sales people. So it's a massive impact. Yeah. how do you think new billing models, new pricing models will change? So sculptor and the incentives?

[00:02:47] Yeah, I wish I knew the answer to that. I've seen companies trying to actually stick to the existing sales models and try to stick to the existing incentive models. And that is generally called wrong [00:03:00] if they've changed their business model. the thing is you also need different skills and sales.

[00:03:04] You don't just need different ways of incentivizing people. You also need way more of the consultative. and not less of the product says, I used to work in telecoms industry and in telecoms industry sales used to be really easy. Look, he has a pretty little mobile phone and you can put it on your end.

[00:03:21] You can talk and then you can play with it. and that's really easy to explain to everyone you control , it's totally easy to understand the business model and takes about five minutes to explain when you sell a machine with a digital service, like a machine that knows when it will break.

[00:03:36]before it breaks and therefore you have basically a guaranteed availability. That's pretty difficult to explain because, people, our customers generally come from, like a medium sized, large ish companies and, quite traditional. they don't get the idea of a machine talking to them and the machine talking to the internet and actually thinking for itself and, having this idea of the machine, telling [00:04:00] the person I'm going to break, please replace me.

[00:04:03] That's quite a foreign concept. And then service plus service fee for this. the salesperson has to really understand what's going on in there because if. One person doesn't understand that they will get their colleague and maybe then they'll get the it guy in and then they all try to understand what's actually really going on.

[00:04:19]so it's a very different sales process from selling a mobile phone. It's fascinating. and when it kinda sounds similar to when they went from on-premise software to recurring and like software as a service is the same shift. yes. It's quite interesting. Interesting. And also another key piece to say some marketing strategy is positioning or value proposition.

[00:04:42]how do you think industry 4.0 companies need to change their value proposition when they start introducing new pricing, bidding models. And it's just all companies. I'm not entirely sure what those companies are, like most companies. I think that it feels like an industry forum or really [00:05:00] very traditional company production companies.

[00:05:03]yeah, they absolutely have to change the way they position themselves. Because again, that has to have to understand the value of the new offerings. Which means they have to approach potentially different people in their customer structure to be able to sell the services correctly. They have to use different marketing channels, but I find that in larger B to B, direct sales as they're very successful, also indirect sales and marketing plays a smaller role in the offer funding.

[00:05:29]but still, Everyone is under a certain age, or is very interested in technology. We gather the information on the internet, which means you have to be on social media. You have to be on the internet. You have to be aware where the people in your customer's organization are actually starting the buying decision, not necessarily the ones who make the buying decision, but the ones who started you have to position yourself as.

[00:05:51] Leader and wherever you want to go, and you have to explain to your customers what is great and new and why they need this new digital service that you're offering. [00:06:00] Interesting. And you mentioned, direct sales and indirect. Channels, we have agents, dealers, distributors. How do you think IOT, how will these changes, affect both direct and indirect sales?

[00:06:11]this is that there's so many aspects, that I'm sorry for them. First of all, digitalization in general, not just the IOT, but general digitalization changes where salespeople are needed, in the information gathering phase. A lot of the time the customer does that actually without the sales and all the lower value and low complexity sales, moving to wherever they go.

[00:06:34] As soon as we find them on Tik TOK, currently more than the normal, web. but yeah, I'm waiting for the time when you can buy, like a large, oil pump on Tik TOK, it will come. Not quite there yet. No, but seriously, the direct and indirect says both. They all have to focus more on consultative, high value, high completion.

[00:06:53] So that's generally how the sales skills have to change. And then when you look at the distinction [00:07:00] between direct and indirect, it can be digital technologies in it's in the various guises. I think they favor direct sales or indirect, because the value adds. The distributor is videos. first of all, because product X has to be explained more.

[00:07:14] They become more complicated. And if you think about someone who's selling oil pumps as a distributor, in the past, they just had to explain this as an iron pump. So many tests can go through words and I don't know this kind of oil and it's this thick and I dunno. Like it had five features and they had to explain those and they had to compare five features of five different, make us have these oil pumps and then they had to compare the price and they could give the customer very good.

[00:07:39] Recommends quite easy. Now, one of these old pumps has, this, self repairing functions. The second oil pump gives you, I don't know, detailed information about everything that's flowing through it and the pressure. And I don't know what. And the third one has preventative maintenance and predictive maintenance.

[00:07:55] And the fourth one has some other features. This guy is totally overwhelmed and they will not [00:08:00] be able to explain all these five different super features to all the customers that come in. So they'll just pick one and always recommend that one, which for the other four. Manufacturers didn't think, Hey, no one sells the stuff directly.

[00:08:13] All the information gathering happens on the internet already. Hey, I've set up my own internet. the more complex the products become, the less value the distributors can actually add. And also the logistics. If you look over the past 10, 15 years, global logistics have become so common.

[00:08:28]put a little bit of a spoke on the wheels, but normally everyone orders anything from anywhere. So everyone's gotten used to ordering bigger things over the internet. So I think generally that indirect sales lose a lot of the game. Interesting. Okay. So that's, my net might be something, some companies can cut out entirely, almost in some cases it happens.

[00:08:50] Yeah. Yeah. And when we read about IOT, you read about how it will make, let's say the production in the factory more efficient. [00:09:00] do you have any theories about how. I say a marketing department will be able to make better campaigns, as the number of connected devices increases.

[00:09:10]I think data protection and data privacy laws play a little bit of a role in this. but generally if I sell a machine that has some sensors and some radio modules in them, then I can get a lot more information in the past. most people, if you use an indirect sales channel, you have no idea where your stuff ended up.

[00:09:30]and you had no idea who you're real now, when you have a Sandler and the radio module, maybe it's a GPS pack on your machine. then no matter what other services you have, you will end up knowing who has bought it. And you may make them incentive, Hey, register and get an extra year warranty, that sort of thing.

[00:09:48] And who bought it, then you know where it is, how, what has been done with it, how it is used in what environments it's skills. zillion things more about your mission. And yes, inflammation is the oil for the market and they can do a lot of [00:10:00] stuff suddenly they know what types of customers use the product, what they use it for.

[00:10:04] It's interesting how that product developed. That's a huge opportunity for marketing. Yeah. I guess you can see more opportunities for upgrades, service, additions, new features. yep. Lots of things you can suddenly do. Yeah. one thing I'm curious about is, when you work with your clients, how it's such a big change and a big, like a different approach from how things have been done in surrogate.

[00:10:28] So how do you change or work with clients to transition from, selling one off products to services, for example, it's a process and a genuinely starts either with an idea with the pain from Simone. So we've not had a customer who came across this interesting piece of technology and, then they were starting to look for how they can use this.

[00:10:48] And it's a long process to actually go from this idea to a business model. To an organization to the skills that you need. So it's really the good old strategy [00:11:00] conducting that you sat with. And then, also then comes really the important bit. What skills do you need to actually sell this? How do you set up the organization?

[00:11:07] So it's, that's one of the things that I love about doing this. You get to see and understand and consult on all aspects of it. So organization technology is a means to an end. What we really do is we'll look at how to change an organization, how to change behaviors, coaches that change in a company.

[00:11:21]so it's quite a process to, to, interpret a successful digital business model. like how long will it take to be, having more of a more offer, a subscription type of approach, whole, how long do you think it will take before it dies? Is something widespread? Whoa, wait, Mr. BARR, some industries, the customers actually don't want it.

[00:11:45] And don't like it. If you think about sensors, some sensor manufacturers had the idea of a sensor as a service. So you don't actually buy the sensor on the radio module, but you pay per data point that is transmitted. And this was actually a very unpopular business model with a [00:12:00] customer. So they're not buying it.

[00:12:01]I think what will happen more is a combination that you still buy things. And then you have additional services on top value, adding services. So maybe the original price is reduced. And then you pay for things like your warranty, like your a hundred percent availability guarantee of something critical, which is enabled by IOT.

[00:12:22]but you still buy the machine, but then you have an as a service, on top of it, It's. This is a little bit of a gem perspective as well, because I know a lot of gems who are very tight on their money and very, they like to have control and they like to own things and they don't like this, next gen reference.

[00:12:39] So it's a permanent, permanent contract. it's a bit of a gem attitude, so prefer to have certainty on the cost. And I bought this now, and this is mine, but slowly changing and eroding, but this is decades away until this is everywhere. Yeah. I think that's definitely the case in Norway and Scandinavian as well.

[00:12:57]yeah, so this has been great. It's been a short, good, [00:13:00] very informative interview. So if someone, if somebody wants to find out more about you and ECPB, where can they go? Our website is ecbm.me. So is it the end of me? and yeah, just contact us through their contact form and we offer digital coffee chats, through the website.

[00:13:18] So you're very welcome to contact. Great. Thanks for coming by and talking to us. Thanks very much for having me.

 

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