The Subscription Economy poses new challenges for the sales force

The Subscription Economy poses new challenges for the sales force
22.03.2017 Rainer Wiedmann
kasse

Internet-enabled products and downstream services are springing up. As a result, many companies end up directly in the Subscription Economy, as the connected products and their services are often sold by subscription. But in many areas, such as the smart home, market penetration is still low. It is only 7.4% in Germany. Important reasons are the lack of standards, poor interoperability and security concerns among users (see also our blog post on IoT security). But there is also some catching up to do on the corporate side. The sale of IoT products and service subscriptions places completely new demands on the structures and competencies of an organization.

IoT-Vertrieb

The introduction of IoT products brings many changes for IoT Sales & Marketing

Source: iq! Managementberatung

Challenges IoT Sales and Marketing

The integration of IoT products into a company’s product portfolio places great demands on marketing and sales. Most IoT offers cannot simply be sold via the usual trading partners, but require new ways of marketing. Networked products establish a direct channel to the customer which wants to be used. Product-centric companies are suddenly faced with the challenge of launching a service offering. IoT products should be offered in combination with corresponding value-added services.

Direct Sales

IoT offers consist of the networked product, software and value-added services, which are designed on the basis of the data generated by the product. Due to this complexity, pure distribution via the familiar dealer network is not possible. Companies must establish a direct (sales) relationship with their customers.

Software & Service Competence Expansion

The IoT sales department should not limit itself to selling, but should ensure that the IoT system is installed correctly and functions smoothly. This requires special know-how within the sales teams. Comprehensive on-site support must be organized.

Integration of Big Data findings

Connected products allow the collection of detailed usage data. Companies can finally understand how they should optimize products and what services the customer really needs. However, these insights can only be gained if all relevant data is transmitted and correctly interpreted. They must then be fed back into product development, service design, IoT sales and marketing. All of this requires very specific resources.

CRM / Onboarding (via product)

Through IoT products, manufacturers who have not had any contact with their customers before can establish a direct channel to them. This is an immense opportunity, especially for resale, up- and cross-selling as well as the entire after sales area. IoT sales and marketing also have the opportunity to replace some of the costly mass media with direct communication channels. CRM management is taking on a completely new meaning in IoT. OEMs in the automotive sector, who were previously dependent on customers proactively visiting the repair service, can identify repair or maintenance requirements in the Connected Car and arrange a customer appointment via the connected system.

Personalization of the service offering

The direct channel to the customer in combination with the usage data enables the individualization of the value-added services offered. For example, service cases in the Smart Home area can be adapted to the current heating output or certain recurring usage situations.

Performance / Value-based Pricing

Especially in the B2B sector, IoT offers are increasingly subject to variable price models. In the area of predictive maintenance, for example, target agreements for availability and downtimes can be made by collecting dedicated data. This is then linked to corresponding bonus or malus regulations.

Access to Real-Time Data

Connected product (systems) increase the demands on customer service. A smart home security system should function quickly again in the event of a malfunction. An IoT pacemaker is best not to fail at all. Customer service staff therefore need direct access to current usage and performance data for the products.

Connected products are not only a new product line, they change sales & marketing, but also product development, massively and sustainably. New processes and organizational forms help to successfully integrate the IoT offerings. New skills and resources are needed in many areas. Specific IT, data and service know-how is particularly in demand here.

Requirements for IoT distribution

IoT-Sales

The starting position for IoT marketing varies according to the type of company
Source: iq! Managementberatung

Very few market participants are prepared to market IoT offers.
Manufacturers usually do not have their own sales teams and have to set them up first. The actual resources are not enough, organizational structures should adapt to the direct sales mechanisms. As an alternative, dealer networks can be used which can represent the IoT products sufficiently well. For example, Samsung offers its IoT-enabled products through its own and external eShops as well as a number of stationary dealers.
At first glance, it is not obvious with which ecosystems the products are compatible. Support is only offered online and as chat.
.

Vertically integrated manufacturers such as Hilti, Würth, IKEA, H&M or service providers such as Allianz have a better starting position at first glance. However, most of the sales teams have little know-how about software or IoT. That’s why Hilti, for example, has set up separate sales and support teams for sales of its networked asset management system OnTrack!

Trading companies have end customer relationships. However, they often feel the same way as vertically integrated manufacturers: they lack the necessary skills to „sell“ connected products. Installation support is also a very difficult topic. Very few sales organizations have mobile task forces that can perform this task.
Only companies like Deutsche Telekom offer a solution that includes on-site installation via their Deutsche Telekom employees.

It is also important in many cases to integrate the IoT marketing specialists closely with the existing sales forces in order to continuously being able to offer the customer a „one-stop“ service.

The picture is different for IoT start-ups. They usually have sufficient know-how in the areas of software, technology and service. However, in the vast majority of cases their sales network is not yet sufficiently developed, so that they too are dependent on partner companies and retailers. Nest products, for example, are available from numerous online shops, and (independent) electricians can be booked via NestPro to set up the system. However, the network is expandable. When entering the location „Munich“ you only get one electrician as search result. In Berlin likewise.

Conclusion

IoT distribution will be one of the most relevant factors on the way to greater market penetration. The complexity of the products and in particular of the ecosystems is high. The customers are overwhelmed with the widely ramified offer and need support with the purchase decision and the successful installation and use. In most company forms there are still too few competent sales and service employees who can intervene sufficiently. Solutions should be sought as quickly as possible. This can be done by setting up appropriate competence teams. Alternatively, it may be easier and faster to implement external solutions based on suitably qualified partners.

 

 

 

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