With IoT sales, customers want to try before they buy

How do you sell someone a digital transformation? Or even a piece of that digital transformation? That’s the question facing companies trying to provide IoT platforms, connectivity, data analytics, data integration, and any number of other services associated with the internet of things.

Companies around the world are aware that they need to do something to take advantage of AI and the potential benefits of real-time data collection and analytics, but in many cases, they don’t know what they don’t know, and they certainly don’t know how to apply it to their business. Which makes it tough to sell them a complex IoT product.

The general advice today for both sales teams at those selling IoT products and buyers of those products is to focus on a single use case and build out from there. In many cases, I see companies offering point solutions that attack one particular pain point and have all of the cloud, connectivity, and app work already handled. That tactic works for smaller businesses, but in bigger companies or with more advanced use cases, such as factory automation, the sales process is far more complex.

In the last year or two, I’ve seen more and more surveys that reference “pilot purgatory,” a term used to describe when a pilot project fails to advance to production. McKinsey estimates that 70% of IoT projects are stuck in some form of pilot purgatory, so it’s clear that simply selling a use case isn’t working. At the McRock Industrial IoT Symposium and related event hosted the day before by Mnubo, a data company, I learned what is working for IoT and data companies.

Selling companies on digital transformation involves the longest and most expensive sales process possible. You have to build it so a company will buy it. Martin Fassier, the CEO of CaSA, a company building IoT for the electrical grid, explains that the most effective sales tool will show the client exactly how technology can help them achieve their business goals.

“You have to go way beyond a demo; [the solution] is literally the alpha version of what your client needs,” said Frasier. But if you’re building an alpha version of your product for each client, it gets expensive. Pierre Carpentier from Cyient agreed with Frasier, saying that as an IT services company Cyient tried a lot of different ways to sell clients on IoT and AI and the only process that worked was the longest and most expensive effort — physically sitting down with clients to understand their exact pain points and then walking them through the specific ways the Cyient product would help them.

Carpentier said that in many cases the company ended up building a version of the product to run in its own business in order to learn what it needed to know. For example, Cyient owns a manufacturing facility, so before coming up with a factory automation product to sell to others, it first built one for itself.

For companies that don’t have the luxury of having their own factories or municipal infrastructure or whatever else that related to what they are trying to sell, the next best option is to hire domain experts from the industry they’re trying to sell into. Those folks will help communicate on the customer’s own terms and in their own vocabulary. They will also help shape the product for the specific industry in ways that will make it more compelling.

Listening to the panelists at both events, I was stunned to hear about the level of arrogance information tech vendors coming into the industrial world were displaying. For example, Bob Turney from Johnson Controls, a building automation company, said that his company had asked an expert from one of the big cloud companies to come to a meeting to share its findings. The expert apparently told the meeting attendees that after crunching the data, the conclusion was that Johnson Controls could save a significant amount of money if it ran its chillers a little warmer.

The response from Johnson Controls? Yeah, we know. You could hear the disdain dripping in Turney’s voice as he shared this story. The point isn’t that the tech firms were idiots, but that they looked at the world with IT-centric glasses and didn’t take into account the operational reasons why a company might elect to avoid taking that savings.

Having experts who understand the industry they’re selling to can ensure that a company understands its customer’s pain points while they are selling them a product. It also helps when building a product.

Unfortunately for firms selling IoT and digital transformation, building an alpha version of a product doesn’t scale. When I talk to large companies such as Cisco or Intel, which are trying to sell solutions in IoT, they tell me that they can re-use about 80% of their expertise from one client pitch to another. For smaller companies, that number is much smaller, and the load of customization is spread across a smaller team.

Until we get more experience with the internet of things and digital transformation, this sales cycle is likely to persist, which makes it harder for smaller companies to enter the market unless they already belong to an established partnership of vendors. It also means that startups and big companies must focus on just a few verticals if they want to succeed.