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*This blog post is based on experience in scaling a B2B IoT business within a larger enterprise.
The age of the internet of things is well upon us and organizations are working on adopting and adapting business processes and infrastructure to a connected world. While awareness is high, the domain is still considered immature with product and technology standards still evolving. The space is expected to see rapid innovation over the next 4-6 years, with modern technologies emerging across the value chain, but companies cannot afford to wait on the sidelines. They will need to embark on a path fraught with risk and uncertainty, and innovate as they learn more and their vendors and partners learn more.
The advantages and risks of IoT technology are relatively well known. IoT is fundamentally real time analysis and deployment. Consider a smart machine on the manufacturing floor. Beyond remote control, we learn about how the machine is being used, when it is used, how it functions in various situations and this is valuable data to make a better machine. Any issues can be corrected real time. Services can be tailored. Data from the machine can be combined with data from the assembly line or other components/machines to optimize operations.
But driving availability and productivity up comes with its share of unknowns. Security risks through new access points and architectures are higher and new security approaches for simple IoT devices/systems will be needed. Real time, high volume data streaming and analysis is required across device/edge/network, with new data formats, algorithms and platforms needed for analytics. Privacy is an issue – who does the data really belong to? Devices will need management systems for availability, compliance, security, monitoring status/location, diagnostics, reporting etc. Communication network standards and topology are important for range, data rates, bandwidth, power, cost.
Considerations need to be given to device and operating system capabilities and platform capabilities (simple device management or device and data management or sophisticated application management and interoperability with other systems?). There isn’t a single vendor providing all the different capabilities required for an IoT ecosystem to flourish – there are device manufacturers, oem players, platform providers, security providers, network operators and system integrators in the mix.
Now consider the company wanting to design and deploy its IoT strategy. It will need to work with some combination of or all the players mentioned above. Company needs to consider the integration of new systems, standards, API with existing infrastructure. New business processes and applications are needed. Remote assets need to be connected. Integrations need time, budget, talent and senior leadership commitment. All this without any compromises to security, privacy or availability, so that there is no risk to existing revenue.
Enter the traditional B2B salesman that has been selling into the IT department and likely interacting with the Director and possibly the CIO/CISO for larger deployments. The best of them solve for customer outcomes and are a business partner to the customer. From understanding customer’s business strategy to communicating product benefits, the best salesman make magic.
Now multiply those skills and capabilities 2x. That’s what is needed to sell IoT. Relying on a traditional sales team and plan to sell IoT is the shortest road to disaster. Making inroads in IoT is going to usher in a new paradigm in selling capabilities, and companies that solve and plan for sales fit as much as they do product-market fit are the ones that are going to succeed.
Sales Talent: Getting right sales talent to scale an IoT business is difficult and will be expensive. IoT is evolving and technologically intensive. Ecosystems will emerge, battle and evolve. Customer business models will need to adapt to this evolution. Requirements and success factors will vary across industries – healthcare, manufacturing, automotive, infrastructure, retail etc. So, what skills should the sales person have?
Understanding the market and existing ecosystem is a must, which will require a certain degree of technical know-how. Business development skills to work and bring together an integrated solution (across so many players) for the client is a must. Vertical domain knowledge is required. On the soft skills side, sales will need to work with more than just IT and more than just the CIO of the customer. Building relationships across the product and business teams, and senior/C-suite is needed to drive adoption. Ability to charter the client into the unknown and navigate rapid advancements in technology requires a certain level of gumption. Sales needs to be able to drive larger ACV deals.
Wait, there’s more..he/she also needs to be really good at traditional sales. You can’t hire a technical business development guy and teach him to sell. It is perhaps easier to teach the vertically experienced sales guy, about business development.
Sales Process: The traditional sales process will not work for IoT. What was a linear 5 step process of prospecting, connecting, researching, presenting and closing with a customer is now going to turn into a jungle maze of complex relationships with more than the customer. Every ecosystem player (i.e oem, si, network operator etc.) is going to jostle to orchestrate the show. The customer is likely going to need them all, so ignoring a partner may be suicide.
Mapping the sales process starts with mapping the customer’s IoT strategy and mapping the end to end architecture. What changes (products/services) are needed to go from current to future state? What’s the role of each provider? How is the customer buying all the various products/services? How does your product fit/interact/integrate with each provider’s solution/service? Once this is clear, sales process needs to be mapped across the roster of providers. A POC may be required with one, platform testing with another. Internal folks from the product team, or channel sales etc. may need to be leveraged for specific steps. Map every step, in detail.
As the technology and ecosystem continue to morph, sales process will change. Vendors need to be proactive about managing to change and how handoffs/integrations occur across the value chain. As the technology matures, perhaps the customer and an integrated platform provider are only key relationships required, but that maturity is a few years out.
Sales Compensation: Industrial IoT deals will have a long sales cycle. Deals require technical integration and this will not happen without a POC. Getting to a deal across many influencers at the customer and partners/vendors will also push the sales cycle out (9-15 month cycles). So, what should compensation for the sales leader and sales rep look like?
One way to go is the standard 50/50/x% accelerator plan. 50% base, 50% bonus and an additional bonus as a % of every deal. No cap on upside. It is going to be expensive ie. High base/high overall OTE given scarcity of talent, but this is not the area to skimp. The idea of draws and paying on KSOs (key sales objectives) is tempting given longer sales cycles, but sales leaders need to take on the risk of the number and shouldn’t be given a cushion. It should be paid on a number the company is trying to hit. New SaaS companies pay x=25%, and the number goes down over time. IoT deals will likely require a higher % than this, with the number going down over time. This is for the sales leader.
The sales rep is also going to be more expensive than the regular B2B IT sales rep. A similar 50/50/y% accelerator plan works well here. You also want the sales rep to be committed for a longer cycle, hence a fixed bonus for hitting key measurable milestones may also be warranted. Keep the plan simple, the more complicated it is, the faster the rep will leave.
If you get the sales talent and sales process right, you don’t need a lot of hijinks to get sales compensation working.
Sales Resources/ Enablement: As mentioned earlier, IoT sales talent needs to have a mix of sales, technical and business development skills. On the technical side, enablement programs need to train sales (at an appropriate level) on the market, customer strategy/architecture and partner/vendor evolution. On the selling side, managerial coaching on selling competencies and selling behavior is still critical. In addition, emphasis is needed on building communication and leadership skills to guide/partner with the customer (all the way from C-suite to line leader) on a transformation journey.
Structuring and deploying a sales team is hard and essential to get right in any business, more so in the IoT space. Founders and business leaders spend enormous time, talent, money on getting product-market fit right, and then rely on same old B2B sales strategy to turn their venture into a winner. The challenges and rewards of this market call for a smarter sales approach.