- Growth in the new world is going to take different approaches than what worked (and was acceptable) in the past
- It will require a change of people-process-tools for success
- While process and tools are “easier” to change, the people aspect of this transformation is extraordinarily important – and hard
- This is even more important in light of the “Great Retirement” and the effects of losing centuries of accumulated person-years of extraordinary knowledge
- OEMs will serve themselves well if they focus on bringing/training/growing the right talent for the new tomorrow
Based on my conversations with Industrial OEMs of all sizes, serving a variety of end markets, companies are expecting an uptake in Aftermarket/post-sales customer demand in the next 12-24 months. The trend is mostly attributable to the post-pandemic demand surge exacerbated by a sense of urgency due to the Ukraine-Russia war & China’s continued lockdown resulting in a supply-side crunch. Additionally, while manufacturers are happy with this demand surge, they are also nervously eyeing the effects of “The Four Horsemen of the Industrial Apocalypse”: Inflation, supply chain disruptions, the Great Retirement, and rising interest rates”. This is going to create a perfect storm of demand destruction for capital equipment while worsening some of the other issues highlighted above. All while seeing increasing demand for parts, consumables, and maintenance services.
I can say one thing with certainty: business leaders of enterprises large and small spend significant amounts of resources, energy, and sleepless nights trying to figure out how to make growth happen predictably, repeatably as well as scalably by tapping into the rising demand. This is an arena that Entytle has focused on for the last few years, specifically helping Industrial OEMs capture revenue from their installed base. Solving the problem of predictable, repeatable, and scalable Installed base sales has been the mission that has driven us since our founding.
During this time, we’ve grown to appreciate that the old adage of “people, process, tools” is as important today as it was many years ago when someone wisely articulated it. More to the point, having all three legs of the stool work in harmony is a must for success.
And that’s where we have identified a major problem that may cripple the organic growth aspirations of Industrial leaders: commercial excellence, i.e. sales and marketing acumen, expertise, and desire. Specifically, we are noticing the alarming lack of this competency in the Aftermarket selling teams of most Industrial OEMs that we have met with in the past few years. Yes I know that is a bold statement, but facts don’t lie. And given the environment that we find ourselves in today and in the near future, this is going to be a real pain point for OEMs as they scratch and claw for organic growth.
“..A major problem that may cripple organic growth aspirations of Industrial leaders: commercial excellence, i.e. sales and marketing acumen, expertise and desire”
How exactly does this problem manifest itself? Quite simply we have observed that Aftermarket selling teams are either reluctant to or cannot, prospect or hunt for new sales opportunities. Some of it is understandable; the cost to prospect is so high, and operating margins are so tight, that for a long time, most companies have relied on a reactive sales model, especially for Aftermarket sales. The default is to create a group typically called “Inside sales” – but they are really order takers. They neither have the skills nor equally importantly, the will, to prospect and hunt.
To be clear, this is not their “fault”; they were simply hired for an order processing role, and are now being asked to do something completely different for which they aren’t qualified, trained, or have a good “personality fit”. They are really good at understanding what a customer wants, and how best to match their needs with the OEM’s offering (in that sense, they do “sell”). They have extraordinary competence in navigating the legacy systems and processes typical in most OEMs. But they have never been trained to sell.
“The default is to create a group typically called “Inside sales” – but they are really order takers. They neither have the skills or equally importantly, the will, to prospect and hunt.”
Requirements of Tomorrow’s Customers are Different
The requirements of tomorrow’s customers are different from the ones of yesteryear. The reactive approach that worked so far simply won’t cut it any longer. Customers are willing to give business but are expecting a dramatically different customer experience compared to pre-2019. Most importantly, the Industrial customer of today has weathered a huge storm, is battered and has zero patience for the ‘that’s how we have always done business’ treatment that Industrials have offered them for decades. So, waiting for the customer to call you in the new world is going to mean putting yourself on a path to decline and irrelevance.
The customer is expecting a modern buying experience, one that is simultaneously self-serve AND reliant on OEMs to educate the customer on technical and other aspects of the product and service. It also requires proactive outreach to the end-user, with the right context, the right information, and the right solution.
It is in this proactive approach that we see significant shortcomings in the inside sales teams of the OEMs. These shortcomings aren’t just “skill-will”, but even simple technology and process issues like not having a complete view of all interactions with the customer, not having a guided sales/recommendation process, and not knowing “who to call” at the target customer, etc.
OEMs can learn from the tech world in this regard; they are relentless users of a multitude of technology and processes to drive organic growth. Tech companies invest heavily in acquiring tools & solutions that deliver immediate results rather than deliberate over quarters & decide to build solutions themselves. The typical tech company also invests in user-onboarding, designing & defining the experience instead of throwing a tool at the end-users in the name of providing a digital-first touchpoint.
Contrast that with Industrials who are setting up an e-commerce portal and expecting the customer to buy from them without nurturing them through the buying journey, educating them on the pros/cons of your product, and having trained salespeople ready to intervene and assist. That is a recipe for failure. The typical Industrial customer expects that the portal would provide a catalog of available products and contextual recommendations for the equipment they operate while acting as a support portal. The customer also expects an escalation matrix that helps them reach an actual inside sales person for the more complex interactions. And therein lies the rub – the customer portals being rolled out today are simple catalogs or order capture systems with no intelligence built-in. The inside sales person on the phone is equally unequipped to deal with complex orders because they too lack complete visibility into installed base data. It’s not the portal that is to be blamed but the underlying unreliable customer data accumulated by Industrials over the decades – in tech parlance this would be garbage-in, garbage-out. If you feed the portal unreliable data, it will spew unreliable information to the customer resulting in poor adoption of the portal, or worse, upset unhappy customers.
Problems Faced by the Industries
Another acute problem facing the industry today is that the Installed Base Data has been traditionally locked in what we call ‘tribal knowledge’ – tenured veterans who’ve seen wave after wave of industry shifts and are on a first-name basis with their select group of customers. While this served Industrials well when 1-2% growth YoY was the norm, in the post-pandemic world with an increase in competition & shifting customer demands, tribal knowledge no longer cuts it. Making matters worse – droves of senior employees are retiring and resigning. They are leaving and taking the intimate knowledge of their top customers with them. Industrials are struggling to fill in the gap and it’s a task of a tall order – how does one even replace an employee who probably had 3 decades or more of customer knowledge with a new hire who is just getting started in the industry. Sure, an Industrial can try and poach employees from competition but that is not easy, efficient, or necessarily cheap.
These are just current examples of how Industrials are rolling out digital-first tools for their customers without a thought to how people, process, and technology needs to be weaved together. It feels as if Industrials are fixing a larger problem in a patchwork fashion with no regard to the bigger picture. Strange that companies that manufacture complicated machinery consisting of hundreds of smaller components to serve one singular purpose should disregard a problem of this magnitude or consider it as something that can be fixed with quick fixes.
Let me tell you that these are weird times for Industrials. There is customer demand, supply crunch, customer-experience shift, and employee exits. Never before has a combination of these been experienced by machinery manufacturers before.
That brings me to what an Industrial should do to survive and thrive in these times. Here are my no-fluff guidelines:
- Invest in tools that deliver immediate value. This is key to whatever you are rolling out this year and the next. And by immediate, I mean 4-6 month payback periods with high ROI.
- Provide 360 visibility to your inside-sales teams so they know the installed base at the tip of their fingers. The tool that does this is called an Installed Base Platform – Entytle provides an Installed Base Platform used by leading OEMs that does exactly that.
- Buy where you can, rather than build. You don’t build your own CRM, your own ERP, your own Word/Excel application. Why would you build a Customer Data Platform or an Installed Base Platform? Build projects are a glorious waste of precious resources – both on the business and IT side, and last years with no tangible benefits. I have seen enough of these to make this rather bold statement and I will stand by it.
- Learn from technology companies that are quick to adopt new tech but also invest heavily in onboarding their customers. Your customers are no longer the ‘old world’ kind. They are provided recommendations on Netflix and Youtube and Facebook and expect exactly that from their OEM. Ensure that you are always providing contextual recommendations based on the asset your customer operates rather than a bland PDF catalog running hundreds of pages. Those days are gone. Period.
- Provide the right data, the right training, and the right framework for your new hires to be able to replace the rapidly retiring population. This means investing in tools that help your inside sales teams get the answers in seconds (not hours or days), providing them with tools that help them revert to your customer instantly, and most importantly, engage with your customers with confidence.
We are in a new era of the industrial revolution. It’s no longer just the machinery that sells – it’s the service, after-service, aftermarket, customer experience, customer engagement, and so many more that will decide which Industrials will be hailed by their customers & will survive this post-pandemic world. As markets open up and orders shoot up, having the right set of tools, people and processes will make or break the machinery manufacturer.