How Industry 4.0 startups can crack selling to big businesses
It is common knowledge that the manufacturing industry is facing an existential crisis. Recent reports from Deloitte and Fictiv indicate that COVID-19 has only increased an already bleak narrative.
The pandemic accelerated a sense of unease and uncertainty in the industry brought about by factors including Brexit and the Trump presidency. Manufacturing thrives on certainty and predictable outcomes and, as much as I hate the phrase, these are unprecedented times.
So, surely this must mean that the industry is crying out for innovation, and would welcome innovative solutions created by “Industry 4.0” startups? Well. Perhaps not.
People we know in the industry believe that technology-driven change is either chronically under-invested, or it’s not happening at all. This gap, and the inertia surrounding it, will be unsurprising for those who know the manufacturing sector.
But, in my mind, it all makes sense. It’s easy to criticise these organisations for not moving quickly enough, but they are huge, and are usually old. Which means they have deeply entrenched ways of working, and massive legacy systems in place.
On top of that, from the startup’s perspective, there’s an issue of not knowing who’s in charge -- who in the organisation has the ability to diagnose or fix a problem.
As a result, both behavioral and technological change takes time.
How can startups speed up the sales cycle?
There’s one core strategy that startups can apply to speed up and activate sales cycles - truly understand, unearth and create “compelling events”.
They’re quite simple in concept, are sometimes hard to pin down and are often overlooked. Compelling events are empathetic scenarios that drive decision making. There are two key types: those that are out of your control and, compellingly, those that the startup can create or accelerate.
They are perhaps best to illustrate using a simple example: you sell buckets. As a bucket-salesperson, a compelling event that is in your control is a 48 hour sale, so customers have to buy a cheap bucket before time runs out. And a compelling event that is out of your control: unpredicted rainfall causes a flood, leading to record bucket sales.
The opportunity in these ‘unprecedented times’ is that we now have one thing that we can predict - unpredictability! So startups need to capitalise on it.
This is a fascinating and important moment in time for any business, as compelling events are easier to predict than usual. Due to Covid, Brexit, Trump and the general economic malaise, we know that we’re walking into a period of uncertainty and change.
Normally we don’t get these insights. We’re usually left watching lagging market indicators. But now, we know that we’re moving into a world of relocation, dislocation and disruption. As a result, the container of compelling events is narrower, deeper and more impactful. We understand how people behave in turbulent times.
All we need to do is overlay these learnings on the industries and clients we serve. Every industry will need a specific approach to create the journey from event to sale, but the essence is - predict the next problem the client is going to face using a “compelling event scenario”, and solve it. Preferably with an added kicker by having the next one in the oven, and even the next one.
The same theory still works in boring normal times
Compelling events are all around us, and occur even in placid waters. Businesses can react cleverly to them, and salespeople must be their guide.
For example, the financial year end is an-easy-to-predict event, which may mean that certain departments within big corporations need to spend money quickly, or they risk budget reductions in the year ahead.
Also, startups should track people's movements within target companies. When internal clients move around, they like to create change, so make some noise and be part of that change.
Monitor the industry more intelligently to see when a competitor of a target client has stolen a march by releasing a new product or feature. Look out for CXO birthdays, monitor social media for press announcements, and use Google Alerts and Trends for industry insights.
As a VC, I see unseized opportunities all the time
Why is this important? Because sales is existential!
Almost every company I meet that is building a solution for the manufacturing industry, is building incredibly smart technology. They are either AI geniuses, or they have reimagined the factory logistics process, and built a tool to make it smarter, quicker or cheaper. That’s great. But so many haven’t worked out how to turn that brilliant idea into revenue. Cold, hard cash. And without that, you’re dead.
I absolutely admire our startups and the tech gurus that develop the technologies, without them there would be nothing to get excited about. But, pretty much across the board, those that serve big business needs to get way better at sales. And understanding “compelling events” is a pretty compelling place to start.