The 2021 Manufacturing Sales Trends
The year 2020 has been a pivotal year for manufacturers. We have seen important shifts in manufacturing that have impacted many of our customers’ strategies for 2021 and beyond. We’ve curated these insights from our customers and analysts, compiling the key trends expected from manufacturers in 2021. But first, let’s look at the year in review.
2020 a year like no other
2020 was a tough year for everyone, manufacturers included. The COVID-19 pandemic has tested the digital-readiness of the industry as it was forced to shift to digital-first sales operations. As a result, there was an acceleration in digital transformation across the industry.
The manufacturers that will thrive in 2021 are those that actively seek innovation and are willing to abandon old ways of doing things. This is what many experts refer to as “embracing the new normal.”
Sales teams were one of the hardest hit by the pandemic amid travel bans with all on-site demos, negotiations, and crucial face-to-face meetings indefinitely ‘postponed’. Combined with economic uncertainly, sales teams were forced to interact in new, often uncomfortable ways as they transitioned to digital interactions. These challenges have shifted how and when we work, making it important to adapt to the current situation while also embracing the future with new ways to interact. Now as comfort with digital interactions grows, many of our customers have shared how they plan to embrace the new normal and take a digital-first approach to sell.
Buyer Enablement is the key driver in manufacturing
Traditionally the buying experience for manufacturing products is high-touch, very complicated, and often disjointed. Partner that with recent economic uncertainty, social distancing practices, and unease about travel– there’s a new sense of urgency to enable digital selling channels.
New research from Gartner indicates an acceleration of B2B sales in digital channels. By 2025, the expectation is that 80% of interactions between suppliers and buyers will occur in digital channels. Partner that with current economic uncertainty, it’s clear there is a race to reinvent the buying experience across all B2B sales, specifically industrial manufacturing.
With fewer deals to go around and a more competitive landscape, you have to find new ways to differentiate yourself and provide a superior B2B buying experience that copes with the constraints of the times and that better suits the needs of the customer.
The leaders in your industries, and many of our customers, are already using or are well on their way to implementing disruptive technologies such as Configure, Price, Quote (CPQ), visualization, and even eCommerce, to meet customer expectations with a focus on buyer enablement.
This trend is nothing new. Manufacturers have been slowly moving towards an online buying experience over the past years. However, the pace has now accelerated as B2B sales migrate online and critical buying decisions are made by teams working remotely. We are certainly not the only ones seeing this trend towards online buyer enablement. In late 2020, Accenture published a report on the state of the B2B digital economy for manufacturers.
According to Accenture’s research, the new normal has 74% of industrial buyers are researching at least half their purchases online. The trend from offline to online is bound the accelerate in the coming years. By 2025, the same study reports 20% of all customizable industrial purchases will take place online. This makes a shift to an online buyer-driven experience more important to the long-term success of your organization.
Disrupting the traditional buying experience is the first step to success. So now, let’s take a look at the top trends we have gathered from our top customers and prospects.
1.) Building Self-service buying experience for highly configurable products
With buyer enablement comes an increased focus on customer self-service. This has created a shift that enables customers to purchase manufacturing equipment using self-service without interacting with a sales team. While buyers are already accustomed to starting their process online and completing it with the help of a salesperson, they are expecting to do more and more on their own. The self-service experience is extending beyond the research phase and into the configuration, quoting, pricing, negotiating, and ultimately purchasing of your products—all online.
Self-service empowers manufacturers to offer an experience that goes beyond traditional selling methods. Enabling self-service throughout the product lifecycle, from the first interaction to re-order, can help your company become more efficient and profitable. This is done by utilizing the wealth of unique product data from CPQ to make recommendations using Guided Selling. For example, you can cater to returning customers by offering specific product features to them, based on their past purchases or data gathered from past product configurations. Using analytics can take you one step further by showing which product features or add–ons are more likely to sell and which aren’t selling as quickly. These unique insights can drive your product development, inventory decisions, and protect your margins.
Enabling self-service makes it easy for customers to engage remotely from their home office, the warehouse, or in the field for an expedited process. A great self-service experience for your customers will go beyond simply describing your product and features and into an experience that leads to them completing orders and making deals that are larger and with higher margins.
Want bonus content? Check out our eBook on the top manufacturing trends!
2.) Real-time 3D Visualization for configured products
Everyone knows B2B customers have been starting their buying journey online for years. Buyers were limited by the product descriptions provided by the manufacturer, often listing the variable options and configurations possible, but without being able to explain if the product could be configured to their exact needs.
This year has forced interactions between you and your customer to move online and this has made buyers expect more from their digital experience. Text and images are not enough to engage buyers when they engage digitally. This has put a lot of pressure on vendors to create digital-first disruptive experiences. This is where real-time 3D Visualization steps in and offers both an engaging and disruptive experience—all online. It’s clear no one will buy products sight unseen and that becomes increasingly evident as digital engagements normalize.
Visualization is the key to building a self-service, digital-first experience on your website. CPQ paired with Visualization empowers anyone to configure highly customized products and see every change they make on their screen in real-time. This allows your customers to see the exact product as they configure and make changes to it. Additionally, features like Augmented Reality (AR) allow your customer to place a 3D image in a room and walk around it as if it was standing in front of them. Our customers are investing in delivering a best-in-class experience that ensures their customers get a personalized showroom-experience wherever they are working from.
Manufacturers, especially those offering configurable industrial equipment, understand the challenges of visual configuration. Until just a few years ago, visual configuration, that is the ability to render real-time phot-realistic 3D images of a configured product, was deemed technically impossible. Prior to CPQ, product configuration was an error-prone process that was slow and costly. CPQ not only enables the configuration to be done in a matter of seconds, it also enables visualization to be done instantly with the assurance that errors eradicated, and prices are accurate. If implemented, you can put the power in the hands of your customers through your website.
The benefits of Visualization do not end at customer experience. In fact, product visualization reduces reworks, increase deal margins, and accelerates the sales cycle. Leaders across all industries understand this and are making moves to put visualization into their 2021 strategy.
3.) Support the complete customer buying journey with eCommerce
Buying (and selling) goods online have become commonplace in B2C industries such as retail, services, and hospitality. eCommerce has normalized the online experience for the consumer and those same expectations are transferred when the individual consumer goes to work as a B2B buyer. For Manufacturing, however, the implementation of eCommerce has been slow and, until recently, technically impossible.
Manufacturers’ sluggish adoption of eCommerce can be attributed to two primary factors. The first has to do with the technical difficulties in preparing a technically-sound, error-free, configured product quote. The task of configuring the product would require an entire team of sales engineers, working days, or even weeks to configure the product just right. Pricing the product was another hurdle for the sales teams to overcome. Before CPQ these tasks would be done manually (using numerous fragile and complex excel sheets).
The second reason why manufacturers were slow at adopting eCommerce, was due to the size and complexity of the deals themselves. B2B manufacturers would rely on numerous face-to-face meetings, demonstrations, explanations from the salesperson in order to ensure the buyer that the product met spec and to demonstrate the value of the product before a final purchase decision was made.
Today, CPQ has changed much of the way industrial equipment is bought and sold. With CPQ, salespeople can configure a product as they meet with the customer, and have the complete quote emailed to the customer before the end of the meeting. When CPQ powers your eCommerce platform, the customer can be assured at every step, that the options chosen are compatible with each other, and that the product parts are in stock. The buyers can also compare and contrast various alternatives and ensure that they are making the right decision.
Providing fast accurate products will help customers get what they need when they need it, throughout the product lifecycle—all through your website.
4.) Selling subscription services for Predicable Revenue
Predictable revenue during times of economic uncertainty is the envy of all businesses. For the manufacturing industry, this could easily be reimagining the way you commercialize your products and building new business models. Our customers are thinking about servitization as a new financial model to enhance the way their customers experience their products. Servitization refers to the phenomenon of offering the products and equipment as a service, where the customer pays a fee for the use of the product, reaping the value of the use of the product. Airline jet engines is one of the most well-known use cases of servitization, where Rolls Royce or GE provides the power unit, maintenance, and upkeep of the engines, while the aircraft owner pays a fee for the usage.
By incorporating a service model, manufacturers can provide more value to their customers while also building a predictable revenue stream. Additionally, customers can avoid big investments and unpredictable operational or maintenance costs by simply paying for usage.
There are numerous ways to implement servitization. Two of the most common models follow the equipment-as-a-service model. This resembles more of a rental model where the equipment is maintained and serviced by the manufacturer. The other model is more closely linked to the actual output or value the equipment provides. Here, the manufacturer charges the customer based on the usage it delivers. Using the jet engine model explained earlier, the engine manufacturer would charge the owner of the airplane per mile flown. In the simplest instances, some are looking to utilize subscription management for aftersales service agreements.
The benefits for both manufacturers and your customers are clear. As a manufacturer, you get to work closely with your customers, building relationships, while building predictable subscription revenue. The manufacturer provides a valuable service to the customer including maintenance and deploys field service that ensures the equipment continues performing at its best. All of this improves customer experience, builds brand loyalty, and bundles all service costs into a monthly fee. With subscription service contracts, your customers aren’t buying equipment, they are acquiring value.
Shifting or adding revenue models may seem daunting, but leaders in your industry are already seeking to build predictable revenue models that improve the experience of their customers. When implemented as part of a digital transformation strategy, you ensure your customers have a digital portal to manage their services and continue meaningful interactions.
5.) Connect systems and processes with CPQ for data-driven decisions
All these trends are insightful ways that manufacturers are re-designing the sales process to be buyer-driven. These four trends rely on the ability for manufacturers to solve one of the most crucial challenges, the ability to manage product variance using data transportability. Managing product variance is about going beyond the configuration of the product components and into interlinking the organization around a single source of truth for product data.
By connecting all business functions, you give everyone in the organization one source of data to work from, ensuring cohesion among the various parts of the organization. This means sales, marketing, and customers are configuring products that engineering can design, and engineering is designing a product the factory can build. The ability to cope with the complexities of all product data, pricing information to inventory, and production schedule can only be effectively managed by a central ecosystem with CPQ at its core.
The benefits of a connected ecosystem don’t just end at data integrity or data transferability. In a post-Covid-19 study, Gartner claims that 60% of B2B sales decisions will be data-driven by merging sales processes and applications. In order for you to achieve this, data silos need to be dismantled. In doing this, commercial teams will be supported by systems that make product recommendations, suggest common configurations, prove services, and provides after-sales service quotes.
The right CPQ software connects your CRM, ERP, CAD, PLM, PIM, pricing tools, eCommerce, and all other front, middle, and back-office software platforms. CPQ can collect and process data across departments, ensuring accuracy and consistency across all customer-centric and product-centric processes.
Managing product variance and integrating data can also extend beyond your organization and empowering all sales channels, whether it be partners, dealers, online, or through self-service. Top manufacturers see the importance of empowering the buyer and using CPQ as the engine to drive that experience.
There’s no turning back now
2020 has reminded us of the importance of valuing resilience over efficiency. The organizations that best dealt with last year’s challenges were not the fastest, smoothest, or productive. Rather they were the organization that best adapted to the new reality while still delivering value to their customers.
We have seen how many global manufacturers were able to use the current economic situation to accelerate their digital transformation. Their aim was to best serve their customers and not lose out to competitors. Digital technologies, like CPQ, have eliminated the complexities that prevented B2B manufacturers from creating a truly digital-first, customer-centric buying, and selling experience.
The many conversations and interviews we’ve conducted with manufacturing leaders all concluded that there is no going back to the way things were. The leaders in your industries across the world are all-embracing digitalization to reinvent the way they serve their customers. In order to successfully do that, they will continue to take a digital-first approach that removes technical barriers and empowers the customers.
At the beginning of 2020, before the pandemic, we advised that manufacturers needed to digitalize or risk becoming obsolete. Today, in 2021, it is even more dramatic: “Manufacturers need to digitalize or die”.
Ready to take your next step? Schedule your personalized demo today!
Contributors:
Nick Thompson, VP of Product Marketing, Tacton
Michael Brassea, Sr. Content Product Specialist, Tacton
Mateo Bornico, CPQ Content Specialist, Tacton