The industrial IoT space is quickly becoming the next great land rush. There will be winners and losers. Who will be the most resourceful and agile pioneers to stake their claims?
Creating Value Through Partners
Creating powerful IoT solution requires some serious integration between machines, sensors, networks, mobile apps, cloud-based software, routers, IoT platforms, and more. This means lots of solution architecting, code engineering, system integrating, data extracting and testing. Today, there is no single player that can provide an end to end solution that delivers the full value potential of the “Industrial Internet”. Vendors pushing the boundaries of IoT recognize the need to establish strong partnerships with multiple technology partners to bring their vision to life.
The role of the pricing nerd is to develop a solid understanding of the value that each partner brings to the table. Then piece together product offerings utilizing a range of solutions that provide varying levels of value. The goal is to align your offering capabilities with customer value, budget and willingness to pay.
Delivering Value Through Co-creation
Another critical success factor for IoT pioneers is their ability to establish strong collaboration with customers. Technology is changing fast and both suppliers and customers must work together to uncover value and bring successful solutions to market. Customers clearly are looking for solutions to their challenges and look to strong suppliers that can meet their needs. In fact, for most customers, the speed of technology adoption is largely dependent on the level of trust they have in their strategic suppliers. This trust is created by having a common vision of the benefits and value that technology will deliver to their business. Increasingly, customers are open to sharing their specific needs or goals for the business and expect vendors to provide whatever technology is necessary to accomplish it.
The role of the pricing nerd is to quantify the value of achieving improved customer outcomes. In the new wave of IoT technology, vendors must be able to prove their value through pilots and result-driven case studies. In the other hand, customers must have the confidence that you can deliver on your value promise. Capturing value numbers on paper and having constructive conversations on value assumptions, dollars and outcomes with your customers is in a word, priceless.
Capturing Value Through Price
Coordinating between partners and customer and managing the complexity of implementing breakthrough technology is never easy. With so many moving pieces it is hard to strategically think about how to capture a fair portion of the massive value that IoT technology can deliver.
The role of the pricing nerd is to set and manage prices that result in a win, win, win for partners, suppliers and customers. Nothing more and nothing less.
The Challenges Ahead
The IoT transformation requires new ways of thinking about pricing models that seamlessly align with customer value. In some cases, it could mean charging a monthly subscription fee per output produced, or per cost avoided. Tying your pricing to customer outcomes is critical but also adds complexity. It is the role of suppliers and partners to simplify the buying process for customers. I ran into an interesting statistic from a major research organization that claimed there is a “62% greater chance of closing the deal when the purchase process is easy.” Vendors make the buying process easier for customers when there is clear communication upfront on value, ability to execute, a clear implementation plan and the investment (price) to turn vision into reality. Managing customer communications require finesse and confidence. In the world of IoT, the pricing nerd is not simply the person who slaps a price tag to cover costs, the pricing nerd is the choreographer of value. Who is your pricing nerd?