What’s the IoT opportunity for B2B?
The economics of IoT are increasingly compelling and the B2B space will benefit first. Bain and Company predicts that B2B Applications will be worth more than twice the consumer market in 2020. Many manufacturers and B2B organisations are adapting their business models to take advantage of the IoT opportunity.
Put simply, the Internet of Things is a network of connected devices that collect and exchange data. With an ever-growing number of these devices capturing vast amounts of data, IoT products are opening up new opportunities for B2B organisations to grow beyond their traditional markets, drive innovation, and open new revenue streams.
Some of the most compelling advantages are:
- Stronger Customer Relationships – Because products unlock data, product manufacturers now have access to more information about the end user than their intermediary or retail ‘middlemen’. For the first time in history, IoT data empowers these businesses to optimise the customer experience by using real-time insight about their behaviours.
- Predictive Maintenance – Thanks to sensors collecting data in IoT products, product manufacturers can pre-empt issues and predict when equipment is in need of repair. According to analysts, this could reduce maintenance costs by as much as 40% and halve unplanned downtime.
- Optimised Products – By replacing assumptions with real-time data about how products are used by customers, IoT can drastically improve how products are designed, produced, marketed, and serviced.
- Supply Chain Efficiencies – With more Internet-connected equipment and vehicles, there will be more visibility across the entire supply chain providing genuine end-to-end shipment tracking.
- Inventory Efficiencies – Managing inventory levels and being able to replenish stocks efficiently is a constant challenge for manufacturers. But as IoT products automatically reorder parts as and when they’re needed, there’s a reduced need to hold large amounts of inventory.
New B2B business models
So how are B2B business models changing to take advantage of these opportunities and unlock new revenue streams?
B2B moves towards B2C
B2B brands are using the quality (and quantity) of data captured by IoT product sensors to identify where it would make more sense for a customer to shop from them directly. This provides potential new revenue streams, drive higher margins, and allowing B2B companies to own the customer experience.
IoT offers more and more recurring revenue models
IoT offers the opportunity to transform potential one-time buyers into long-term, repeat customers through recurring business models. Manufacturers will use IoT sensor data collection to launch pay-as-you-go and subscription-based services that create more sustainable revenue streams.
Grip on customer experience
Achieving better (digital) experiences for customers requires B2B organisations to solve the complexity of the sales, delivery and customer experience ecosystem, and these new B2B business models will only survive if they provide clear customer value, whether that’s convenience, or simplifying the B2B purchase process. IoT devices provide an opportunity for manufacturers to expand into services and unlock new revenue streams, creating a more predictable revenue stream along the way.
Data analytics and machine learning
Data analytics and machine learning provides a means for B2B organisations to transform IoT sensor data into actionable insight. As organisations look to automate processes such as sales and customer support, having access to the correct insights will be key to taking relevant data and using that to perform a host of actions, from automatically generating a quote that best fits with an individual buyer’s expectations, to identifying which product images are most likely to result in a sale.
Companies are already seeing great value in using data analytics and machine learning to help corporate buyers seamlessly procure what they need. And some companies are launching dedicated AI centres and IoT platforms on which to run IoT services and apps.
Data analytics and machine learning will help manage and automate elements of the buying process, as well as providing invaluable insight to sales teams through assessing buyer habits over time and predicting order preferences and quantities. Customer journey mining , for example, can register a customer’s pain points and recommend a solution based on insights gleaned from machine-learning in a cost-effective way that frees up staff time.
Of course, data analytics and machine learning comes with its own challenges. B2B organisations will need to develop or purchase analytical software and algorithms that can extract actionable insight from the vast amount of data IoT will generate. But once implemented and correctly programmed, the opportunities provided by machine learning are almost limitless.
B2B needs a robust omnichannel approach
IoT provides B2B organisations the opportunity to get closer to customers than ever before, but becoming a genuinely customer-centric organisation will require businesses to establish the right structures, processes, and practices to support innovation and digital experimentation.
When it comes to technology, now, more than ever, B2B organisations need a robust omnichannel approach that enables them to sell directly to customers, incorporating into that omnichannel strategy not only all available customer information but also all data information from IoT sensors in physical products.