How IoT Is Changing B2B Business Models
B2C gets most of the attention when it comes to the Internet of Things (IoT). But with B2B applications set to account for nearly 70% of the value IoT unlocks, manufacturers and B2B organizations are adapting their models to take advantage of the IoT business benefits. Let’s take a look at the state of IoT in the B2B landscape.
In this IoT B2B guide:
- What is the Internet of Things (IoT)?
- What’s the IoT opportunity in B2B?
- IoT B2B opportunities
- Frequently asked questions
What is the Internet of Things (IoT)?
The Internet of Things (IoT) refers to the interconnected network of “things” that exchange data with one another via the internet. In an everyday sense, you might have encountered these with “smart” objects that you have in your house – like controlling your smart thermostat via your smart speaker.
This interconnected network of internet-enabled objects are able to share data and work in unison, solving issues and enhancing the efficiency of the systems around them.
What’s the IoT opportunity for B2B?
With an ever-growing number of these IoT devices capturing vast amounts of data, IoT products are creating new opportunities for B2B organizations to grow beyond their traditional markets, drive innovation, and open new revenue streams.
Advantages of IoT for B2B brands.
IoT business benefits hold a lot of promise and businesses that seize the IoT opportunity can look forward to some compelling advantages:
- Stronger customer relationships. Thanks to the data that IoT products unlock, product manufacturers for the first time have more information about the end user than their intermediary or retail ‘middlemen’. IoT data empowers these businesses to optimize the customer experience by using real-time insight about their behaviors.
- Predictive maintenance. Thanks to sensors collecting data in IoT products, product manufacturers can pre-empt issues and predict when equipment is wearing or needs repairing.
- Optimized products. By replacing assumptions with real-time data about how products are used by customers, IoT can ultimately improves 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 an eternal challenge for manufacturers. But as IoT products automatically reorder consumables and parts as and when they’re needed, there’s a reduced need to hold large amounts of inventory.
- Improved safety. IoT removes the chance of human error. With internal efficiencies and procedures operated by smart technology, it’s less likely that mistakes will be made in ordering processes and stock management.
Disadvantages of IoT for B2B brands.
However, there are some potential disadvantages to be aware of:
- Network and power dependent. Of course, you’ll need a permanent network connection with enough upload/download speed to hand multiple connections, which can be expensive. You’ll also need to factor in the costs of powering all your smart equipment.
- Security flaws. As with any internet-enabled device, you open yourself up to hackers and potential data leaks. Though many smart devices include built-in security as standard, they are not always the most robust of defenses.
5 IoT business opportunities.
So how are B2B business models changing to take advantage of these opportunities and unlock new revenue streams?
Read on to find out more IoT business benefits.
We’re already seeing a host of brand manufacturers jump on the direct-to-consumer (D2C) opportunity. Where a brand can provide a compelling reason for a customer to shop from them directly, there’s clearly an opportunity to unlock new revenue streams, drive higher margins, and own the customer experience.
As we’ve seen with high-profile D2C failures, customers might not initially seek out products on dedicated websites unless they have a very strong incentive. But thanks to the quality (and quantity) of data captured by IoT product sensors, industrial goods and product manufacturers can use real-time insight to offer a compelling reason for customers to engage with them directly in exchange for value-added services.
Further, product manufacturers are recognizing the need to deliver value over and above their physical products, and they are using sensors, software, and services to grow the value of their products. IoT data can also be marketed to other businesses opening new B2B channels.
Expect to see a further blurring of lines between B2C and B2B business models, and B2B and B2C companies competing for new (and sometimes the same) markets.
Recurring revenue models.
IoT offers the opportunity to transform potential one-time buyers into long-term, repeat customers through recurring business models.
As we reach a point where almost anything can be sold as a service, manufacturers will use IoT sensor data collection to launch pay-as-you-go and subscription-based services that create more sustainable revenue streams. We may even see IoT product manufacturers charge for the service and volume of data processed – rather than for the hardware itself.
Achieving better digital experiences for customers requires business to business organizations to solve the complexity of the sales ecosystem. These B2B subscriptions will only survive if they provide clear customer value – whether that’s convenience or simplifying the B2B purchase process.
Thankfully, B2B subscription models aren’t a massive step away from regular B2B buying (in which customers tend to buy regularly, in bulk, from the same branded manufacturers).
From printers that order ink when levels are low, to servers that can proactively maintain themselves, IoT devices provide an opportunity for manufacturers to expand into services and unlock new revenue streams.
Machine learning provides a means for B2B organizations to transform IoT sensor data into actionable insight.
As organizations look to automate processes such as sales and customer support, machine-learning insights will be key to taking relevant data and using that to perform a host of actions. These could include automatically generating a quote that best fits with an individual buyer’s expectations – or identifying which product images are most likely to result in a sale.
Companies are already seeing IoT business benefits in using machine learning – in combination with personalization APIs – to help corporate buyers seamlessly procure what they need. And some companies are launching dedicated AI centers and IoT platforms on which to run IoT services and apps.
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.
A chatbot, 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 resource.
Of course, machine learning comes with its own challenges. Business-to-business organizations 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.
Overcoming IoT challenges.
IoT provides the opportunity to get closer to customers than ever before, but becoming a genuinely customer-centric organization will require businesses to establish the right structures, processes, and practices to support innovation and digital experimentation.
When it comes to technology, B2B organizations need a robust ecommerce presence that enables them to sell directly to customers and gain insights from the data captured in IoT channels.
Our award-winning work is helping B2B and B2C organizations to achieve their goals faster, accelerate growth, and drive innovation.
Data-driven decision making.
Smart devices collect data. Lots of it.
Whether that be customer shopping habits or ambient warehouse temperature, or anything else the item is set up for. A savvy business owner can utilize this information to make data-driven decisions for the benefit of the business. You could use customer shopping insights to promote a richer variance in your most popular product lines. Or you could use data on ambient warehouse temperature to ensure optimum conditions for stock longevity in your storage facility.
Understanding this consumer behavior is key to making consumer-conscious choices and ensuring that your customer has the best experience with your service.
Data such as this is a valuable asset and when levered correctly and appropriately can kickstart positive changes across all vertically integrated levels of your operation.
IoT and B2B – frequently asked questions.
What are the four types of Internet of Things networks?
The four types of IoT are:
- Cellular Network
- Local and Personal Area Network (LAN/PAN)
- Low Power Wide Area Networks (LPWAN)
- Mesh Network
Who invented the IoT?
The term ‘IoT’ is typically associated with innovator and entrepreneur Kevin Ashton. While Ashton is widely credited with coining the term “internet of things”, he reportedly preferred the term “internet for things” to describe products which were connected to the web.
What are some examples of the IoT?
The IoT includes all internet-enabled, smart devices, such as:
- Smart speakers
- Smart home security system
- Autonomous city management system
- Autonomous farming and industry equipment