Tl;dr - Is Web3 on your radar yet? It should be. Eventually, it will impact your business in some radical ways. But even today, right now, Web3 elements including smart contracts and micropayments can help improve industrial sales. You can use them to incent sales activities and to foster improved data quality and CRM engagement.
Understanding the Broad Context of Industrial™ Web3
Marc Andreeson (of Netscape and A16Z fame) is going all-in on Web3. He's not alone. Many predict that it will be as significant as the original internet; that this will perhaps be the real 4th Industrial Revolution.
Certainly, there's a great deal of hyperbole and many unjustifiable predictions. At the same time, there's lots of exciting potential that industrial manufacturers should proactively work to understand and incorporate into corporate strategy and even product roadmap planning.
But it's not just about some indefinite future. There are already some important "Here Today" implications that industrial manufacturing CEOs should consider.
A case in point is the use of smart contracts, micro-rewards, and gamification to drive sales activities and improve CRM data.
You'll find some introductory context immediately below. If that's unnecessary, then skip directly ahead to the discussion of applications for industrial companies, and more specifically, growing industrial sales.
What Does it All Mean? Web3? Smart Contracts?
Some quick context.
Gavin Wood is credited with coining the term (pun intended - he's one of the creators of the Ethereum blockchain) Web31. It refers generally to a "decentralized" internet that no longer relies on large, controlling platforms.
A combination of growing bandwidth and new technologies is supporting Web3 that builds on Web1 (the original internet as you knew it - navigate to pages to read) and Web2 (the read/write internet of cloud apps and social media in which you participate.)
The buzz around the Metaverse is introducing many to the immersive, integrated concepts of Web3. Selling "digital sneakers," payment for playing video games, and investing in "virtual real-estate" are examples2 of how the decentralized digital infrastructure of Web3 is enabling the growth of the Metaverse.
Behind many of these transactions are smart contracts which are built on a blockchain and often settled in cryptocurrency. These are three very distinct things that are often conflated but should be understood independently.
Smart Contracts are agreements that will execute on their own. Parties agree to predefined rules which are then coded onto the blockchain (publically observable) to govern the transaction. When something is done as agreed, then in consideration, something else is done as agreed. This could be a payment, for instance. A gamer might be confident that they'd be paid small amounts, automatically, for achieving levels in a video game. Similarly, a machine manufacturer could be confident that they would receive a small payment automatically for every cycle of a production machine provided to a customer on a Product as a Service Smart Contract.
Blockchain, a digitally distributed and decentralized public ledger, is the engine behind smart contracts. In other words, it is a public record of agreements and transactions that is simultaneously updated in multiple public locations around the web. The facts that it is public, and maintained simultaneously in multiple locations, provide confidence that it is accurate. It provides similar mutual protections for both parties as traditional escrow arrangements, with the additional benefit of substituting public observation for the intermediary with its attendant cost, time, and problematic judgment.
Smart contracts offer another benefit - scale. Because they are coded, they can run essentially unlimited transactions at a very small cost. Escrow arrangements are expensive and time-consuming, but smart contracts can be set up to automatically observe and tally even single keystrokes for instance - with an agreement executed based on each one. That introduces the possibility of administering and paying micro-rewards, or tiny payments commensurate with small activities in a way that simply wasn't possible previously.
Cryptocurrency - a category that includes Bitcoin, Ethereum coin, and thousands of others - is a digital "currency" that is publicly created (minted) and transacted on a blockchain. Whether it is indeed a currency (medium of transaction and store of value) is an interesting philosophical question but not germane here. The point is that it is an increasingly accepted means of payment, easily incorporated into smart contracts to facilitate Web3 transactions.
How Does all this Apply to Industrial Manufacturers?
The honest answer is that we can't fully begin to appreciate the implications and range of applications of Industrial Web3.
Perhaps in five years you'll have two separate sales teams - one to sell physical machines made from bent steel (although probably sold as Product-Service Systems vs. traditional capital equipment transactions,) and another to sell virtual machines into virtual factories in the Metaverse.
I know it may sound absurd, and feel like an unwelcome prospect, but people are already spending millions of real dollars to buy virtual property to build virtual establishments.
And perhaps in a couple of years virtual and augmented reality to assist with machine training, troubleshooting and repair will be ubiquitous and easier to support.
But here's the point of this article.
Right now. Today. Industrial Web3 has the potential to improve your industrial sales.
Web3 for Sales: Drive the Right Sales Behaviors
There are two immediate opportunities to apply industrial Web3 capabilities to improve industrial sales today.
- Incent the right behaviors and activities
- Improve data
Let's look at each in more detail.
1. Using Smart Contracts to Drive Important Sales Behaviors
Most industrial companies have some sales process. That process defines the steps that are required to take a project from initial creation/identification through closing. And then hopefully beyond closing to maximize the lifetime value of future purchases in addition to aftermarket sales!
These sales processes can often be improved (technology companies offer us some opportunities to adapt their evolving best practices) but even in a basic state they provide a framework to translate the process steps into activity plans. You've probably calculated something like:
- $5MM annual goal, with an average deal size of $500K, means 10 closed deals
- 30% close rate means you need 33 qualified opportunities
- If you create 1 opportunity on average from 5 meetings, then you need 167 meetings
- You know that it takes 7 calls to get a meeting, so you need 1,167 calls
- And if it takes your team roughly 20 prospecting touches to connect for a call, that means each rep needs to be doing 23,000 prospecting activities each year
Of course, you'll use sales training to improve the conversion rates at each step. You'll use candidate assessments to hire qualified salespeople to optimize your sales process. And you'll integrate marketing and sales to create buying experiences to improve results.
The basic math is straightforward.
Tracking these 23,000 activities is not. Not for one rep, and definitely not for your sales team.
Further, while you can stipulate these as expectations or even conditions of employment, we know the frustration that arises because not everyone on your team will follow through on them.
Smart contracts and micropayments can help here. And the technology exists currently for immediate, proven implementation. Here's how it would work.
Using APIs to connect to your CRM, smart contracts can track the execution of omnichannel outbound sales activities as small and frequent as prospecting calls, emails, and social touches.
With a simple reallocation of some portion of compensation - perhaps some from base pay to recognize the performance expectation, and some from commission to emphasize the linear relationship between these activities and revenue results - you fund micropayments for each activity. And in the process of administering the smart contracts, you also gather substantially more granular data on how each of your folks executes against expectations.
The bottom line is that incentivizing the right behaviors is more effective than haranguing your team to perform them. There's ample psychology research to substantiate this - and you've heard it for years anyway. The carrot vs. the stick. This is increasingly important as rising generations bring different mindsets and expectations to work.
This hasn't been done before though, because we had no feasible way to accurately measure and administer at scale.
Now with smart contracts, we do.
This also makes it easy for you to clarify performance expectations and priorities for your sales team - often with greater clarity than traditional review and coaching approaches. Your team will appreciate that as much as the financial incentives!
2. Improve Your CRM and Marketing Data
As buyer behaviors, expectations and journeys evolve digitally, your system of record that supports your engagement with buyers has to evolve too.
Where CRMs were originally simple contact management tools, increasingly they're integrated with marketing automation, website experience, and communications platforms (chat, email, sales video, etc.) That's one of the reasons it's so important to consider the system origin and design even in early CRM implementations. Too often single brands sell Frankensystems of acquired software that aren't really built on a common database and technology core and struggle to deliver on promises.
No matter what technology you use, though, buyer experiences and your team's effectiveness rely on accurate, comprehensive data. Even simple issues like bounced email addresses can have a big impact. They can signify the departure of a key buyer contact with implications to pending deals at their last company, and opportunities at the company they move to. But the bounce has to be noted, some research done, and updates made. If that doesn't happen, the value of the data asset deteriorates - at an estimated rate of 30% of email addresses/year!
The consequence is that as CRM data deteriorates - using the email example - reps rely less on CRM and more on their own Outlook or Gmail accounts. It's a negatively reinforcing cycle that reduces CRM engagement.
But beyond administrative updates, CRM supports other important business functions. Pipeline management is important for sales training (qualification, sales process, sales skills) and for forecasting. It only supports those, however, if reps consistently complete fields related to deal stage qualification, close likelihood, predicted close date, and deal size. Often in industrial companies with long sales cycles, those data points are not consistently updated.
Smart contracts can address this as well. For instance, you could deduct micropayments for any deal which isn't updated weekly, and add micropayments for each buying team role that is populated with contact details.
Creating Employee Incentives
This is new because smart contracts provide a framework to track all of this at scale, automatically. If your CRM offers an open API, then articulating the important data and activities that matter for your business will enable a blockchain developer to create the contracts.
What's involved in actually translating this to sales (or customer service or any other function) rewards? After all, it's not just enough to track it.
There are a few steps along the way:
- Define what you want to track and incent - both from management data and employee incentive perspectives
- Engage Solidity3 (programming language of blockchain) development resources (you could hire, outsource, or engage a firm)
- Decide how you'll fund the micropayments - total amount, where those funds come from (current comp redirected, additional comp based on profit value of the improvements, etc.), and how much each activity is worth
- Decide how you'll pay the micropayments - e.g. as an additional paycheck line? or preferably through an instantly available mode like a funded Visa® card
- Prepare your team for the change by explaining how everyone benefits and creating some FAQs and content on your internal wiki
- Create integrations with your payroll and reporting systems so that you don't inadvertently impose an additional administrative burden
Certainly, this will take a chunk of time and some resources upfront. And you'll also find, as with any initiative, that you need to make tweaks as you go.
It's not a massive undertaking, however. In fact, it's probably three one-hour meetings:
- definitions and goals
- finance planning
- rollout and change management discussion
And if you're looking for the easiest way to undertake this, we're thrilled to be collaborating with blockWRK, a blockchain developer that's implementing employee incentive programs of this sort, to help companies launch confidently and efficiently.
Early Adopters of Traditional Best Practices
Web3 and the Metaverse are daunting and only vaguely defined. It will likely impact industrial companies in ways we can't imagine - through technology and activities that are yet to be created.
But already today, there are practical and concrete applications for Web3 on your business. Smart contracts to incent sales activities and data hygiene are an exciting example.