The Future of Industrial Companies in the Software Market

Software can play an increasingly central role for industrial companies as a source of competitive differentiation and new revenues. As industrial companies continue to invest in software, unlocking the true value of their investments will become increasingly important. The bar on ROI will only continue to rise. To meet this rising bar and deliver significant growth, the majority of industrial companies will need to transform how they go to market with software.

Required Postsales Capabilities for Industrial Companies

Industrial companies will need to understand the nuances of the required postsales capabilities, including the following:

• Customer success, not customer support. Customer success can sometimes be confused with customer support, which can be costly. Customer success involves proactively reaching out to and working with buyers to help them reach their multifaceted goals using the software product, unlike customer support, which revolves around answering and reacting to customer help requests. Industrial companies often do not have this function, because their products, which are sold as onetime purchases instead of on a recurring basis, generally do not require it. However, a strong customer success function is key to succeeding with software. More than 80 percent of our survey respondents cited the lack of a customer success management team as a postsale challenge.
• Renewal operations team. In a similar vein, industrial companies that sell in a much more transactional manner traditionally haven’t had to worry about renewals, but this is a key aspect of selling software. When companies shift to software built around recurring revenues, the focus on renewals and net retention becomes increasingly critical. As a result, most companies have to invest in a renewal operations team. For example, one industrial company saw that while they could land initial bookings for its software product, renewal rates were low. Root-cause analysis suggested that sales teams often contacted customers about renewals at the last minute or even past the renewal date, by which time many customers had already decided to move to another provider. The company responded by setting up a small renewal operations team to track upcoming renewals and ensure sales teams contacted customers at least three months before contract expiration. This new team was also tasked with drafting notes and troubleshooting the internal renewals processes, which helped drive higher renewal rates.
• Tooling to track customer life cycle. Industrial companies often need to build a sophisticated system for tracking renewals, another key piece of selling software. Linking renewals to contracting and customer-relationship-management systems is crucial to a 360-degree view of the customer’s lifetime value. In addition, customer telemetry built into the products can help customer success managers better support user adoption.

Market Trends and Recommendations

As industrial companies pivot towards software-driven business models, it is imperative for them to adapt to the changing landscape. Below are some key market trends and actionable recommendations:

Market Trends:

• Rise of recurring revenues in software sales
• Increasing importance of customer success in software adoption
• Shift towards data-driven decision-making in industrial sectors

Actionable Recommendations:

• Invest in building a robust customer success function
• Establish a dedicated renewal operations team to drive higher renewal rates
• Implement tools to track the customer life cycle and maximize lifetime value

Organizational Impact and Strategies

Organizations that successfully implement the above recommendations will see a significant impact on their bottom line. By focusing on customer success, renewal operations, and customer life cycle tracking, industrial companies can drive higher software adoption rates, increase customer retention, and ultimately grow their software revenues.

FAQ

Q: Why is customer success important for industrial companies selling software?

A: Customer success is crucial for ensuring that buyers achieve their goals with the software product, leading to higher adoption rates and customer satisfaction.

Q: How can industrial companies improve renewal rates for software products?

A: By establishing a dedicated renewal operations team and proactively contacting customers before contract expiration, industrial companies can drive higher renewal rates.

Conclusion

In conclusion, industrial companies must adapt to the changing dynamics of the software market by investing in the necessary postsales capabilities. By prioritizing customer success, renewal operations, and customer life cycle tracking, industrial companies can unlock the true value of their software investments and drive significant growth in the digital era.