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Chris Shutts

Episode 57

How to “Consumerize” B2B Manufacturing

Chris Shutts has spent the 21st century at the forefront of the evolution of sales in the manufacturing space. He co-founded Big Machines in 2000 and sold the business to Oracle in 2013.

Now he leads Logik.io, a strategic Zilliant partner that delivers next-generation technology to manufacturers of complex products. Logik.io helps these companies consumerize the way they sell by enabling faster, self-service product configuration for their customers. He joined Barrett Thompson for an in-depth conversation about how Logik.io and Zilliant work together to lead the next evolution of sales and customer experience for manufacturers.

CRM in 2000 was originally a differentiator and then it became a must-have, and then CPQ in 2010 was a differentiator and then a must-have. We think now is the age of consumerization of B2B buying. It's a differentiator (now); in 12 to 24 months, or even sooner, it'll be a means of survival to really continue to grow the business.

Chris Shutts, Logik.io

Transcription

Chris Shutts: When we think about consumerizing the buying experience for B2B transactions, this concept of, “Browse my website and then fill out a form and have sales contact me.” That is not a frictionless buying experience. The frictionless buying experience is, “Show me everything you can do to help me. Show me the solution that fits my needs. Give me some guidance on costs and then tell me who's going to get back to me, and when, if I can't buy it right now.”

Barrett Thompson: Hello everyone. My name is Barrett Thompson. I'm the General Manager of Commercial Excellence at Zilliant and I'll be your host for our podcast. I'm joined today by Chris Shutts, co-founder and CEO of our partner Logik.io. Chris, welcome to B2B Reimagined.

Chris Shutts: Very great to be here.

Barrett Thompson: Chris, before we jump into our topic today, would you tell us one surprising or interesting fact about yourself that I wouldn't learn if I looked at your LinkedIn profile?

Chris Shutts: Um, let's see. Yeah. So one of the things. A hobby I have is I like to collect old cars. So, um, that's sort of my idea of a really fun day on a Saturday is to, uh, spend time in my garage, keeping my old cars running. [00:02:00]

Barrett Thompson: You have a project in the bay right now?

Chris Shutts: Well, it's kind of the interesting thing about old cars is they're always broken for some reason. So I kind of finished some major projects and it's just, now it's a regular maintenance, which is pretty high and cars, you know, made in the sixties.

Barrett Thompson: That's fantastic. Appreciate someone who's handy with a wrench. We're thrilled to have you on our podcast today to talk about the evolution of sales tools, in particular for manufacturing and, uh, for starters, could you give our audience an overview of Logik.io and what it is you do for your customers?

Chris Shutts: Yeah, sure. So Logik.io, we're a next generation technology company and we have a technology we call the Commerce Logic Engine and it's really designed to support manufacturers as well as other companies that make complex products, to help them consumerize the way that they sell their products. So one of the interesting trends that's happening, you know, if you look at a typical [00:03:00] configure price quote transaction that typically happens with a sales rep and they work, they interact with the customer and CPQ has brought a lot of value to businesses. But what we're seeing in the market is that with this concept of consumerizing it and making everything faster, easier to use, and in some cases, self service.

Barrett Thompson: That's fantastic. I'm intrigued by two things there, you know, better for the seller and maybe even extended to the customer themselves as a next gen digital commerce experience.

Give me a sense of what this means for customers who've implemented Logik.io.

Chris Shutts: Well, it typically means a few things. So one of the big advantages they have is they can maintain their product configuration rules in one place, and then they can extend them into multiple experiences. So for example, you could put all your product configuration rules in Logik.io, and then you can connect it to your CPQ tool.

You can connect it to your eCommerce engine. You can put it on your corporate website as a lead [00:04:00] gen mechanism. You can extend it into like a service experience. So if you have to reconfigure a product as part of a service call and figure out upgrades or changes to the modules of that product, you can use the same rule set for all of those experiences, because it's a headless technology. So you can easily extend your own UI or use one of our UIs on top of the tool to support each one of those requirements. And then at the same time, you can do it with a much better user experience. And one of the primary drivers is, you know, if you think about a company that sells very complex products, they might have hundreds of rules, hundreds of options, you know, the best CPQ tools in the market as of two years ago or a year ago, even those experiences would take five seconds per page update, 10 seconds for a page update.

We do those updates in 40 milliseconds, 20 milliseconds. So we've really taken this experience of what we're all accustomed to with our own personal buying behavior, like an Amazon-like performance and putting [00:05:00] it into these complex transactions and that’s one of the key benefits, you know, that they get with Logik.io.

Barrett Thompson: Those are pretty impressive for someone who's still operating in the old fashioned way. If you will, let's talk about what the process would look like for someone to implement a commerce logic engine.

Chris Shutts: Yeah. So a lot of companies have already implemented some form of product configuration, typically via like a CPQ experience.

And so with one of the things we did, you know, foundationally with the product and we built it as we really spent a lot of time on administration and maintenance. We learned a lot, you know, from my previous work, you know, founding Big Machines, you know, 20 years ago, we really learned a lot about how complicated these tools can get.

And how complicated therefore the administration experience gets. And the challenge is as you evolve a company over 10 years or 20 years, is that you, you go after [00:06:00] adding lots of capability for the customers and then the administration frankly, gets out of control and it's difficult to manage. So what the advantage we have a Logik.io is we knew roughly where the product needed to go.

And we could build the administration from beginning to be very simple. And one of the key things we put in there is this thing, we call a matrix loader, which is a way to pull data out of another system, normalize it like in a Google sheet or Excel, and then load, and then load all your rules, your data tables, your options, your functions automatically into Logik.io. And we're seeing some interesting things in the market where these migrations that, you know, for a Fortune 1000 company might take three months, six months, we're doing them in weeks or days even. And so, you know, one of the things we've, we've done with a lot of our early customers, as we said, here, here's the product.

Try it out. And we're amazed at what they can do even like in a week. Um, as far as getting this [00:07:00] consumerization experience with their products.

Barrett Thompson: That’s impressive. And I appreciate the power of centralizing the rules in one place, delivering them as needed through all of the experiences in the business. And then your balance between ensuring that the front end experience is wonderful because the backend experience of administration was well thought out and well taken care of in the overall solution.

What are your thoughts on how your solution allows a business to drive actionable insights coming from data, enhancing the buyer experience as a result of doing that? Is there, talk to me about the intelligence that's in the solution.

Chris Shutts: The core value prop that our customers are going after, you know, is they're trying to make, let's just say a brand new sales rep or a sales rep at a distributor or a dealer, or even their end customer make them their best sales rep, automatically. You know, that's the principally that the goal of it is, um, you know, sales reps, especially if you sell like [00:08:00] really complex manufacturing equipment, you know, like in fluid handling is, is a prime example where it could take months or even a year for somebody to be able to walk into like a chemical process company and sell them a hundred thousand dollar piece of rotating machinery and do it proficiently and quickly, and have it be like a really good sales experience.

So primarily what we do is we make all of your reps as good as your best reps. And then what we're also finding is that because it's so easy to manage the data, manage the rule behavior companies are then further looking at the way customers are using the product and eliminating options that don't make sense, uh, entire models that don't make sense.

You're starting to combine things into packages and sell solutions. And that's where it really gets exciting because then we can not only go after this efficiency argument at these companies, but we can also help them grow the top line. And the [00:09:00] advantage we have is we can manage the solution configuration very well.

And that's typically where a lot of the traditional CPQ tools struggle because when you start to sell solutions with lots of different products combined together, and a lot of interactive ability, that's where it gets really challenging to manage the sales process and do it with really fast response time and ease of use and like amazing guided selling.

Barrett Thompson: Chris, you mentioned making each seller as strong as your best seller or even making your customer your best seller. I love that. I love that image. We have a similar outlook at Zilliant, and we've used some of the same conversation coming at it from the angle of pricing and sort of price acumen, accuracy of price to the market.

What are your thoughts on bringing together price management, price optimization from Zilliant the guided selling experience from Logik.io to make sellers great at what they do?

Chris Shutts: [00:10:00] think it actually unlocks like a whole ‘nother dimension to the possibilities. You know, if you think about the pricing management capabilities that Zilliant has, which is very sophisticated and very highly - You guys have been doing this for quite a while. If you think about doing that in, as you're configuring a bundle of parts, let's say that's, you know, traditional use case that's been fairly well established and there's good data points for that. I think the new dimension that can happen here with these combined solutions, which I'm actually very excited about is, is being able to optimize the complete solution and system.

And that applies a whole new set of price optimization, price management that needs to happen because a lot of times the pricing characteristics are not tied to a product they're tied to functionality characteristics of the system itself. And I think that's where it gets really exciting. And we can bring a ton of value to these manufacturers is because they want to sell a solution. Consumers want to [00:11:00] buy a solution, but that solution has not necessarily been fully optimized. We can obviously build the solution, and present it to them in a really unique way. But, you know, we had Logik.io, we can just provide the price that they're telling us to provide.

And I think you guys can optimize that price, which is a really exciting possibility for this solution.

Barrett Thompson: I see a lot of value in your point here about the solution. If you will. The whole is greater than the sum of the parts. So there's a thinking above the SKU. There's a thinking and acting above the SKU level, both from assembling the solution, as well as putting a price that captures the value of that solution in front of the seller, in front of the customer.

We've had customers, our customers ask the same of us, help me get the solution price that's matching the market value. And that may be different than what you see when you do simple summations or are there other sorts of things. So I think that's a powerful combination.

Chris Shutts: I like that phrase, thinking above the [00:12:00] SKU a lot, you know, we say “Sell a solution, not a bundle of parts.”

Thinking above the SKU, that’s a very elegant way to, to think of. I like that.

Barrett Thompson: I want to explore also the angle of extending the configuration process into the hands of the buyer. Cause I think that's very different than what many people experience today, when they're in the buyer's chair, it might even be scary, frankly, for some manufacturers to think that way, if empowering that self service through the channel for the configuration, have you run into preconceived notions or myths or fears about that approach?

Are there things that people think are possible and not possible? And maybe they've got it wrong?

Chris Shutts: Yeah. So there are definitely some preconceived notions, but, and when we talk about putting it in the hands of the buyer, there's a range of that. So it's at the far extreme, just like we do with our daily [00:13:00] lives, where we can buy cars completely online and they show up in our driveway.

That's the far end of it. And obviously with a lot of these companies with B2B buying, that is a genuine stretch in their capabilities and their beliefs. I do think that over time, the majority of B2B transactions will actually happen very much in a self-service mode. And McKinsey actually has some really interesting data on this study because of the buying behavior and B2B transactions is changing very fast.

So they do a series of interviews and polls where they go to corporations and they say, how likely are you to do $25,000, $50,000 or a hundred thousand dollar transaction online in the next 12 months. Those percentages are changing fast. And one of the big drivers for that I suspect personally is COVID, you know, COVID has pulled eCommerce adoption, you know, five years in, in general for B2C, B2B.

So COVID is a big tailwind for that. And that [00:14:00] may not be ready to go all the way, but the data is telling a very different story. And that was one of the key drivers for why we started Logik.io, because we knew that these transactions are getting consumerized. And we knew that that trend is happening. And frankly, I think at some point, although the CPQ market is still expanding at about 20% per year in terms of license revenue, at some point that acceleration will slow down.

And the primary reason for that will be that those CPQ transactions will start to migrate out of CPQ and into eCommerce self-service platforms in some form, whether it's B2B or B2C. And so we knew that when we built Logik.io, we had to handle that use case. And it also created a big technology differentiator for us because no one can really handle that use case well, for cases where you have lots of, lots of options, lots of rules. And you need to build a UI that a lot of these eCommerce platforms can handle, you know, they have built in UI engines so they can, [00:15:00] you can customize your UI. And we built logic to work with that, that framework with a headless architecture, but what these companies can do now, if they don't want to go all the way to the, you know, buy my car online and it shows up in my driveway is an analog.

If they don't want to go there. What they can do now. And what a lot of our customers are doing is they're using, they're putting Logik.io on their corporate website and they're using it as a very sophisticated lead gen tool. And so what they do is they allow their customers to browse their products, pick a product, and then Logik.io runs in a headless fashion behind the scenes on their website and their customers are picking options, even though they're not necessarily fully configuring the whole product.

And then they submit that as a lead and it goes into Salesforce or a CRM. And then at that point, that lead is, is an amazing lead actually, because you've got almost complete buyer intent at that point, that is something that companies are doing today. And that is just a natural [00:16:00] progression. As you evolve your product definition.

That transaction that they're building today will eventually be completely, you know, self-service, or it'll be self service with a minor workflow, to an application engineer or to a distributor to complete it in the future. And that's something that's happening today and it's happening very, very quickly.

Barrett Thompson: That's a very creative application of the technology that, that I hadn't considered before. I think it's the configured product equivalent of, you know, going to a website, scrolling through product catalog or product pages, and then saying, “Hey, I'm interested in this, the SKU that's already been conceived, but to sit down and create that myself as a part of the first engagement with corporate website, sort of the art of the possible in the product domain on that website, that's an intriguing use case.

Chris Shutts: Another fine point on that Barrett is that when we think about consumerizing the buying experience for B2B transactions, this concept of, “Browse my website and then fill out a form and [00:17:00] have sales contact me.” That is not a frictionless buying experience. That is a high friction buying experience. So frictionless buying experience is, “Show me everything you can do to help me. Show me the solution that fits my needs. Give me some guidance on costs and then tell me who's going to get back to me and when, if I can't buy it right now? You know, we do studies actually with our prospects. Kind of a readiness assessment and that's a big red flag in the readiness assessment, we say, you know, you see the contact sales form.

It's just kind of a funny thing that we, we strike that.

Barrett Thompson: Yeah. Oh, I could see it. Uh, the, the one I've drawn attention to, with some of our customers is the “call for price” button sitting on the website. Right? It's the equivalent of that? Well, what I hear you saying, Chris that’s so important for our listeners to grasp is that if they're a manufacturer or other provider of configured products, and you're thinking about taking this to your market, it's not an evangelistic play where you're trying [00:18:00] to convince them, your buyers already want this. It’s a pull.

Right. You need to lean into that. That's already coming from them. We see the same. In fact, it was slightly different angle, but our B2B customers will say, I can even imagine the configuration being done online, but oh, the price negotiation, you know, that’s sacrosanct, that can only happen when you speak to a human, because the tribal knowledge and we're sensing what's going on, but we've actually used our technology to enable a price negotiation experience that happens immediately, self-serve, between the customer and an intelligent tool. Think of it as a kind of intelligent agent. People are familiar with intelligent agents or bots coming on to help them in the buying experience. We can extend that all the way into the price negotiation experience.

So it really is possible to have an entire B2B transaction happening online self service all the way from configuration through [00:19:00] pricing. And then fulfillment is, you know, the last step in that activity. And that's a breakthrough for B2B.

Chris Shutts: It definitely is. And I think it plays perfectly into this concept of kind of one and done in B2B buying behavior.

A lot of these companies time is very important to them and completing tasks is very important to them because it's more important that they can complete their projects than to necessarily optimize exact cost and margin on those products. And so that's an awesome technology that you guys have that I've seen where, and I think that right now is a differentiator, but I think soon that will be a must-have.

Because as these transactions get consumerized, it has to be a one and done type scenario wherever possible. And that will help companies differentiate and sell, you know, sell more of their products, just like, you know, CRM. And in 2000 was originally a differentiator and then it became a must have, and then CPQ in 2010 was the differentiator.

And then a must have, we think now 2020 is the age of [00:20:00] consumerization of B2B buying. And now it's a differentiator. You know, in 12 to 24 months, or even sooner in some industries like high-tech manufacturing, it'll be a means of survival to really continue to grow the business and grow the top line.

Barrett Thompson: Those are great opportunities ahead for B2Bs to be on that leading edge to make a difference in their business with these approaches, Chris, before we leave, do you have any parting thoughts about how the inflation that is impacting manufacturers of configured systems, how they should be thinking about responding to that?

Chris Shutts: Well, I think that's a case where our joint solution is pretty awesome use case for them because they can manage price changes very fast, you know, with the Zilliant technology, which is critical.

And then with Logik.io, you know, we can present options and we can also present, you know, different permutations of the solution that they're looking for, which will then help, you know, the [00:21:00] buyer manage their cost perspective, you know, versus where, you know, the price trend is heading. I do think to a certain extent, I mean, I sit on the board of a manufacturing company that's struggling a lot with price. They have, you know, the input costs are going crazy. And they have long lead time manufacturing. So it's kind of like a worst case scenario for them to manage, you know, margin. I do think that, you know, there's this acceleration in price, which Zilliant is uniquely positioned to help them with.

But on the other end, I do think there's going to be a fair amount of overshoot. And so then the problem becomes, how do you remain price competitive when this overshoot happens? And I do think the overshoot will be pretty aggressive and, you know, very fast. And so I think they need to not only be thinking of managing it up, but managing it down also, that is going to be a very challenging scenario that I think companies will, if they're not careful, they will see, especially for more commoditized, configured products, they'll see a lot of market share challenges [00:22:00] pretty quickly with that.

It's almost like a technology must have, you know, it feels like.

Barrett Thompson: I can confirm your point there that price agility is critical and being able to sense what's happening in the market in a timely way to drive that agile price change agility, both in the mechanics of execution, as well as in sensing, when the signals are telling you that a price change is needed, that's pretty important when things are moving quickly and that's exactly what's happening now and I think for the future as well, for sure. Chris, I've really enjoyed our conversation today. And I want to thank you for joining us on B2B Reimagined and sharing your perspective.

Chris Shutts: Yeah. Thanks Barrett. It's a great, great conversation. Obviously there's a lot of, a lot more for us to do together and I look forward to creating a ton, more happy customers with Zilliant and Logik.io.

Barrett Thompson: Likewise, and I want to thank you, each of our podcast listeners for being with us today, we are committed to your success, and if you need any assistance, please reach [00:23:00] out to us. Would you do me a favor and take a moment to rate and review the show as it helps us to continue to put out great free content. Until next time have a great day.

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