Identifying the driving force behind Keyence’s success
During the past ten years Keyence Corporation’s stock has increased from $67 a share to over $600 per share. Since 2014, Keyence has grown revenues from $265.01 billion to $526.85 billion, increasing sales 20% on average year over year. Keyence is listed by Forbes at #33 for the Top 100 Digital Companies and #38 for the World’s Most Innovative Companies.
I was fortunate to work for Keyence for about two and a half years selling industrial automation devices, and during my time there I was awestruck by the collective productivity and “Keyence Magic”, that I made a conscious effort to study the fundamentals of Keyence’s business model by learning everything about the organizational structure and sales processes and identifying the values and priorities that made them successful.
Keyence founder Takemitsu Takizaki was an employee at a Japanese Toyota Motor Plant when he developed his first sensor, which in Keyence lore is the DD model for detecting double sheet metal blanks in stamping. This was around the time when Taiichi Ohno was pioneering and implementing the famous Kanban system, or just-in-time or lean manufacturing, which transformed manufacturing into a hyper-efficient process. Mr. Takizaki was undoubtedly influenced by Toyota’s continual improvement process that prioritize efficiency.
When he left Toyota to found his company, he undoubtedly leveraged his Kanban insights and implemented sales process engineering into his sales routine as he traveled around from factory to factory to give in person product demonstrations to each of his customers, while collecting information about their needs along the way to develop new and better products and a better understanding of the market.
Mr. Takizaki applied the same techniques used to automate manufacturing facilities to automate his organizational sales process, using data to guide decisions to optimize time, and always keeping the goal of profitability in mind.
Working for Keyence
Keyence recruits its sales team from colleges with strong alumni networks, typically with reputable industrial engineering programs, but they really don’t discriminate and hire wherever they can find talent. They look for character, personality, and technical aptitude. The interview process includes several and web conference interviews, a personality test, an IQ or aptitude test, and final interviews at their HQ for a series of meetings with area, regional and national sales managers, where you not only explain why you want to work for Keyence, but are asked to sell a Keyence devices to teams of managers. You are also asked to sell a pen. They make the interviews difficult to test the interviewee’s persistence and grit and desire to close the sale.
Once hired, you are selected to join one of Keyence’s many divisions. Their products typically fall into one of two categories: lab technology or industrial automation technology.
Keyence flies new hires to their Itasca, IL HQ where they pay for you to stay in a hotel to train between two and eight months, depending on the product and application complexity of the technology.
Training begins at 7:30pm on Monday morning and lasts until 5:00pm. New hires are expected to arrive at the office at 7:15pm Monday through Friday while employed at Keyence. Most sales training involves learning about the technical specifications of products, which applications they are used to solve, and the value proposition of Keyence over other technology or competitors. Every fourth week you fly to a territory in the United States and conduct a “ride along” with experienced salesman so you can witness and absorb the culture surrounding Keyence’s process.
During these ride alongs you and the other sales engineer meet somewhere in their territory, park you car, and sit in the passenger seat with them as you drive from factory to factory and meet with engineers to give product demonstrations and examine manufacturing processes or machines in search of sales opportunities.
Most of training is learning the technical specifications of products, knowing the answers to common technical questions, and understanding the value proposition or competitive advantage of Keyence. In additional to product training, a great deal of time is spent mastering product demonstrations and performing presentations.
Keyence emphasizes scripts for everything. Every sales call, every email, every demonstration is scripted. This creates consistency that can be measured and analyzed and tailored and improved upon by sales managers who coach you throughout your employment. Everyone in the company is expected to use a script and perform technical product demonstrations the same way. These scripts were practiced a great deal.
The only sales techniques that Keyence actively employs is SPIN Selling, which involves asking questions to understand the customer’s Situation, identify the Problem, clarify the Implication, and formulate the Need or solution. Asking questions and collecting information to understand customers and their needs is at the heart of Keyence sales process.
Every Keyence sales engineer has a portable demonstration case containing a selection of core products from the division they represent. The technical demonstration is another of Keyence’s key processes. It is expected that salesman open the case and perform a demonstration at every “sales call” or meeting with prospective customers.
Throughout training you also learn about the two types of incentive plans and bonus structures. One is tied to activity and the other to sales numbers, both of which are meticulously tracked in real time.
At some point you’re introduced to the Keyence Customer-relationship management platform, or CRM database, and you learn the steps and procures for proper data entry processes that will come to define your daily routines at Keyence. While this piece of software initially seems old and clunky, written on a .NET framework that looks like Windows 98, you’re told from the very start that this is the most important sales tool at your disposal. It’s not until you spend a week or two in the field that you realize that the CRM is insanely powerful, and one of the primary reasons for Keyence’s success. Many colleagues joke that the CRM is the Matrix that provides Keyence the omniscience to make its products, marketing and sales so effective and successful.
What makes Keyence’s CRM so powerful? The daily sales processes of every Keyence sales engineer is entered and tracked using the CRM. Every salesman in the company lives on the CRM, and every activity is recorded, from emails and phone calls, to sales meetings and applications (opportunities) and purchase orders, as well as a host of valuable information about the characteristics and needs of customers and contacts in your territory.
There is a tremendous amount of “data entry” when working for Keyence. For many starting out, this seems tedious and painstaking. Nothing could be farther from the truth. If you want to succeed in sales, you need to track your activity and progress with the utmost detail. Keyence’s sales activity processes are seamlessly streamlined with the data entry. You couldn’t invent or innovate a better system. The Keyence CRM is a proprietary system custom developed in-house to optimize all activity. It is a reflection of the direct sales culture that has been developed through trial and error and refined since Keyence’s founder Mr. Takizaki pounded the pavement selling his first sensor products door to door.
In fact, every customer and contact through Keyence’s sales history is collectively shared in Keyence’s CRM across the world. Data is constantly being shared, updated, and streamlined for accuracy and efficiency. When sales engineers join, they gain access to decade’s worth of customer information. When a Keyence employee leaves, the customer and sales activity data stays in the CRM, ready for the next new hire. Keyence doesn’t emphasize the relationship between its sales engineers and their customers. When you depend on relationships, you become complacent and give up control over the sales process. When that sales engineer leaves, the sales and customer and market knowledge leave along with him. Instead, Keyence emphases brand value, and exercises internal controls over the customer relationship to ensure it remains long after an employee leaves. Keyence sales engineers don’t invest in the relationship beyond delivering technology solutions. That means no lunch or dinner meetings, no company paid golf outings, no special favors or comforts for customers.
Keyence pays a competitive base salary. For most 21 year old college graduates, a $65,000 or $75,000 base salary for a sales job seems like a god send. This includes expense reimbursements such as .55 cents per mile driven, food stipends, and some of the best benefits and investment plans you could ask for. In addition, if you achieve 100% of your sales goals, your monthly and quarterly bonuses quickly take you over six figures for the year.
There are two types of bonus incentives that Keyence pays to its sales team. One is a quarterly bonus tied to your overall sales achievement numbers. The other is a monthly bonus tied to your monthly sales activities recorded in the CRM.
The quarterly bonus is a multiplier formula based on total revenues + goal achievement + growth + effect. Total revenues are the total sales for the territory, which include residual or passive purchase orders. Goal achievement is based on your monthly and quarterly and overall sales target set by your manager.
Monthly sales targets are the total “pro-active” sales for the month, or Linked Purchase Orders, meaning there is a relationship linking a “sales call” to an “application” to a processed and shipped “purchase order”. This is opposed to “reactive” or passive sales for the month that just keep coming in without any work aside from taking an order, such as MRO or any repeat business. There are also quotas on “sold Shodans”, which means “beginner” in Japanese, and refers to new Keyence customers, or those who haven’t ordered a product from your division within two years.
Quarterly sales targets include whether you hit your monthly goals, and whether you achieved your quarterly sales target. Growth is the percentage achieved of your growth target, so if your territory growth target was 50%, and you hit 40%, you achieved 80% of your growth target for the quarter. Effect is the margin of your total revenues. Every product has a set effect or margin. As a salesman, you have leeway to discount up to 10 or 15 or 20 percent, depending on the product and your sales manager. Any additional discount needs submitted “special price request” approval. Keyence highly discourages discounting, so they monitor your effect closely. At the same time, if it’s a competitive situation, and the sale could result in MRO business or high volume future business, Keyence is able to discount to 80% list price, and even 90% in special cases
The monthly incentive bonus is based on your divisional ranking of monthly sales activities. Each week a sales activity update is emailed to the division sales team that includes data on a variety of metrics that vary from division to division and even quarter to quarter as strategy influences incentives. New metrics are routinely introduced to incentivize sales activity according to strategy, update or increase the accuracy of data in the CRM, or incentivize habits for collecting information, such as adding new accounts to the CRM or adding new contacts to accounts.
Some common or core activity metrics include:
- # of sales calls, or scheduled face to face meetings
- # of applications (opportunities for those familiar with Salesforce)
- # of minutes on the phone
- # of ECO’s entered, or “existing competitive opportunities” i.e. instances where a customer is using a competitor’s product
- # of Linked Purchase Orders, or proactive sales generated by applications tied to sales calls
- # of Sold Shodans, or new accounts
- # of New Product Customers, or selling a different product into an existing account
- # of Needs Cards, or customer needs that Keyence currently doesn’t have a solution for
- # of ILS, or internal leads sent to reps in other divisions.
- # of Leads, or outstanding leads that are past due and need follow up
These metrics are assigned a point value which ultimately determine your ranking among your divisional sales peers. The top 50% of the ranking get a monthly bonus payout, which might be anywhere from $1500 to $1000 for 1st place. In addition, ILS’s are paid out $25 if they are accepted by the recipient and a legitimate application is generated, and another $50 if it leads to a sale. This tracks and incentives intra-company referrals.
Everyone in the division has the same sales activity goals, and achieving every activity metric doesn’t guarantee you’ll land in the top 50%.
Within my division, monthly sales goals consisted of roughly the following:
- 700 Minutes on the phone
- 60 Sales calls
- 36 Applications
- 15 Linked Purchase Orders
- 5 Sold Shodans
- 15 NPCs (new product customers)
- 25 ECOs
- 4 Needs Cards
After months of on boarding and training new sales engineers sent back to the field office in their region where they are assigned a cubicle along with their peers from different divisions. While the workday officially begins at 7:30am, you’re expected to arrive at the office at 7:15am, with many sales managers arriving as early as 6:30am. You’re expected to begin working at 7:30am promptly.
For your first day on the job, your area product sales manager runs you through the sales process by outlining what the daily routines of your week will look like, and showing you how to begin the process of scheduling calls. He opens up the CRM and shows you the ins and outs of navigating your territory database, such as how to generate reports, or assemble lists of territory accounts, and how to sort by annual sales, number of contacts at company, number of applications at company, number of POs sold, sort by city, by zip, and the like. You also learn how to sort through a company’s contacts and see how many sales calls a contact has accepted, how many applications were generated by that contact, what products were demonstrated at each visit, as well as information about sales calls and applications and POs of other divisions, which is great for cross selling.
You are expected to be in the office Monday and Friday from 7:15am to 5pm. Your primary activity in the office is cold calling, or picking up the phone and calling from lists of contacts at target accounts generated by the sales manager. If you call and don’t get a response in the morning, you call again in the afternoon. If no response, you leave a voicemail and send a follow up email.
Your objective is setting up as many sales calls as possible. Being in front of customers and demonstrating products is the top priority.
On Tuesday, Wednesday, and Thursday you are on the road visiting customers. Your goal is six sales calls (meetings) a day, scheduled at intervals of 8:00am, 9:30am, 11:00am, 1:00pm, 2:30pm, and 4:00pm. Ideally, at the end of every sales call you transcribe meeting notes from your Composition Notebook into the CRM. This includes any new information about the company, engineering or purchasing contacts, applications, or competition. Typically you’re running from meeting throughout the day, so most data entry occurs at night when you arrive at the hotel room. At the end of the week on Friday you are expected to have all weekly sales activity data entered and updated with accuracy by 5:00pm.
During your sales meetings with customers you are responsible for gathering highly detailed information about the company, any and all contacts, production processes and work flows and machines, as well as any competition and urgent needs. Requesting a tour of the plant or a manufacturing line or seeing examples of automated machines is an essential part of understanding the customer and establishing common ground for discussion. Every sales call with a customer is a crucial opportunity to collect data about the customer and contacts and competition and enter it into the CRM. In this way Keyence is able to develop real-time hyper-granular customer profiles across the US that they can use to perform detailed analysis for marketing, product development, and sales strategies.
Each sales call with a customer begins by opening up a company brochure and providing a company overview that includes a brief history of Keyence, the Keyence direct sales fast shipping model, and a summary of the various divisions and their respective technologies. As you flip through the catalog you are asking the customer question about whether they use any of the technology you’ve mentioned and where, always jotting down notes for data collection.
After a five-minute company overview, you open the demo case and begin a scripted demonstration of the products, tailoring your presentation only to the types of applications commonly used within their industry. After you point out the physical aspects of the device, you demonstrate how easy it is to use by configuring it on the fly for set up and programming, and highlight three unique features that sets this device apart from the competition. You then ask if there areas where a device like this would be of use. If yes, you ask continue to ask questions and probe for more information about the need. The aim is to try to identify the pain point or cost of the need, which you then use to develop three value add justifications for purchasing this device. Keeping things simple is an important part of the Keyence sales process. Technical products can be overwhelmingly difficult to understand, so Keyence trains its sales team to identify a customer’s primary needs, which they can use to highly three selling points. Any more than three and the customer will lose track, become overwhelmed by information, and shut down.
These value add justifications boil down to increasing profitability or minimizing expense—making money or saving money—but the value propositions always involve saving time, increasing quality, increasing performance, reducing waste, and the like.
For example, a Keyence solution might save time with installation or maintenance because of ease of use or increased durability. It may increase quality via higher performance or function capability. It may reduce waste by increasing reliability. Cost may not be an issue as much as performance and ease of use. Or ease of use might not be as important as durability and cost. Understanding the nature of the application and the customer’s unique needs allows you to develop a compelling value proposition.
Depending on the division and the products being demonstration, a typical demo will last between 10 to 30 minutes. If the meeting is longer than 60 minutes, you politely explain that you have another meeting, and ask to schedule a follow up meeting to continue discussing the applications on the spot.
Keyence Business Model
Keyence Japan is first and foremost a research and design company that specializes in industrial automation and lab technology. All of Keyence’s products are contract manufactured by a select group of elite suppliers that maintain the highest reliability and quality controls. Much like Apple, Keyence doesn’t fabricate or manufacture anything.
Keyence maintains a presence in countries across the world through subsidiaries on each continent. In the United States, Keyence America acts as a direct wholesale distributor to the US market for Keyence Japan.
Unlike the majority of industrial automation and lab technology companies in the United States, Keyence does not use 3rd party distributors to import and stock its products. Instead, it imports and stocks and maintains its own domestic warehouse where it takes orders and ships to all its customers. As a consequence, Keyence saves up to 30 to 50% on margins by selling direct to customers.
For inventory planning and forecasting, Keyence relies on the CRM data entered by the sales team to provide up to date information about applications and products in the pipeline, ship dates, estimated order size, reorder frequency, and the like. This allows Keyence to forecast inventory and restock its US warehouse every two weeks like clockwork. The CRM also makes all inventory stock visible the sales team, which allow them to notify management if there are any unexpected large orders.
Most other industrial automation companies rely on 3rd party channel partners such as regional or online distributors or manufacturer’s reps to sell their products. Typically, these channel partners represent dozens or hundreds of vendors, or specialization in any one technology. They typically prioritize their largest, most valuable vender business as the expense of all the other lines. In most cases an industrial automation manufacturer will have Regional Sales Managers or Channel Partner Managers that oversee and manage distributors relationships and train their 3rd party sales reps.
The reality is, distributor sales reps bring little value to any one industrial automation manufacture, be it product knowledge or sales skill, and end up costing 30-50% margin to maintain the “partnership”. Distributors primarily rely on passive MRO business from established customers and, as a result, have little incentive to proactively target and sell.
Keyence knows this, and has structured its business model that assumes all responsibility internally to targeting and growing business. In any given territory, there will be up to 15 Keyence sales engineers with specialized knowledge in a group of technologies for every one Regional Sales Manager who rely on distributor sales reps with no deep knowledge, and often possess a conflict of interest while they try to sell one of the dozens or hundred of other products they represent.
When Keyence entered the US market thirty years ago, sales engineers represented a wide spectrum of Keyence technologies of varying cost and complexity. They found that sales engineers would neglect the low cost devices in favor of the higher dollar devices, or focus on the simple devices rather than the more complex products requiring longer sales cycles and support. In order to drive sales in the unpopular products, Keyence took steps to regularly split product lines into divisions based on technology, cost, applications, and complexity. This has resulted in the 15 or so divisions currently represented in the USA.
Because Keyence manages every aspect of its sales, stocking, and distribution, they have the ability to process orders and ship products with incredible speed. Quotes are generated within 24 hours. Orders are shipped within 24 hours, and can arrive within 24 hours using UPS Red, or within 5-10 days for most other products. NDAs are processed within a week. For Keyence, increasing efficiency and effectiveness are the cornerstones of profitability.
The primary strategy for Keyence is profitability. Every product developed and introduced into the market is scrutinized for net profit. This influences their product design by creating a one-size-fits all for 80% of the identified applications or needs in the market, with little ability for customization. They’re interested in selling what’s on the shelf with ease, not engineering a solution, which takes time, and time is money.
Contrary to every other industrial automation company that Keyence competes with, they don’t use Applications Engineers. Instead, every Keyence sales rep is a “sales engineer” and trained to do the work of applications engineers. At the Itasca, IL HQ, Keyence utilizes “technical marketing managers” which act as a hybrid of marketing managers and product managers. As well as being the senior technical product and applications experts, they’re also responsible for developing each products value proposition as well as designing the marketing materials of their division’s products.
Each of Keyence’s products prioritize ease of use with a shallow learning curve so that just about anyone can pick it up a product and implement it with little to no training, regardless if you’re a technician, maintenance, engineer, scientists, or manager. Keyence designs off the shelf products that solve 80% of potential applications with little or no need for training or custom accessories, such as bracketing, cabling, connector options, communication, networking modules, lensing, or lighting.
Keyence designs products that cast a wide net over the most common applications and challenges that engineers and maintenance face. Their goals is to be the best at catching 80% of those opportunities, while not worrying about the 20% of applications that require additional support or engineering to configure.
It’s very common that a Keyence sales engineer identifies a potential application that might work with a product their represent with the right time investment, but they are trained to walk away and find the easy sale: those aren’t Keyence’s target customers.
Time is money, and efficiency is everything.
Because Keyence’s primary target customer is B2C End Users, with production lines containing machines with their own communication architecture ecosystem, they design their products with the most flexibility to integrate into any environment. Ease of installation, ease of configuration, ease of use.
Because Keyence develops products that are designed to work for 80% of applications, their product selection for any particular technology grouping is usually smaller than the competitions lineup, but Keyence products typically have higher overall functionality when it comes to general applications.
For example, Keyence may have 18 lasers measurement models, whereas a competitors may have 36 or 48 different models. It’s likely that for niche applications any one of those 36 or 48 models have a higher specific performance than a Keyence model, but if a customer has lots of general applications, they’ll need to purchase a fewer variety of models from Keyence, which allows the customer to maintain fewer stock numbers of a product that can do more.
You can see this drives down the variety of inventory needed for Keyence to stock as well as their customers. It also means Keyence is producing high volume of any one product, which means higher margins on the products it produces.
Keyence sales strategies revolve around analyzing CRM data to spot market needs and identify product sales trends. What is the average reorder rate for specific products at end users? How quickly is a product adopted by other plant engineers once sold? What percentage of customers that buy one product buy another product after a targeted sales call and demonstration? How many sales calls does it take to generate an application for a product? How many sales calls does it take between identifying an application and receiving a purchase order for a particular product? Which opportunities are we losing because we don’t have the right technology? Which opportunities are we losing to competition and why? Who is our competition for specific applications or industries or regions?
These questions and more define the nature of Keyence strategy.
Keyence Organizational Culture
Paramount to Keyence’s sales process is the overall culture. The work is repetitive, tedious and relentless. Your job responsibilities are typically the same year after year, will little variation throughout your career. It’s common to hear colleagues talking about being a “Keyence Drone”.
Everyone in the sales organization maintains the same schedule and responsibilities until you are promoted to Regional Product Sales Director, at which point you’re relegated to a desk to conduct sales strategy and market analytics for your regional team with the CRM data.
Sales goals set by senior directors, and typically based on last years total revenues and growth, with anywhere between 15 and 50% growth expectation. Unless a territory is extremely mature, yearly growth targets will rarely fall below 20% from the year prior, and often exceed 30%.
For career advancement, there are two tracks available for those promoted from Sales Engineer I and II (SE 1 and SE2) to Senior Sales Engineer (SSE): Sales Management or Business Development. For those who want to manage direct reports and grow a territory of sales engineers, there is the sales management route. For those interested in strategic business development with application engineering support, there are the sales product specialist roles that lead to business development management.
Coaching and mentoring are a crucial part of passing on the sales knowledge to the next generation of recruit. Keyence promotes only from within. Each sales engineer is hired to grow a territory until annual sales of 1.5 to 3 million are achieved for two to three years. At that point a new sales engineer is hired and the territory is split. Once a territory grows to a certain size, say about $10 million, Keyence will promote the senior sales engineer within the territory to Area Product Sales Manager or APSM, where they manage a group of sales engineers as well as a handful of local accounts requiring minimal travel. Once that territory grows to include anywhere between 5 and 15 APSM’s, the most senior or accomplished is promoted to Regional Product Sales Director, and these National Product Sales Directors.
Keyence’s primary market strategy is to provide value-add solutions to End User’s with innovative products that solve for real market and customer needs.
Most of Keyence’s sales calls and the applications they generate are with plant level engineers at B2C End Users. A manufacturing line process needs to be improved so higher function sensors are required. Or maintenance is trying to find ways to reduce down time with more reliable sensors, or reduce the time to replace a sensor on a line, or reduce the cost of having to replace cheap sensors.
By targeting End User’s at a plant level, and by replacing existing competitor technology with their own, Keyence slowly begins to build a case for converting all future production lines and machines with their technology.
And because Keyence records meticulous data about their customers in their CRM, they’re able to develop products with a definite market fit that solve justifiable and quantitatively proven problems.
Below is a breakdown of the industrial automation customer market:
(Note: $ is business development potential, and + is passive sales, MRO, or one off projects)
- Machine Shop End User– CNC, Metrology $Fabricates parts to business
- Systems Integrator and Engineering OEM $++One off custom integration to business
- Given the specification by B2C End Users
- B2B Custom OEMs $$+++One off custom automated machines to businesses
- Given the specification by B2C End Users
- Cost > Value
- B2C End Users (Manufacturing Plant/Factory Line) $$$+++High volume finished products to commercial or consumers
- MRO business (Maintenance, Repair, Operations)
- Organic Sales Growth (Where distribution comes in)
- Plant Specification driven to B2B Custom OEMs
- Requires Business Development (long sales cycle)
- Value > Cost
- B2B Specialized OEMs (Standard Products) $$$$High volume automated machines to industry or commercial (Flow business)
- Requires Business Development (long sales cycle)
- Determines specification
- Cost > Value
The biggest buyers of industrial automation technology are B2B Custom OEMs. They are in the business of building automated machines and production lines for massive B2C End Users. However, while they are big buyers with large repeat orders, they rarely have the freedom to specify technology or products on the machines they build.
Instead, B2B End User’s drive the spec for their factory. The manufacturing and plant engineers consider many variables, such as what products they currently stock at the plant, what their maintenance engineers are familiar with, what products have a proven track record, and which suppliers are most reliable.
Most B2B End User’s develop a preferred list of suppliers based on their relationship and their familiarity with the products. It is incredibly difficult to take business away from a competitor at these companies; the risk is too great, and many companies are far too entrenched with existing product lines and ecosystems.
At the end of the day, B2B Custom OEMs might be the biggest buyers of industrial automation products, but everything they build and purchase is determined by the B2C End User Plant.
This is also true for Systems Integrator and Engineering OEMs. They are hired to integrate machines from B2B Custom OEMs and B2B Specialized OEMs into a production line. The only industrial automation products they buy is what the B2C End User specifies, or whatever is already used on the machines they’re integrating. Most of their work is programming controllers or engineering networks for a production line.
B2C End Users Factories vary in size, but at the biggest manufacturing plants, such as automotive facilities where harsh conditions lead to increase maintenance, the MRO business can be extremely profitable. The machines and production lines are a plant’s largest capital investment, so maintenance is a major part of realizing a long run time and a good return on investment.
One of the most profitable customers for industrial automation companies are B2B Specialized OEM’s. These companies design automated machines with a very specialized process which target specific industries or commercial markets. These customers are very price conscious, and will develop as much of their own technology in-house as possible to reduce costs in order to have a competitively priced product that can sell in the market.
B2B Specialized OEMs typically build standard, off the shelf, automated machines, with a relatively finite lifespan. Some factors include changes in the market such as evolving consumer demands and tastes, or new technology innovations that require redesigning the machine to remain competitive (faster chips, better screen resolution).
However, there are B2B Specialized OEMs that make off the shelf products that rarely change, because the products or materials processed by the machine are consumer staples that will never go away. Such as trash compactors, fruit sorting machines, metal stamping machines, and the like.
Once a B2B Specialized OEM determines the design specification of the machine, it’s released to the market and goes into production and it’s not redesigned for many years. They’re typically selling their machines at high volume, or high dollar. Once an automation product is designed into a machine, you can count on years of business. Unfortunately, many of these machines are relatively low maintenance, so the future MRO business is limited.
B2B Specialized OEMs are also looking for industrial automation companies that understand their needs, and provide a full solution that integrates into a nice package that they can engineer, service, and sell with ease. If they can purchase from a single supplier who provides them with all the automation technology needed to make a competitive machine, they won’t look elsewhere.
Go to Market Sales Strategy
At the end of the day, Keyence’s most successful strategy to market is to target B2C End User’s. By solving plant level problems and replacing existing competitor technology with their value-add products and quick delivery times, they are able to slowly replace competitor technology with Keyence’s products, and grow MRO business.
Over time, as the maintenance engineers replace competitor sensors with more reliable Keyence value-add products, this conversion influences and drives the plant specification for future machines and production lines, which eventually increases sales with B2B Custom OEM’s and System Integrators OEMs.
Key to this strategy are three major selling points:
- Large aggressive sales force targeting B2C End UsersHigh volume, low dollar, purchase orders
- Demonstrating and testing products at every meeting or at lab
- Value-add products designed for MRODurable design, die-cast aluminum housing, IP67 and above
- Quick disconnect
- Simple, easy to use, learn, program, install
- High function products means smaller portfolio with more capable products
- Easy to integrate; full networking options to drop into existing eco-systems
- Quick DeliveryQuotation same day, within 24 hours
- 24-hour delivery on all products, and at most 2 weeks.
Through this approach, Keyence is able to replace competitors, and become a preferred supplier specification on future machines and production lines.
Keyence’s list price is typically 10 to 15% higher than the competition. However, with competitive situations, Keyence is able to discount up to 80% and still make a profit thanks to their distributor free model.
When B2B Custom OEMs or Integrators receive a spec sheet to build a production line, and Keyence is one of three names of specified vendors, Keyence will always win the business with its competitive pricing.