Chances are good that you're currently more optimistic about your business than you’ve been in a long time if you’re a CEO of a manufacturing company.
Tax cuts, fewer regulations, and strong demand are fueling more optimism than the National Association of Manufacturers (NAM) has seen in a very long time.
They should know, as they’ve been publishing a quarterly survey on manufacturer optimism for 20 years.
To date, optimism among manufacturers registered its second-highest level ever recorded in the recent 2nd quarter 2018 report (the highest was Q4 of 2017).
93% cited an optimistic outlook for their business over the next 12 months.
While there is high optimism related to an improved economic climate for manufacturers, there is also an eye toward how to sustain long-term growth after a boom cycle like we are experiencing now.
It's a good time for CEOs and sales leaders to potentially rethink how they’ve gone to market in the past.
So…what are three things that manufacturers need to know about modern selling? Here’s the rundown of what’s happening with our clients, the manufacturing industry as a whole, and how companies are responding to stay competitive.
#1: Independent rep channels aren’t filling the pipeline like they used to.
Companies are seeing fewer and fewer prospects coming from these traditional, heavily relied upon sales channels.
Dan Anderson, CEO of SSI Electronics, puts it this way:
“Well, from our company’s inception in 1983, we’ve leaned heavily on the use of independent sales representatives to increase our top line revenue. The ability to get broad market coverage with minimal fixed costs appealed to us back then and certainly still is a driving factor today.
More and more, however, we find ourselves re-assessing the best way to utilize independent sales reps. You see, for years, we’ve considered our sales reps as sort of a ‘one stop shop’ for sales growth.
You know, sign them up and then simply expect them to prospect, nurture and eventually bring in opportunities and eventually close the business. Clearly, the sales environment has changed whereby this old formula doesn’t work.”
Manufacturers like SSI are taking matters into their own hands with their independent sales channels by playing more of a sales role throughout the buyer’s journey.
They're generating their own leads, partnering with their channel by nurturing prospects with online and traditional marketing sales efforts, and negotiating better deals with higher profitability and greater margin.
“More than ever,” says Anderson, “we collaborate with our sales force while the opportunity is alive instead of expecting our independent sales channel to handle this strategic role independently. Often these discussions result in identifying ways that we, as the principal, can augment their efforts.
Many times this includes reaching out to the customer or prospect, in more of a sales capacity from the home office. It reminds me a bit of the old saying about how it takes a village to raise a kid. In today’s sales environment, I feel like it takes a total company effort to make a sale.”
#2: Informed buyers require more value.
It’s not new news that buyers are spending 60% of their purchasing journey by consuming online content to determine potential suppliers and solution options.
By the time they reach out for a rep, they are already armed with information that traditionally only the sales rep had access to.
Buyers of products and services from manufacturers are requiring business insights and expertise in real time from highly knowledgeable sales reps. They’re less likely to spend time with a broker who boasts a catalog of widgets.
This reality puts additional pressure on having sales talent who know how to add bring value beyond what’s readily available online, and who are also adept at not commoditizing your product and services by making unnecessary concessions.
Both approaches are designed from the inside to the outside. That means they are both centered on what a vendor has to sell, not what a customer wants to buy. This is a huge difference, because buyers actually don’t buy the products you sell. What they buy is the value they can achieve with your products, solutions, and services."
CSO Insights goes on to say that value means different things to different customers - impacting their overall EBITDA performance to achieving a growth goal in a new market, while others want to reduce their expenses.
To that end, research shows that a salesperson who can have a value conversation with a prospect is more successful than those salespeople who simply stick to product conversations.
Tim Reisterer, one of the authors of Three Value Conversations drove home this point on a recent podcast.
“When we looked at salespeople and what separates high performers and low performers, you could argue that all of the salespeople on a sales team have the same products to sell.
They are part of the same team. They are all trying to follow the same process because companies try to institutionalize a process. They’ve all been given, if you will, a territory that should be as opportunistic as each other’s territories. So if one is a high performer and one is a low performer, what separates them?
All of those other things are the same and so it nets out to your ability or inability to articulate value—to tell a story that's meaningful that customers respond to and take it in a way that’s differentiated and powerful.”
#3: Fewer sales roles due to technology and diversification.
IoT and diversification is all the rage as manufacturers look to grow, add value, and incorporate service revenues to their business. A more complex offering has implications to your sales model and the sales talent required for success.
If the experts are right, manufacturers of B2B and B2C products will no longer be able to compete without embracing Industry 4.0, the trend of automation and data exchange.
According to Geo Scott, CEO with Americas’ SAP Users’ Group3, “We have cars with sensors, we have homes with sensors, and we are starting to have bodies with sensors. Any organization that is not thinking about how this digitized world impacts or disrupts will wake up one day and wonder what happened."
PR Newswire says that Industry 4.0 is here to stay and that the global industry 4.0 market will reach $214B by 2023.
Better offerings based on product usage are and will enable manufacturers to respond with customer-driven products in the marketplace. No question.
Gathering customer usage data and sharing it with a network of service providers and partners will require manufacturers to equip and develop product-wise, sales savvy engineer types that can:
- articulate a buying vision to senior leadership
- accurately communicate the product offering to a team of engineers
- manage the nuance of a complex sale
Manufacturers are looking internally and assessing their talent pool to see who has the aptitude, behavioral tendencies, and preferences to step into these high-demand, highly valued sales roles.
We use a sales-specific assessment with our clients that compares an employee’s results to a performance model to help them identify potential employees who have the capability to step into those positions. Here's an overview of those tools.
While IoT will allow manufacturers to expand into new markets and develop new product offerings, it will also streamline activities that salespeople have sometimes filled.
Salespeople who have made a living as “order takers” will become dispensable because data from IoT will automatically provide manufacturers with information they need for routine customer needs like restocking and order fulfillment.
Forrester forecasts 1 million U.S. B2B salespeople will lose their jobs to self-service eCommerce by 2020 which accounts for 20% of the B2B sales force.
“B2B buyers are living in a 2015 digital-first world,” says Forrester, “but B2B sellers are still living in a 1965 salesman-first world. Our new data shows that nearly 75% of B2B buyers prefer to buy online when purchasing products for work, yet just 25% of B2B companies actively sell online.
“Firms must adapt by building digitally enabled selling models that put self-serve eCommerce on equal footing with commissioned salespeople. The effects will be felt most significantly by sales reps who are considered order takers—those serving customers who purchase self-explanatory products in a simple selling environment.”
SIX Actionable Steps:
- Revisit the last five deals you’ve won and define the steps it took to convert those deals. Take note of the time it took at each stage of the buying journey. What role did your sales channel play? What role did your internal sales support team and product experts play at each stage of the buying process?
- What caused each prospect to move to the next stage? What commitments should your sales team have in place in order to move the deal to the next stage in the buying process?
- What were common reasons why prospects decided to invest in your product or service in the first place?
- Re-do your collateral (competitive comparisons, case studies, whitepapers) to reflect the needs or requests of prospects at every stage. Are you missing any critical marketing piece? Would a free trial or demo early on in the process expedite the decision? Do you need a more general piece to detail why the issue your product solves in a big deal?
- Write your value story. Explore how your product or service helps your prospects avoid the risk of external factors: new regulations, competitive pressure, product advancements happening in the marketplace. Describe a prospect's current state and then a prospect's future state because of your solution.
- Evaluate your internal talent to find potential candidates that can fill an ever-expanding and demanding sales role. Check out sales specific talent assessments that can help you coach and develop a successful sales team that are well equipped to articulate a more sophisticated offering.