“Just get us the names,” has been the request of many contract manufacturers trying to implement a targeted sales approach without really changing sales practices. Starting with better leads but still selling the old way will not improve results in profitable closes per call. Aiming the laser in a Laser-Guided Sales process requires three basic planning steps (figure 1). First, developing a clear value proposition to the customer based on an understanding of what the manufacturer does well profitably.
Second, segmenting the market and targeting the likely customers who will recognize the value in that proposition. Third, determining how to demonstrate that value to the target customers. Doing your homework is not an attractive chore, especially when under immediate pressures to grow sales while volumes decline, or to digest increasing sales while the supply-base consolidates. But doing the homework now will pay off with sales that better fit the organization’s strengths, and therefore greater profits.
Homework benefits the customer
While the old way of selling contract manufacturing services is disappearing, it still persists. That method involved the sales person going to the customer with an equipment list, and perhaps the latest part processed for another customer, and saying, “Here is what we have, do you have anything for us?” That approach required the customers to do much of the work of determining the best way to manufacture the components that they wanted to buy and the best way to use the supplier’s capabilities.
The engineering staffs at customers today are forced to do more with less. With more responsibility, most do not have the time to develop the best manufacturing process for the components they must design, validate, and program manage. Customers also have fewer resources to address issues that arise during the life cycle of the product. For both reasons, customers look more to the contract manufacturers who are the experts of the process to know the most cost effective method to produce what is needed, and to know what to address in the process or design to solve problems relating to their components. Increased workload per engineer at the customer is further aggravated by the noise of desperate companies clamoring for fewer and larger requests for quote on new programs.
Declining resources and declining share means customers must reduce their supply base of contract manufacturers. The suppliers to keep must be the ones that provide the best value. Best value may include new technology, lowest cost, best problem solving, fastest to market, and may also include least hassle with which to work. The customers’ decisions will be easiest regarding companies that clearly and consistently demonstrate their value.
Homework benefits the supplier
Regardless of business model, applying lean manufacturing principles to the entire enterprise has been the emphasis of manufacturers in recent years. As a result, there are no “extra” heads in most departments, especially quoting, engineering, and sales. Meanwhile, the consolidation of the supply base and the desperation of the customers to find lower prices have driven up the volume of quotes requested of suppliers. Managing the quote volume to the staffing level requires ignoring some of the quote requests, preferably the quotes that the manufacturer will not or should not win.
It is wasteful and contrary to lean principles to expend technical or sales resources pursuing work that the supplier will never win. It is also wasteful to take work that doesn’t belong in a particular manufacturer’s plant. Despite a need to get sales, unprofitable work not only drains cash flow but also uses capacity that could be better deployed elsewhere. Or, despite some profitability, if the manufacturer’s capabilities are sub-optimal for the work there is a high risk of losing the work to someone who is, and all launch costs may never be recovered.
Sending sales personnel out to “get work” without clear focus on what the company does well to make profit, what the value of those capabilities are to the customer, what customers really appreciate that value, and a means to demonstrate that value is also waste. Sales calls without closing, or closing on bad fit work are expending scarce resources with inadequate or no return for the company.
Sales planning process
With a little thought and realistically facing the brutal facts, most companies can identify what it is they do well and profitably. The challenge is translating this “us” focus into the “them” perspective necessary to formulate a value proposition. A value proposition must clearly articulate benefits the customer will receive that exactly correspond with the customer’s needs or wants. For example, a supplier promoting their strength, “we produce the best quality precision parts,” is using an “us” focus and requires the customer to assess what problems are solved by precision parts and where precision parts are needed. Instead, a supplier promoting their value to the customer with “you will never have another warranty problem in your fuel nozzle,” for example, has presented how precision parts can solve a problem with which the customer can instantly relate.
A value proposition might not come easily to a group of managers in a conference room. Exploring the market place for information on similar processes, similar products, alternative processes and products, and drivers in the market can shed incredible light on what are the real needs and value opportunities.
Once a value proposition is drafted, gaining deeper understanding of the potential markets is a requisite to targeting the right customers and formulating how to best demonstrate and deliver the value. Gather information such as market trends, technologies, customers, customers’ sourcing strategies, competitors, competitors’ methods of differentiation, and required competencies. From that information, further segmentation of the markets around what drives the greatest need for our value, and what specific customers would appreciate our value the most is the equivalent of using a scope instead of the naked eye. The quadrant of customers that both need our value and recognize that they have that need are the “bulls eye” customers (figure 2). Subsequent research on those specific customers can reveal specific sourcing practices, the customers’ value propositions, current programs being awarded, and specific wants and tradeoffs. This level of understanding enables the contract manufacturer’s sales people to focus on high potential business with the precision of a laser.
For example, the first round of research identifies that precision parts are used in fuel systems and why: exact metering of fuel, sealing against leaks and emissions, liability risk of failures, high cycles during use, etc. The next round may reveal information about topics such as which fuel system suppliers are known for highest quality, what technologies are being developed, and what manufacturing processes they have in-house. Knowing, for example, which customers are making “make v. buy” evaluations and which need to buy from outside help target the right customers. Further research about those customers without in-house capabilities may reveal specific programs, specific technical challenges, and how they select and evaluate suppliers, as well as contact names.
However, having a laser bead alone on the target doesn’t mean the supplier will capture the business. Having a well thought-out, well documented plan to demonstrate that value increases the chances the sales professionals will hit their mark. Does the situation warrant bringing a working prototype to the first sales call, for example. Performance data, testing data, or designs may be other approaches to demonstrate the value in the supplier’s value proposition is real, can be attained, and can meet the needs of the customer. Other questions to answer include: to what level in the organization should we sell; how can we protect our value from being given to a competitor; when should we approach the customer, and with how much detail. Documenting the approach into a plan, complete with responsibilities, expected outcomes, and due dates will improve the accountability and increase the chances for positive results.
Executing & measuring results
A clear plan with tasks to target the customers who will most appreciate the value proposition is the first phase of the hard work to capture business at which a contract manufacturer can be profitable. Managing the execution of the plan by tracking tasks and deadlines, and adapting the plan as new information becomes available is the critical phase to ensure all of the homework pays off. Collecting data on the outcome, such as to who was the work awarded, why, and at what price builds valuable intelligence to use to adapt the approach in future opportunities. After a few cycles of aiming the laser at sales opportunities, not only will the organization feel invigorated for taking a very pro-active approach to selling, the mix of work within the manufacturing plant will become more of the type of work you can do well.
