Production minus sales equals scrap

Across the manufacturing and engineering sectors we place a huge amount of emphasis on principles such as production values, quality, research & development and innovation, and quite rightly so. But, writes Steve Thurlow of Huthwaite International, if engineering excellence is to be turned into real commercial success there’s another element that is too often overlooked - sales:

Business guru Peter Drucker and IBM founder Thomas Watson are just two of the many people alleged to have coined the famous remark, “nothing happens until somebody sells something”. Whoever it was, they were at least partly right. Yet time and time again we see engineering companies failing to take sales into consideration when developing new offerings.

In part that’s a legacy of a time when innovation really was king and, to make a sale, technical sales engineers simply had to present an elegant piece of engineering to equally technically-minded buyers. But times have changed.

Increasingly, the once successful technical sellers are forced to deal with non-technical buyers and, worst of all, procurement professionals. These are conversations technical sellers are less comfortable with. So what are the key sales strategies that ensure great production achieves commercial success?

I’ve suggested that in the past technical sellers found it easy to sell to technical buyers; now let’s look at what really went on. Technical sellers find it easy to sell to technical buyers because both can immediately see what the elegantly engineered solution can deliver.

Both understand the innovation is better/quicker/cheaper/more reliable etc. and can easily quantify the value such improvements bring. And that’s the first key point: people buy what they value, they always have.

In the ‘good old days’ the seller didn’t have to demonstrate the value because the customer could see it for him or herself. Now, because buyers are less technically aware, they need it spelling out to them.

The product can no longer speak for itself and the seller has to explain what value their innovation brings.

Even then it’s not that simple. Value is a buyer perception and what each individual customer values may be different. For example, a production manager may value, say, ease of installation, whilst a procurement manager values low cost of ownership.

And, just as importantly, what each customer values may be different to the value the seller sees. The key for sellers is therefore to ask the customer about their challenges and needs in order to understand what each individual values.

The seller must then tailor how they present the solution to demonstrate it meets each customer’s specific needs and hence delivers what each customer values.

Why ‘value add’ usually means ‘value give’

Lots of sales organisations talk about ‘adding value’ but this deserves closer scrutiny. When we look at what companies mean when they talk about adding value we hear things like “Going the extra mile” and “Giving a little bit more”.

In most cases it involves giving, at no charge, something the customer values. In effect it’s taking something the seller has and transferring it to the customer. So no value has actually been created or ‘added’, it has just changed hands.
The most effective companies realise this and go one step further. They seek to add genuinely new value by exploring the customer’s problems and needs to uncover new, additional ways their product or service can help.

By discovering new areas of impact that the same solution can address, the seller can create new value without giving anything more away - and really adding value for the customer in the process.

Every manufacturer knows that product innovation is essential for competitive advantage. But what happens when product innovation is hard to achieve or maintain?

Some products simply have no room for further improvement, others operate in markets were ‘copycats’ are quickly available or there simply may not be the time or money available for innovation.

What do you do when there genuinely is little or no significant product differentiation?

Once again it comes back to how the sales organisation approaches its customers. As we’ve seen, customers buy what they value, the products and services that satisfy their needs - and the more needs you uncover, the more your solution is valued.

So let’s add another dimension to that. Instead of simply uncovering more needs what if we start thinking about different needs?

Perhaps we can explore needs in other areas or, by considering the implications of a problem, link needs across the customer’s business. For example, a failed component may stop production but what effects could that have?

Could it mean order deadlines are missed and penalties incurred? Could it lead to customers being let down and so your reputation becoming tarnished? Suddenly a simple engineering problem has consequences for finance, sales and top management.

And most important of all, if you are the only seller who explores these areas, yours is the only solution that’s addressing them. You have created differentiation not by having product capabilities that your competitors don’t, but by uncovering needs and value that they haven’t.

Waste not, want not

Last, but by no means least, what about process? Virtually every manufacturer will be familiar with the concept of Lean and the idea of taking waste out of processes; so can it be applied to selling?

It’s a process like any other and, while some of the stages and outputs are quite hard to measure, it is possible to identify and eliminate waste. So what does waste look like in the sales process?

Visiting customers who are not in a position to buy is waste. This may sound obvious but how many sales people have visit plans based on frequency, spend or routine that take no account of the probability of an immediate sale?

They make the call because they always visit once a month. It’s done under the guise of ‘relationship management’ but is it really worthwhile or is it wasteful?

Perhaps even worse is visiting a customer who does have a desire to buy, then failing to uncover and develop their needs; in effect failing to do all the things we’ve just been discussing.

This is doubly wasteful because not only is the seller wasting his or her (and the customer’s) time, they’re also wasting a sales opportunity.

By going along and talking about themselves and their products or services and failing to uncover needs and build value, sellers miss real opportunities, and actually open the door a little wider for their competitors.

So, effectiveness comes from understanding what your customers need and value, developing ground-breaking products that meet those needs, and searching for additional value - particularly value your competitors haven’t identified.

And those sales organisations, which do that at each and every customer contact, will turn great product innovation into commercial reward. Production + Sales = Success!