I had a conversation the other day with a gentleman who is on the executive team at a manufacturing company with five production facilities that all support 4 major customers. He joined the team a few years ago, and was shocked to find out they have had one sales guy who has pulled down commission checks in the tens of thousands per month for the past 10 years, all from those same 4 customers.
Something's horribly wrong with this picture. I asked him a handful of questions after learning this, and I thought I would share parts of our conversation with those of you in the manufacturing space to see how many of these you're wrestling with yourself.
Does that sales guy commission fall off after a period of time?
His answer was no. That sales guy was paid the same commission for every order that came through. All he had to do to make a fat commission check was to make sure he kept his customers and that they came back and ordered again and again.
That's not necessarily the wrong behavior to incentivize. You obviously want to make sure that your sales and customer support teams are aligned with the goal of keeping every customer you have and losing none of them to a competitor. But it's not a very complete way to incentivize sales.
Consider revamping the commission structure to incentivize sales to be hunting new, unique customers. Sure, they still need commission for maintaining customer loyalty, but perhaps dropping the percentage after two years and again after five years will keep the sales team from resting on their laurels too long.
What happens if one of those customer leaves?
If this organization lost one of their four major customers, they would have to shut down at least one, if not two of their 5 production facilities, including lay-offs, unemployment, and thousands in lost production.
The idea that four people in the world hold the employment of how many hundreds of people in their hands should be enough to keep any executive awake at night. I went through a season with one company when one major customer left and took 40% of the revenue with them.
The key issue here is diversification. Sure, you need whales, and your sales team should be hunting whales. But you also need a whole bunch of trout just to keep the boat from tipping too far in one direction. Obviously, commission on these isn't quite as enticing as it is with whales, so get creative on how you incentivize your sales team to go find you a hundred small customers to balance out your 4 whales.
Do you do secondary operations, direct to consumer, or through distribution?
A little bit of all that, actually. Some of their facilities do secondary ops for other manufacturers, others manufacture consumer items that are sold through distribution and online through an eCommerce site.
Obviously, this may be less the norm and more an exception, but let's dig into each of those a little bit. If you do secondary ops, you may consider conducting a market survey to get a better grasp of the scope of your prospect universe, the reasons they buy, and the triggers that would cause them to switch out members of their process.
If you are among the few (and growing) number of manufacturers who are selling direct to consumer, eCommerce isn't slowing down. Look into selling on Amazon, or using a platform like Shopify or Magento to build your own eCommerce sire. Sales from eCommerce are easy to track, and through a proper application of data analytics and marketing, can quickly become predictable and repeating.
Selling through wholesale and distribution is about putting your sales team in front of purchasing teams at the right stores. Again, a market survey may give you insight into the scope of the universe, their motivators and triggers. This data can be used to segment the market and leveraged to create strategic sales initiatives.
What kind of content marketing or lead generation are you doing?
Obviously, the gentleman's team does almost no content marketing, because they haven't properly prioritized new-customer acquisition.
There's a lot of buzz lately around becoming a "thought leader" in your industry. Sure, this can be done by releasing some good white papers, publishing a study you conducted, or speaking at conferences and trade shows, but you can also become a thought leader by consistently pumping out high quality, relevant, engaging content. Even if it's only engaging to other members of whatever niche market you're in, let them all know that you know your stuff, and you're doing things better than the competition.
Lead generation usually refers to creating enough interest that prospects are calling you to buy from you. It can also refer to phone-based sales, generating interest through personal connections with your prospect base. Either way, generating interest among your prospect base has to become a priority for growth and sustainability in an increasingly competitive manufacturing landscape.
To sum it up, revitalizing thesales process for manufacturers involves lighting a fire under a complacent sales team, setting goals for a diversified client base, understanding your verticals and using data to approach each, and keeping yourselves at the forefront of your prospects minds.