Six Critical Steps for Manufacturing Companies to Increase Sales Productivity

Transcription

1 Six Critical Steps for Manufacturing Companies to Increase Sales Productivity

2 Introduction In an ever-changing innovative economy, it is crucial for manufacturers to constantly improve their sales processes to continue meeting customers growing expectations and to ensure that they employ modern tactics to acquire new clients. Based on the findings of the McKinsey Global Institute 1, Across manufacturing industries, the use of big data can make substantial improvements in how companies respond to customer needs. However, the use of big data for sales purposes is not as spread out among manufacturers as one may think. For instance, in the Quebec aerospace industry - one of the biggest manufacturing clusters in Quebec 2 - only one company out of five uses Customer Relationship Management (CRM) technology to drive sales productivity. This may be attributed to a lack of knowledge regarding the potential benefits of using CRM software within the manufacturing industry. This white paper aims to demonstrate how, by following six simple steps, manufacturers can rise to this challenge. This paper explains how to boost sales and enhance sales productivity specifically in the manufacturing arena. The document provides actionable recommendations for the different stages of the sales process, from identifying new qualified leads to assessing customer profitability. Let s explore the role CRM technology plays in helping manufacturing companies leverage big data to become more competitive. 1 McKinsey Global Institute, Manufacturing the future: The next era of global growth and innovation, CEFRIO, CAP VERS L ENTREPRISE NUMÉRIQUE - Portrait de l utilisation des technologies de l information et des communications dans l industrie aérospatiale québécoise

3 1 Identify new potential leads Increasing sales productivity starts with assessing how effective a company is at engaging with potential customers and adapting its sales techniques to their changing needs. Do you know that every second, two new professionals join LinkedIn? Do you know that the fastest growing segment in social media last year was the baby-boomer age group? For Twitter, it was the year age bracket, while for Google+ it was the year age bracket. From groups to blogs to job listings, these platforms are rich sources of information and a medium for conversation for those who want to connect with others in their industry. Though traditionally social media have been perceived to be used only by the younger generation, it seems that they are also increasingly catering to baby-boomers and decision makers. Targeting prospects efficiently can be difficult due to the overwhelming amount of social interactions. This is why a growing number of marketers and salespeople use social listening tools offered by certain CRM software. For example, a manufacturer of train electronics has managed to land a huge contract with one of the world s largest train manufacturers just by analyzing a social discussion about a technical challenge that the train manufacturer was struggling with. Once the train electronics sales executive demonstrated an understanding of the train manufacturer s challenge, they were able to establish a call (off the social world) that later on resulted in a long-term business relationship - using CRM social listening tools. 3

4 1 According to Gartner Research, customers will manage 85% of their interactions without talking to humans by Once manufacturers have identified potential leads, the challenge is to approach them. Customers are less interested in interacting directly with sales representatives, especially not during the early stages when they are just doing research. According to Gartner Research, customers will manage 85% of their interactions without talking to humans by As customers are becoming more autonomous, it would be beneficial for manufacturers to find new ways to engage with them. Using marketing automation tools, marketers and sales teams are able to respond in a more systematic manner to prospects signals of interest. For instance, some CRM software tools enable companies to set up alerts whenever prospective clients register to receive marketing material on a website (e.g., downloading a brochure). The alert could trigger the sending of another two days later with a case study that relates to the product brochure that was downloaded. A week later, a webinar invitation could be sent to learn more about the benefits of the product. Through these interactions, prospects would receive content they are genuinely interested in and, based on their response, manufacturers would be able to define their level of interest and how likely they would be open to a conversation regarding their product. By facilitating social listening and lead nurturing through marketing automation, CRM software enables manufacturers to better identify prospective clients and approach them in ways in which they feel comfortable to communicate. 3 Gartner Research, Gartner Customer 360 Summit 2011,

5 2 Get better visibility of the sales pipeline Leads are good, but sales are better. Once new qualified leads are acquired, the objective is to forecast sales and achieve an optimal sales conversion rate. Many manufacturers lack control over their sales channels, whether it is their satellite sales offices or their distribution network. Based on recent McGill research 4 (see chart 1) only 38% of the surveyed Quebec-based manufacturers have control over the majority of their distribution network. In order to gain better control, companies need to establish insights regarding the pipeline of their sales channels. They can encourage sales offices, distributors, resellers, agents and value-added resellers (VARs) to use their CRM system to report their pipeline on a regular basis. By centralizing customer data, manufacturers are able to gain a direct view of their sales pipeline. CRM software tools include sophisticated real-time sales reporting which provides the ability to aggregate and slice the data multiple ways in the same chart. This enables sales executives to go beyond the simple question of pipeline volume and to assess sales analytics such as sales inflow, outflow, velocity and potential bottlenecks. By integrating sales analytics into their distribution network, manufacturers are also able to identify discrepancies between actual and forecasted sales. Integrating CRM to a company s distribution channels can be a very complex process due to the necessity for negotiation with partners. However, manufacturing companies are encouraged to implement this path as they will benefit from significant savings in terms of time and money while gaining better visibility of the sales pipeline. 4 The Conference Board of Canada & McGill University, SME Manufacturers in Quebec: Adding Services to Boost Competitiveness and the Bottom Line,

6 2 Based on recent McGill research only 38% of the surveyed Quebec-based manufacturers have control over the majority of their distribution network. CHART 1 Ownership of Distribution Channels (percentage of films; n-110) 0% Less than 40% 40-80% More than 80% Note : Respondents were asked «Approximately what percentage of ownership does your company possess over the distribution channels? Source : McGill University 6

7 3 Foresee customer demand and enhance the customer experience Sales analytics are not only used to better view the sales pipeline, they can also be applied to foreseeing customer demand and to constantly improving the customer experience. In a survey of manufacturing executives, KPMG (see chart 2) 5 have found that the top three challenges to innovate are: lack of market knowledge, incomplete understanding of customer s needs, and shortage of innovative ideas. Between 50% and 75% of the executives surveyed by PricewaterhouseCoopers 6 declared it was a priority to innovate in order to create new value offerings in In order to develop new products and services, manufacturers must have a strong understanding of their customers changing requirements and circumstances. By using sales analytics, manufacturing companies are able to identify untapped offering opportunities, such as developing relevant services based on their customers needs and difficulties. PricewaterhouseCoopers found that the 20% most innovative manufacturing companies experience 28% higher growth than the least innovative ones. When asked for their plans to innovate, 95% of industrial manufacturing executives say their companies have plans to collaborate with strategic partners over the next three years. That s not all. They re planning to work together with their customers, suppliers, academia, even with the competition to spur innovation. Using sales analytics collected by CRM technology, companies can foster product innovation through co-creation and collaboration. Leading manufacturers also use sales analytics to identify under-served customers, to increase up-sell and cross-sell opportunities. 5 KPMG International, Canadian Manufacturing Outlook 2014: Leveraging Opportunities, Embracing Growth, com/ca/en/issuesandinsights/articlespublications/documents/4504-canadian-manufacturing-outlook-2014-web.pdf, PricewaterhouseCoopers, Rethinking innovation in industrial manufacturing: Are you up for the challenge?

8 3 PricewaterhouseCoopers found that the 20% most innovative manufacturing companies experience 28% higher growth than the least innovative ones. With CRM software, companies are able to analyze their customers purchase history to identify sales patterns. The generated information can be used to suggest additional products/services related to the purchased product, or offer recommendations for further purchases. The purchase history also gives precious clues about the purchasing cycle stage that a customer is in. This makes it easier for sales personnel to deliver tailored follow-up offers. Better foreseeing of customer demand also has implications for supply chain management. By leveraging the data collected in the CRM solution, manufacturers may build a Sales, Inventory, and Operating Plan (SIOP) to address customers needs in a timely manner. For instance, operations managers can forecast product demand surges in a specific segment, at a certain time of the year. This process enables manufacturers to anticipate the required supply capacity much more accurately, ensuring a satisfactory customer experience through prompt delivery. CHART 2 Challenge to Innovate Lack of knowledge of potential new market areas 29% Incomplete view of difficulty understanding the needs of our customers 20% Shortage of ideas to drive innovation 18% Source : KPMG, Canadian Manufacturing Outlook 2014: Leveraging Opportunities, Embracing Growth (2014) 8

9 4 Streamline the sales processes through workflow automation Once companies have a 360 view of their customers requirements and expectations, they can shorten the response time for Requests for Quotations (RFQs) by using CRM-based automated sets of standard rules during the quotation process. This means that the turnaround time for standard quotations to the client is reduced and sales executives are able to focus on other important tasks. Of course, not all RFQs can be automated. As demand for customized products and services continues to rise, it is vital to enable collaboration for complex quotation processes to address unique customers needs and personalized products. Made-to-order quotation is a time-consuming process and it requires input and approval from various functional/technical specialists, some within the company and some from external vendors. By facilitating collaboration, manufacturers may, for example, automate the quotation workflow, making sure that feedback is received from all the relevant parties in a timely manner. By centralizing quotation data, sales efficiency can be substantially improved and customers will receive reliable quotes within a shortened timeframe. Facilitate collaboration and engagement by increasing accessibility to data. 9

10 5 Facilitate collaboration and engagement by increasing accessibility to data Sales professionals in particular are increasingly mobile due to distributed sales teams. In order to be effective and to close deals, they need to be able to access reliable and up-to-date customer data wherever they are, whenever they need it, which is where mobile and cloud technologies come into play. Gartner Research 7 predicted that 70% of professionals will conduct their work through personal mobile devices by 2018, and that Software-as-a-Service 8 (cloud) solutions could account for the majority of CRM applications by Gartner Research, Bring Your Own Device: The Facts and the Future, Gartner Research, The Gartner CRM Vendor Guide, 2014,

11 5 According to a recent Accenture report 9 (see chart 3), digital technologies not only contributed to increasing sales effectiveness, but they are now poised to be catalysts and accelerators of business transformation. Accenture has found that top-performing B2B companies outperform other companies just by seriously considering social, web, mobile and cloud technologies as game changers. The report highlights that there is a consensus among sales masters regarding the potential of these technologies to generate new revenue sources and improve engagement with customers, employees and partners. As manufacturers continue to expand internationally, cloud and mobile CRM applications will continue to play a critical role in facilitating sales collaboration across multiple offices and countries. As the McKinsey Global Institute 10 points out, [Manufacturers] will be challenged to organize and operate in fundamentally different ways to create a new kind of global manufacturing company - an organization that more seamlessly collaborates around the world to design, build, and sell products and services to increasingly diverse customer bases. These organizations will be intelligent and agile enterprises that harness big data and analytics, and collaborate in ecosystems of partners along the value chain. By providing team members access to real-time data, manufacturers can facilitate collaboration and standardize sales processes, thereby enhancing the effectiveness of their sales team. 9 Accenture, Powering Profitable Sales Growth: Five Imperatives from the 2014 Sales Performance Optimization Study, McKinsey Global Institute, Manufacturing the future: The next era of global growth and innovation,

12 5 Gartner Research predicted that 70% of professionals will conduct their work through personal mobile devices by 2018 CHART 3 Sales «master» understand the potential of digital technologies and outperform other companies. TECHNOLOGIES SEEN AS «GAME CHANGER» BY PROFILE MASTERS STRIVERS : Confident Seekers Great Planners Execution Heros TRYING HARD / LAGGARDS DIGITAL (work, digital) - will significantly improve engagement with customers, employees and partners. - will provide significant sources of new revenue for our company. 86% 86% 84% 79% 68% 58% MOBILE - will significantly improve engagement with customers, employees and partners. - will provide significant sources of new revenue for our company. 91% 86% 83% 80% 67% 63% CLOUD - will significantly improve engagement with customers, employees and partners. - will help to become more agile and flexible like never before. 90% 89% 82% 79% 68% 66% 12

13 6 Mesure customer profitability accurately Considering the great efforts to instill sales efficiencies, how can manufacturers measure the impact of increased sales productivity on their bottom line? According to KPMG s Global Manufacturing Outlook , only 12 percent of manufacturers say they are very effective at determining their profitability. Asked what profit and cost analytics practices their organization will prioritize in the next years, the executives surveyed identified dashboards, applications, and analysis as the three most important ones (see chart 4). To assist sales teams, certain CRM solutions now feature powerful dashboards with cost distribution tools to determine customer profitability. Such tools attribute costs to all activities (customer service, sales call, RMA, etc.). Each time an employee assigns an activity to a customer in the CRM software, the cost is computed and aggregated to assess the net profitability. The CRM tool computes the actual customer profitability on a daily basis using gross profit from orders and the cost allocation for each activity, and then assigns a static rank (e.g., A, B, C, D) to all customer accounts. By assessing how profitable a customer is, companies are better equipped to determine how much they should invest in customer retention on a case-by-case basis. Certain CRM solutions also allow manufacturers to track service and warranty activity, lifetime value of equipment and even equipment at risk to ensure profitability and customer satisfaction through improved service response. Customer data analytics enable companies to design cross-sell and up-sell techniques to increase customer profitability, hence supporting sales executives through better-informed decision-making. 11 KPMG International, Global Manufacturing Outlook: Performance in the crosshairs,

14 6 According to KPMG s Global Manufacturing Outlook 2014, only 12 % of manufacturers say they are very effective at determining their profitability. CHART 4 Which of the following profil and cost analytic practices are your organisation s top priorities in the next 12 to 24 months? Dashboards and drill-down capabilitt 34% 34% Applications Integrated planning and forecasting 32% Analysis statistical and driver-based 3% Multi-dimensional margin and cost analysis Less use of Excel 11% 13% Central repository making cost and margin data easily available 18% 25% 31% Sources of information use of new and more detailed information, internal and external Modeling scenarion and predictive Rationalization of data models 14

15 Conclusion The impact of social, mobile and cloud solutions has made it clear that digital technologies and sales analytics are disruptors in the manufacturing arena. They can also be considered key success factors in achieving substantial growth. Manufacturers can leverage these innovations through CRM technology to boost their sales productivity and enhance the customer experience, thereby increasing their competitiveness. By investing in sales analytics, manufacturers would be in a position to strengthen their lead generation process, increase visibility of their sales pipeline, and improve customer demand forecasts. Making the data accessible to sales teams also enables manufacturers to streamline the sales processes, improve collaboration among a distributed workforce and measure customer profitability. In order to effectively customize a CRM solution to their specific needs, manufacturers should partner with CRM consultants having in-depth knowledge of manufacturing processes. Experienced consultants will be able to assist in developing a phased implementation timeline that will allow manufacturing companies to fully capture the essential data required to provide decision-making insights and sales productivity. 15

16 About Gestisoft Gestisoft is a CRM & ERP consulting firm for small and medium-sized businesses and organizations. Founded in 1997, Gestisoft has hundreds of clients throughout Quebec and Ontario. Gestisoft assists organizations in gaining organizational intelligence to increase their agility. Whether companies want to implement mobile or social, cloud or on-premise solutions, Gestisoft guides them in deploying a solution which captures the essential data required to provide decision-making insights. This enables companies to streamline processes, enhance performance and productivity, and receive a consolidated picture of operations, marketing and sales. Unlike other service providers, Gestisoft takes a proactive approach with its privileged support plans and integrity Health Check reports to ensure agility. With vast expertise in the manufacturing, distribution and service industries, Gestisoft better understands industry-specific needs. 16

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