7 Ways Industrial Marketing Increases Business
In the world of manufacturing and industrial business, it’s not uncommon for a company to have achieved annual revenues of $5-10 even $20 million, without ever devoting a certain percentage of their budget to marketing communications. They may have a brochure; a website; exhibit at a few trade shows each year; maybe even throw out a print ad every once in a while. They do the bare minimum they feel is expected by potential customers so they can get their foot in the door – literally. The mind-set is usually that the only real way to build a business is by putting sales people in front of prospects.
Sadly, some of the people I meet (we’re talking about business owners and marketing executives!) actually don’t see much difference in sales and marketing. That’s why in manufacturing and industrial companies, you so often see the title “Director of Sales & Marketing” or “VP of Sales & Marketing.” Might I be so bold as to say that this seems to be a position that is at odds with itself? Marketers, if they are doing it correctly, focus on meeting the needs and objectives of their target customers; while sales, conversely, tries to make customer need match whatever product or service it is selling.
There is even more confusion about what constitutes “marketing. ” Marketing entails several functions that include:
1. Developing the products or services that customers want.
2. Pricing the products or services correctly.
3. Making the products or services readily available to the customers.
4. And finally: Promoting the product or service, which if done correctly, not only convinces customers that the product or service is preferable to its competition, but that it is clearly the only choice. This is the field of marketing “communications” and of all the marketing components, it is the one most likely to be outsourced and the one most likely to be neglected if a company is making a profit.
I think that effective marketing not only helps to increase sales – it leads to the creation of a more valuable asset – a RECOGNIZED BRAND – something you might want to sell some day. I spend a lot of time talking about why a company should invest in marketing; this post takes a slightly different tact by going beyond the short-term reasons, and explains how a company that focuses on marketing will be more attractive to potential investors in the long-term.
An employee may not like the fact that their company’s owner would like to sell out and retire to Costa Rica; but the reality is, most privately owned, small to mid-size industrial business owners will either pass the reins to their company on to family or look for investors to buy them out when they’re ready to retire. If your long-term vision is finding a larger company that wants to buy your company’s expertise, technology or share of the market (and get paid top dollar for it,) then you’d better start thinking strategically about marketing. Here are 7 compelling reasons why:
1. Marketing communications creates “top of mind” awareness
All you have to do is watch TV for a few hours (and actually watch the commercials) to get a sense of how repetition of the same message starts to creep into your subconscious mind. After you’ve seen 5 commercials for those cute, new VW’s, you suddenly find yourself daydreaming about going car shopping. After all, that Suburban IS almost 8 years old, and of course you want a vehicle that’s more fuel efficient! I know this isn’t a manufacturing or industrial scenario, but trust me – the same underlying psychological phenomenon occurs in the case of industrial marketing. An integrated marketing communications plan that gets your messaging out to the right target audience, consistently and over time, WILL eventually create the “top of mind” awareness for your product or service that turns a prospect into a customer. Recognition and awareness for your company also make it much easier for your sales staff to get someone on the phone or schedule an appointment. Companies like to do business with companies they “know” and have positive perceptions of. Likewise, investors like to buy recognized companies.
2. Preferred brands command a premium price – short and long-term
Go through a process of determining your company’s unique value proposition, and then start purposefully communicating that to the marketplace (promotion.) This is the only way you will create a point of differentiation between you and your competitors. As your customers and the industries you sell to begin to recognize your company (brand) as the preferred choice for a certain product or service, it allows you to charge premium pricing. Not only does this boost sales in the “now,” it creates a perception in the minds of future investors that your business has more value than another one that claims to do the same thing.
3. Happy customers not only send referrals, they create perceived value
Every sales person knows it, but businesses still hammer them to get out and develop “new” business: the most powerful form of lead generation comes in the form of an existing happy customer. Happy customers talk to other potential customers, even in the industrial world. I talk to manufacturers every day that tell me a good percentage of their new business comes through referrals from satisfied customers. It takes more than the experiences with your company to make a satisfied customer – one who is willing to be an evangelist, of sorts. It also takes a marketing strategy that positions your company (in the minds of your target audience) as the market leader in overall customer satisfaction and intimacy. It’s part of the image you build around your brand – it’s the magic result of well executed brand development and marketing communications. Word of mouth praise for your company not only attracts more business, it attracts potential investors that want to own a company with this kind of status.
4. Planned marketing communications create a system that can be replicated
I have clients that have their marketing communications planning and implementation down to a science. A meeting in the Fall determines the focus for the following year’s marcomm initiatives. Budgets are allocated; tactics agreed upon; responsibilities delegated; and contracts negotiated. The result is continued momentum in building brand awareness and credibility, and a rather flawless execution. This process is one that can be documented and taught like a system. In any manufacturing or industrial service company, documented processes lend to the overall impression of the business’ stability and value. If a potential buyer can see how they too could operate the systems within your company, even after you are long gone, you’ll be creating a more marketable asset. If you need to, hire an expert: but start creating and documenting a marketing communications system that you can teach others to run and remove yourself from the lead generation game.
5. Repeat revenue streams ensure a profit now and later
This really falls more into the other marketing functions than that of communications, but a smart marketing strategy not only focuses on a company’s core market and value proposition, it also finds ways to build multiple channels for recurring revenue. Smart marketers (and business owners) look for ways to diversify their offerings and especially in areas where repeat sales require little to no effort on the part of the sales team. With the Internet, this is more possible than ever before; particularly if you sell a product that is not custom engineered, or a service that can be easily classified without a lot of customization. Recurring revenue, generated from an effective marketing strategy, and teamed with a stellar customer service approach is a combination that is very attractive to a potential new owner.
6. Nothing lasts forever: marketing has to be a long-term investment
Here in Houston, where I live, getting into the “good ole’ boy network” was the way an industrial business succeeded in the last half of the 20’th century. Today’s upper management is not concerned with who you know and what clubs you belong to. They want to know how you’re going to help them meet their objectives and solve their problems. Relationships developed over time will get you so far; but what about the increase in career moves and job-hopping? What happens when the person you developed a relationship with moves to another company and isn’t in a position to specify what you sell? What happens when the person you developed a relationship with retires and is replaced with someone much younger? What happens when YOU are ready to retire? Will there be someone there who can step into your shoes and carry your company through that transition without losing customers?
The way to prevent a negative outcome in any of these scenarios is a consistent marketing communications program. If you’re keeping your company’s name out there and building brand identity and recognition, you have less of an educational process to deal with every time a new person is introduced to your business. This also comes into play with young people just entering the work force. The senior engineer at your top customer may love your product; the new hot shot engineer fresh out of college doesn’t know anything about it – UNLESS they’ve already been exposed to it through Professors, the Internet, trade publications, trade shows, etc. Consistent and persistent messaging, going to an integrated mix of contact points with your customers and prospects, is an investment in your company’s long-term stability and value.
7. Employees who are “brand ambassadors” sell your company – to customers AND potential buyers
Today, marketing is not just something you do “outside” of your company. If you truly want to create a powerful image and value proposition for your business, the first group of people you have to convince are your own employees. Internal brand integration is just as important as your external marketing strategies. Every employee in your company should understand how their position contributes to the promise your company makes to its customers and be motivated to carry it out. Understanding their unique role in your company’s brand promise is just the beginning; if you want brand ambassadors, you need happy employees. An employee that feels appreciated and fairly compensated (and that doesn’t always equate to their salary) is much more likely to sing the praises of your company. I think it goes without saying, this is good for business today as well as making an impression on a future investor. Who wants to buy a company full of overworked, disgruntled employees?
Marketing IS a long term investment. You will not create a recognizable brand (name, image, reputation, etc.) without it. You will not develop a stable, growing business without it. You will not beat the “lead generation” game without it. You will not create “brand ambassadors” among your employees without it. You will not create a company that has obvious value to a potential buyer without it. Marketing is essential to the health and continuing prosperity of any business – including manufacturing and industrial businesses. So what are you waiting for?