Level funding or 2% increase?
Experience tells me that as you work through budgeting you're considering the sales & marketing budgets through a lens of two other numbers. First is the '14 budget. Second is the top line growth expectation that's baked into your overall '15 plan.
The default starting point is the '14 budget and adjustments up or down are made from there.
That's a huge strategic error, but it's typical for manufacturing companies. Faced with a need to increase manufacturing floor space or add substantial capital investment to provide additional volume or new capability, you'd build that change into your operations budget.
But when it comes to sales & marketing, the sales budget may consider adding a couple reps, while the marketing budget is quite probably just an allocation for trade shows (which is then poached from on occasion for small other requirements.)
Not only is it time to manage the top line with the same rigor as you do the bottom line, applying process excellence to revenue growth, but it's actually time to blow up your sales & marketing org chart and therefore the budgeting process.
Adjust to today's markets
Have you increased your spend for coded fax paper 3%/year since 1990? Of course not. At some point you switched to plain paper, then to virtual fax, and maybe have even eliminated faxing completely. After all it seems a bit silly in an email world.
Coded paper is a relic - it was great at the time, and then the world moved past it.
The same has happened to your sales & marketing arrangement.
There was a time when your direct sales reps were the ones that drove your business. That's why they were the highest paid employees of the company, and why you tolerated egos and behavior you wouldn't have from others. Marketing in contrast was a smaller, almost administrative function which preceded the real work of sales. They created brochures, scheduled trade shows, monitored competitors, modeled pricing, etc. The marketing staff was invariably smaller than the sales team - probably no more than 1/2 the size and more likely 1/4 to 1/3.
You probably even account for the expense differently. Marketing is treated as a cost, cutting directly into the bottom line, while sales is treated as a cost of sales, essentially a variable cost you're happy to bear.
But here's the problem. That staffing and budgeting model mirrored the roles of each when direct sales reps were the fulcrum in a world of asymmetric information between buyers and sellers. It's a different world today. And buyers are emphatic that they are not interested in speaking to sales reps until they're approximately 70% of the way through their buying journey.
That means that you must transition from a company that sells, to a company that helps buyers buy. And you must adapt your staffing and budgeting just as surely as if you had to make massive investments in new production capability.
But it's probably too big a change to make on your own!
The role of boutique consulting firms
You harbor some impression of consultants - good or bad, there's a predisposition. And that tends to color your opinion. Often small companies see consultants as too expensive and superfluous, while larger companies use them for political cover for decisions they've made. The real value is perspective and insight which can help propel companies to new levels. Inherent in that is a substantial change management role. There's nothing newsworthy in that. But for manufacturing company CEOs and presidents who are tweaking their budgets and considering adding (or cutting) a marketing or sales resource, it's probably time to consider the potential value of boutique consulting firms.
The market is dictating a massive shift in the way you sell. You may not fully appreciate it yet, and implementing that shift will require skills and perspectives that are probably not in house. Further it will require change management expertise and a position far removed from any vestigial silos.
The right consultant, therefore, could be an incredible asset to the sr. executive uncertain how to navigate this seismic change in how B2B sales are made. But in a world populated by carbon copy consultants of every sort, including many freshly minted MBA types with no relevant practical experience in the industrial manufacturing world, is it even feasible to identify one that's different?
Selecting a capable business advisor
Manufacturing companies that are willing to tackle this revenue growth challenge, rather than simply "whistle past the graveyard", will find value in a consultant with the right background. Key points to consider include:
- relevant industrial manufacturing experience
- expertise in direct and channel sales
- deep understanding of technology and evolving B2B marketing trends
- familiarity with change management approaches
- complimentary sr. executive perspective (walked in your shoes)
- exceptional writing and communications skills
- high level strategic vision and tactical execution comfort
- ability to distill complex system environments into manageable concepts
There are also certain warning signs:
- narrow range of expertise - tends to focus on a single tactical approach (e.g. sales training or export controls)
- limited industrial experience
- lack of business management (P&L) experience
- domestic only background (inadequate for today's global markets)
- product focused perspective
'15 evolution for '16 success
So as mid-size manufacturers plan their '15 budgets they have an opportunity to use '15 as a year for systemic adaptation rather than simple incremental tweaks. Management must set the tone - and incremental adjustment will set a tone of complacency just as surely as sweeping change would set a tone of strategic engagement.
Understandably though the scope of B2B business development change required and specific implementation will not be intuitive to most industrial manufactures. Boutique consulting firms which specialize in this area and bring the requisite expertise hold the key to the successful transition for many such companies.
Learn more about the skill set companies should consider in our whitepaper on managing B2B market complexity.