Clearly foreseeable risks to top-line growth
Industrial manufacturing companies face a multitude of challenges. Typically they are very proactive about addressing and rectifying those that lie in manufacturing, operations and the P&L. They are less attentive to latent top-line growth challenges. Yet inattention to lurking industrial sales threats simply exacerbates the extant risks.
Two other unseen risks should be addressed.
- A demographic time bomb in many sales channels
- Slow lead follow up
Greying sales channel
Industrial sales is often managed through indirect sales channel of some sort - often reps and/or distributors. Many of those channel sales relationships were formed many years ago. Literally in a different B2B sales millennia.
That raises two problems for most industrial manufacturers. First, sales channel's primary role for which they are compensated was the creation of projects and generation of leads in their region. Most channel never excelled at that, and as buyers now conduct extensive research themselves and are no longer reliant on sales reps for information, channel is even less effective. Lead generation responsibility now falls to the manufacturer - but that's a mind shift that most manufacturers haven't yet made.
Second, the rep model particularly (although distribution in many cases as well) is challenged by demographics and long-standing loyalty. Many rep agencies are really one person in practice - a well known and respected, knowledgeable, responsive and reliable person who has cultivated strong relationships with both manufacturers and buyers. Many such rep relationships were formed in the 70s & 80s and have been fruitful for manufacturers. But many industrial sales reps are nearing retirement age, and many have no strong or viable succession plan (in most cases a junior person in the agency simply doesn't bring the same horsepower.) Further, the traditional rep model is largely built on a model of information asymmetry. And today buyers know more than most reps.
That creates a challenge for manufacturers - and it's a challenge that's complicated by loyalty. Those reps that have been there for 30 years, helping to build a business, haven't fully retired yet. And manufacturers are therefore appropriately hesitant due to loyalty, to simply drop them. That's honorable, but it carries an enormous opportunity cost.
The solution is to address both sides of the equation simultaneously. If manufacturers take responsibility for lead generation and nurturing (what buyers expect anyway), they can manage the lead gen for territories where channel is nearing retirement. By passing off leads at the right time (once nurtured and sales ready) they can support their channel partners - yet they've established a direct relationship which they can leverage to drive sales and care for prospects as channel's engagement diminishes. This is a model that provides prospects a great experience, allows manufacturers to drive their growth, and honors the obligation of loyalty that many manufacturers feel toward their industrial sales reps.
Lackadaisical lead follow-up
"We need more leads"
"These leads are horrible."
You've certainly heard both of these from your sales team (by the way, do you ever fret about the fact that your legacy org chart that differentiates marketing, sales and customer service, almost certainly disrupts your prospects'/customers' experience?)
How often do your sales reps actually dig into the visitor behavior details you've captured prior to following up on a lead? And how many of them leverage the enablement tools and content you provide? And how many really understand the nuanced approach that's necessary to successfully nurture and sell and inbound lead - as opposed to a 'traditional' lead? Probably not many. But those may be secondary concerns.
It turns out, according to recent research by SalesStaff, that allowing more than an hour to pass before responding to leads substantially reduces the likelihood of ultimately closing the deal. But it gets worse. In the B2B sales world response times were found to be as outrageous as 93 days for an email and 42 days for a follow up call.
Other startling findings included:
- only 1/2 of companies with marketing automation even used the tool to send an automated lead acknowledgement email, and only 1/4 actually used the tool to send a personalized response
- only 22% used the phone, and of those 40% only made one attempt
- further "the likelihood of making contact with an inbound lead is less than 40% on the first attempt and about 90% by the sixth attempt. Yet only about 5% of sales reps make six attempts"
The reality is that inbound marketing leads require savvy inbound sales follow up. Many companies have failed to adapt accordingly, and it's costing them business.
That's part of the reason a "Chief Revenue Officer" role is becoming more important - the old silo approach to organizational and resource allocation is no longer appropriate for today's buyer expectations as outlined here.
Understanding the economics
This all boils down to a financial question for management. But many think of 'marketing' as a P&L cost line. That's not quite how buyers see it....