Growth isn't all good
Jamie Cartwright (@cart_writing) had a great article recently on the Weidert Group Whole Brain Marketing Blog. Writing for manufacturers of capital equipment he rightly pointed out that often those of us in the marketing world do clients and prospects a disservice with our bias toward growth.
We tend to assume that every company wants to grow, and wants to grow explosively. And that's simply not the case. In fact many would be content to maintain their current operation profile without the HR, regulatory, operational and finance hassles of growth - and they find our fixation off-putting. They sense there's an alternative to either hyper-growth or a slow motion death spiral...but they don't hear it discussed.
Jamie's point was that companies needn't simply pile on orders, but could use marketing to generate enough leads to select those that they find preferable.
That's a valid point - but it doesn't fully tackle the scope of the challenge of manufacturing revenue growth in the B2B industrial, heavy machinery and capital equipment world where companies reject the false choice of growth or shuttering the plant!
How do you set revenue growth targets?
The first question is who sets your targets? Your banker? (demands) Your accountant? (suggests based on benchmarks) Your kids' colleges? (by tuition increase) Your spouse? (lifestyle expectations) Last year's plan? (add some %)
Any of those are legitimate - although you might find a more enlightened banker and look for an accountant who will provide more strategic advice. But they all assume a variety of factors will remain static.
And yet we know that most manufacturers are worried about margin compression, and that many companies are preparing for leadership and/or ownership transitions. So setting growth goals based on historical factors may not be appropriate.
More importantly, though, for many middle aged manufacturing company owners the ego rush of building a company has passed. Their proud of what they've accomplished, but they don't need growth for the sake of growth. And as Jamie rightly points out, growth brings a number of often unwelcome hassles.
What most privately owned middle market company owners really want, in my experience, includes:
- lifestyle income
- asset preservation (value of business as their primary asset)
- opportunity for family involvement
- security for employees to whom they are typically very loyal
- reduce the stress of "waiting for the phone to ring" with unpredictable order flow
Those factors can be distilled into stability and predictability. They want to prevent decay and preserve corporate health. Growth itself rarely supports those goals - and often interferes. But in a world where customers often offshore their manufacturing, where imports are cheap, where competition is fierce, where buyers are less predictable and where markets evolve very quickly, generic "growth" is a handy treatment for the symptoms of less consistent revenue and profit.
Enough growth serves to plug the gaps and keep things stable.
So manage for stability, not growth
So who says the choice is betweeen stagnation and decay....or growth?
That's a false choice as Weidert's article hints. But as Jamie notes most marketers don't understand the manufacturing world. The standard marketing answer is more! impressions, clicks, leads! More! But that's not necessarily a realistic answer for many business owners.
Why not manage the business for stability? That means revenue at the level you need to satisfy the fundamental business objectives. Manage marketing and sales to optimize profit - both on capital sales projects, and ongoing spares and support. And develop data and systems to help you discern which buyers will buy and when (rock solid forecasting), and what actions are required to adjust as results trail or exceed the goal.
That's where inbound marketing can really help manufacturers. LinkedIn research shows that 74% of buyers ultimately select the B2B vendor that first provided value as buyers were searching for a solution.
That means that the inbound marketing goals that support manufacturing revenue growth include:
- thought leadership / unique, valuable, industry/domain insights
- great SEO to get found first (this isn't for products related searches - by that time you're in the 26% and you're just another quote - but rather for solutions to underlying business challenges)
- detailed insights into buyers activities and behaviors, with closed loop reporting to correlate behaviors to discreet outcomes, to attribute success/failure appropriately, and ultimately to proactively impact projects
- further insight from data collected to identify profile attributes of most profitable customers/projects, and understanding of buying cycle phases and duration which can be derived from those behaviors
Want to dig into the finance of Inbound Marketing for Manufacturers - in detail and from the perspective of a company owner (not a marketer)? Our eBook provides that perspective - A Finance Exec's Guide to Content Marketing for B2B Manufacturers.
Achieve predictability and increase value
The outcome of this approach is a very manageable and predictable order flow. You'll know from pipeline statistics what revenue will be for upcoming periods - and you'll be able to throttle specific activities down, or up , to adjust accordingly.
You'll know which buyers will actually buy....and when.
And you'll have a full pipeline of prospects including some that don't even know yet that they need your help, to nurture until they're viable projects.
You'll stop looking for orders, tallying up what's likely to happen next week before the quarter closes, and listening for ringing phones to gauge incoming orders. You'll stop fretting about payroll, and skip the painful process of moving to a larger facility to support growth in less profitable projects just to maintain stability in income.
And in doing all this, not only will you enjoy business more - but you're better managed and more predictable business will likely increase in valuation.
Talk about a win-win!
Are you a manufacturer that wants stability in unpredictable markets? Check out our free eBook on Manufacturing Revenue Growth for more on the process.