Growing Strain in Marketing and Sales - a Manufacturing Action Plan

Ed Marsh | Feb 28, 2023

Tl;dr - There's a growing awareness and unease that marketing and sales teams may not be able to deliver revenue growth as expected. That's complicated in manufacturing companies because managers, leaders, and board directors often have no formal or contemporary experience in those disciplines. The good news is that process engineering can improve revenue just as it did manufacturing and operations.

Data Points Tell an Important Story on Revenue Growth Challenges

CEOs are not confident that sales leaders can drive growthThree unrelated articles in the past 24 hours have reinforced my anecdotal observations of the current situation faced by many mid-size industrial manufacturers.

  1. CEOs don't have confidence in their sales and marketing leadership's ability to grow revenue. A recent Sales Benchmark Index survey of CEOs found 56% are not confident in the CRO's ability, and 69% lack strong confidence in their CMO's ability to drive results.1
  2. declining revenue, the "company founded by salespeople to make software for salespeople is in the midst of the worst sales slump in its history."2 And that's for a company that spends "45% of its trailing 12-month revenue on sales and marketing costs alone" compared to the average 16% spent by other companies on the S&P Software & Services Select Industry Index that generate more than $10 billion in annual revenue. In my experience, the pressures growing for middle-market industrial manufacturers are even stronger, if not yet fully recognized.
  3. 82% of CFOs responding to Grant Thornton LLP’s CFO survey for the fourth quarter of 2022 plan to "increase investment in demand generation, with six in 10 saying they will raise spending by 6% or more....CFOs need not be involved in demand generation tactics, they are expecting to see quantifiable performance out of the marketing, sales and customer functions. This extends to understanding how alternative approaches such as disruptive marketing and customer technologies can create value, drive measurability and enable maturation of demand generation capabilities." Further, CFOs are asking whether "organizational capabilities and go-to-market motions are mature enough to respond to shifting customer expectations."

On the one hand, sales have been strong, and CEOs and CFOs have been preoccupied with supply chain and talent challenges. Sales and marketing haven't been their highest priority.

That's changing. There's a gradual awareness growing that they may not have the right people, skills, or processes in place to drive revenue growth success in today's market conditions. Buyers have very different expectations for experience and engagement than when many mid-size manufacturers implemented their current models.

But that awareness creates angst because it's an uncertainty that's not offset by clarity into how to change, and normalcy/recency biases create enormous inertia to overcome.

Nobody Knows for Sure - Market, Managers, Executives or Directors

There is no "settled" revenue growth science. As B2B buyers change, their B2C buying experiences influence their B2B expectations, buying teams grow, technology evolves constantly, and company priorities shift quickly, effective sales and marketing will constantly evolve.

After all, when even with its massive budgets and long track record stumbles, it's clear that things are changing.

That means experimentation for specific products, markets, ICPs, and buyers. It means iterative efforts.

It doesn't mean standing still until something is clearly broken or until there's a clear solution.

The problem for most privately held manufacturers is that nobody knows how to quantify their baseline or where to begin experimenting.

Sales and marketing leadership, unlike their engineering and manufacturing counterparts, is often installed and promoted because things are OK rather than because of meaningful credentials and documented continuous improvement.

Senior management often comes from technical and finance backgrounds, and even those with sales and marketing experience worked in those disciplines when market conditions were very different.

Boards of Directors are unable to provide satisfactory oversight of management because they rarely include independent directors with contemporary skills and insights into effective revenue growth.

That creates a crummy situation. There's concern and gradually growing awareness that something's going to break. There's no internal expertise to quantify the challenge or identify potential solutions. And there's no management context for considering what to do next.


There's Good News for Manufacturers

The bad news is bad, particularly because it's so vague. But there's good news too.

The situation manufacturers face today with the potential dysfunction in revenue growth is closely analogous to one they faced two decades ago in their manufacturing.

Most companies underwent a manufacturing metamorphosis - from making stuff and checking quality, to designing and continuously improving their process for making stuff. They engineered the quality and production planning steps. Quality improved as did output and on-time delivery. 

Process engineering improved manufacturing.

Process engineering can improve revenue growth. 

Of course, that means some of the same disruption, uncertainty, and internal dissension they faced last time. Some long-time employees will resist, argue and challenge the change. Indeed some will be unable to adapt. That's both sad for companies and employees with long-standing loyalty, and a natural part of change.

Process Engineering for Revenue Growth

There's no doubt that revenue growth is complex. The full panoply of steps from marketing ideation through measuring lifetime value is enormous. And there are functions that can't be as carefully controlled as certain mechanical manufacturing steps.

Process-engineering-for-industrial-revenue-growth-diagnosticThat doesn't mean, however, that the principles of process engineering can't be applied to most incremental steps and to the revenue growth function in aggregate.

That's precisely what my proprietary ORE™ (Overall Revenue Effectiveness) framework helps companies to do. Learn more here and download a free diagnostic for your current operations here.

Implementing ORE will require the increase in budgets that CFOs are already funding. 

And it will require more.

Owner, Executive, Director & Management Commitment

Everyone is going to have to come to grips with the challenge. That means awareness, mindset, and commitment to change.

It also means that companies must ascertain certain things empirically. These include whether:

  1. The board includes executive and independent directors with the skillsets to provide appropriate marketing and sales oversight, fulfill the growth strategy, and manage senior leadership.
  2. A baseline (maturity model) for the company's current capability and performance - and specific priorities, goals, and timelines for improvement.
  3. Realistic assessment of senior management's credentials and capability to envision and execute the necessary changes.
  4. Accurate measurement of the sales team's ability to sell in today's market conditions (from senior VP/CSO down through each customer service and inside sales rep.)

Without these, any planning or discussions are simply exercises in ill-informed self-flagellation or self-soothing; neither of which approach the gravity of the moment.

That's why I'll soon offer a Board of Directors' BootCamp for Manufacturing Revenue Growth. The BootCamp will bring directors and executive management together to develop these baseline measurements and create a prioritized plan for success. If you're interested in learning more, please give my friendly chatbot 👉 your email address.

1. SBI Growth Forum for CEOs

2. WSJ on the "worst growth stretch in history" for

3. Grant Thornton Investment in Demand Generation is rising