Are You Getting The Wrong Type Of Manufacturing Enquiries?
by Jo Shaer, on March 2, 2018
Over the last couple of years, we've spoken to lots of manufacturers and engineers - at events like Southern Manufacturing and Subcon and on the social media platform, LinkedIn, for our Factory Friday feature.
When we ask them about how customers find them, the answer is invariably word of mouth referrals. Continuing the conversation to the power of the internet, many complain that they don't want to do any online marketing because of the time it takes to deal with the wrong type of manufacturing enquiries - prototypes from inventors, procurement departments comparing prices to batter their existing suppliers, RFQs for varying quantities, etc, etc.
So, here's what the manufacturers said - followed by some expert advice from Kevin Clark, a business coach with ActionCoach who specialises in the manufacturing and engineering sector.
I don’t want leads from my website because I won’t be able to support my existing customers
Recently, we’ve had a number of manufacturers and engineers tell us that they don’t want leads from their website because dealing with additional quotes means they won’t be able to give the same level of service to their existing customers.
My response to one was to ask whether he wanted his business to grow. And if he did, how was he able to envisage that without getting new customers.
He explained to me that it is a fine balance in maintaining service levels i.e. on time (most SME engineers achieve below 90%), growth and cost of increasing capacity. They need to have spare capacity to handle growth - but the spare capacity needs to be throughout the business, i.e. costing as well as skilled staff and machines. Most SMEs in engineering would quickly reduce costs in line with their output. The problem with this it can take a long time and a lot of extra cost before it’s paying back.
This all seemed quite logical but it still didn’t explain how they could grow. In fact, it seemed to suggest that they would rather maintain the status quo.
The enquiries that come through the website are jobs no one else wants
Another told me that the work that is regularly being 'put out' is the jobs no one else wants, or very difficult or has little to no money in it.
Sub-contracting or offloading small manufacturing enquiries
This was supported by a third manufacturer, who told me that a manager can only do so many 14 hour days in a single week and staff less. Too many enquirers take up valuable time to vet and/or reject, so they look to offload as many low value ones as they can, focusing on the high end, most likely good prospects.
Are you making your business vulnerable by relying on your existing customers?
I pointed out to many of these guys that a recent report by McKinsey had revealed that only 13% of consumers were truly ‘brand loyal’. That's a scary figure when you're turning down the opportunity to get new work because you don't want to impact your existing customers.
But it only gets worse - another 29% are vulnerable to overtures from competitors and a whopping 58% had actually switched from a longstanding supplier to a new one.
Suddenly, placing all your eggs in the basket of your existing customers without the potential for back up starts to sound a little foolish.
The truth is that buyer behaviour has changed – for B2B buyers as well as retail consumers. We all have a computer at the end of our arm where we can start researching other suppliers. And that is particularly relevant in the modern world where price can be a major consideration.
Your procurement manager at your long-term customer will be under pressure to check that you are giving them the best deal. His friendship with and loyalty to you will be tested to the limit if his own job is on the line.
So that's the marketer's take... but here's manufacturing specialist business coach, Kevin, with his experience with this type of situation.
A business coach perspective on the wrong type of manufacturing enquiries
“Jo, you’ve put your finger on several key points that are common challenges for factory owners, and it starts with the title of your article.
The point is this…not all leads are equal!
One of your contributors’ states that the work being put out is difficult, low profit jobs. So, would it be better for your business to attract leads from good clients that valued what you do and paid well for a great service? You only have a finite capacity so why waste it on low margin projects with low return on investment and effort?
Of course, your contacts are correct, it is a longer-term process to grow your business, the way you want.
Are you looking to grow?
The first place to start is with “Does the owner want to grow their business and if so for what purpose?”
Whether It’s an exit strategy, legacy for family or “never retire because I love what I do” purpose, that choice will inform the decisions you make now. For many businesses, these long-term visions and short term actions are not connected because there is little or no clarity on the business purpose. The result is people focus on the tangible, immediate challenges which can store up long term issues.
Engineers are terrific at solving technical problems that come to them and relish coming up with elegant solutions. The danger arises when being reactive becomes an ingrained habit and your business grows by default.
Your behaviour can become exclusively responsive, so when times are good you spend and ramp up, if they are slow you cut back, a see-saw business.
Which leads neatly to the comments from the 3rd contact you mention.
Use of time…all businesses have a finite capacity. As we started with, would it be better to use that time on the best type of clients with the most profitable work or just react to low value requests?
Scared of Sales & Marketing?
To be candid, that means having a sales and marketing function that works for the business. In general, Engineers recognise that overseeing or implementing a sales and marketing function is not an area they are comfortable with, so they tend to shy away from it.
However, it’s a vital component of becoming proactive, working on the business and protecting you from the “eggs & one basket” nightmare. Done correctly it increases cash and profits for the long term, attracts the type of clients engineers enjoy working with and serves the purpose that you, the owner, has set for your business.
The irony is that engineers and manufacturers are passionate about, and value processes, they’ll follow them for their products but often don’t put them in place for their businesses where they can deliver the biggest results.
For those that do, the good news is they stick with processes and activities and see it through to achieving the results they wanted. That persistence & desire to solve a problem is what makes them great engineers, it’s just a case of thinking of your business as the most interesting and complex problem you’ve yet been presented with.
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