Increasing revenue by applying production concepts to sales and marketing

Continuous improvement efforts help metal fabricators to avoid sending flawed parts and assemblies to customers. That same kind of commitment to process can improve sales and marketing efforts as well. Nuthawut Somsuk / iStock / Getty Images Plus

These are great days for U.S. manufacturing. Reshoring is accelerating, and technology is boosting efficiency and precision. Supply chains are returning to normal, and many boomer-owned companies are seeing generational transitions in leadership.

Family-held and investor-owned businesses alike are experiencing the benefits of favorable market conditions and trends. For some, that’s enough; they’re content to maintain a manageable business. Others seek rapid expansion. Yet all companies face latent threats and challenges to the status quo.

Many have concentration risk, with a large percentage of sales from a small number of loyal customers. Margins are under pressure. Necessary capital investment in technology, as well as growing labor, insurance, and materials costs, must be balanced against pricing pressures. And rapidly evolving customer business models translate into unpredictable shifts in buyer expectations.

This contrast between a golden age of manufacturing on one hand and a demanding and unpredictable market situation on the other creates an operational and philosophical tug of war for company leaders. While grateful for historical success, they worry about impending market changes they sense but can’t fully define.

Some put their heads down and hope that simple hard work will drive revenue, because that’s the way it’s always been. They focus on operational details and hope that sales will happen.

That type of passivity is a mistake.

Metal fabricators, like every industrial manufacturing sector, have a proven and effective toolkit to be proactive and seize control of revenue growth and profitability. They simply have to apply the same mindset of precision, rigor, continuous improvement, process engineering, and measurement they use in production and operations and apply it to marketing and sales.

Managing Revenue Growth Like Operations and Production

Not too long ago, production efficiency was measured by output. There was an accepted trade-off between higher efficiency and reduced quality. To make up for decreased quality, companies added quality control stations, absorbed higher waste factors, and boosted customer service. Those trade-offs assumed that there was a practical limit—a point of diminishing returns in the pursuit of quality.

And then, suddenly, that changed.

Eminent quality improvement scholar William Edwards Deming, PhD, and his contemporaries challenged assumptions and showed that it was possible to be more efficient and to improve quality simultaneously.

Poca Wander Stock/iStock/Getty Images Plus

Now, companies instinctively reengineer processes to improve net quality output. They conduct kaizens, determine root causes, continuously improve less efficient functions, create A3s, and experiment with jigs and fixtures. There are even thriving disciplines based on improving results with factory lighting and similar details. Six Sigma is a valued business credential.

Manufacturing is scientifically managed. Yet marketing and sales are different.

Business leaders with detailed real-time awareness of operational and production factors often can provide only nonspecific best guesses about key revenue growth indicators:

• Average transaction size
• Close rate (qualified opportunity to closed/won)
• Definitions of qualified opportunities, qualified leads, and prospects
• Customer acquisition cost by lead source and account type
• Characteristics of the ideal customer profile
• Number of leads, cost per lead, and average revenue per lead by lead source
• Percentage of target accounts that have been actively engaged in the last month and process for selecting targets
• Gaps in sales and marketing tech stacks
• Milestones in the sales process
• Sales methodology used by the team
• How often sales managers roleplay with reps and what topics they coach on
• Average sales cycle (from discovery meeting to closed/won)
• Lifetime value of a customer (initial sales, repeat sales, service contracts)
• Number of buying team roles that must be engaged for an opportunity to be deemed qualified

These are representative. The full list is as complex as an entire production line process.

Analogous gaps aren’t tolerated in production. In marketing and sales, however, metal fabricators accept them just as they used to accept that some percentage of defects were inescapable.

Revenue growth is ripe for a transformation like the one in production. To increase profits, you can apply process to the front end of the business just as you do the back end.

Overall Revenue Effectiveness—Like OEE for Marketing and Sales

This change isn’t easy. It can feel overwhelming. Some longtime staff will insist that you’re naïve and impractical, and they’ll be eager to prove it.

You won’t have the resources to change it all at once. This change will be a gradual process with exciting wins and progress interposed with frustrating plateaus and deferred returns.

That’s OK. You may not remember clearly, but your journey to production improvement was similarly grueling—and completely worth it.

And therein lies the good news: You’ve already done this. You know what it takes, and you know the deep satisfaction and increased profits that result.

Aside from a determination to change—to wonder never again why the forecast is so unreliable and the sales pipeline so unpredictable—you need two elements to guide your revenue growth transformation:

1. A framework to visualize the journey and prioritize the tasks
2. A set of best practices that you can adapt to the specifics of your business and market

Overall revenue effectiveness (ORE) provides the framework. Just as overall equipment effectiveness (OEE) is the product of the efficiency of sequential steps in a linear production process, ORE identifies hundreds of steps in the revenue growth process so that each can be optimized to improve the net quality output (revenue and profit dollars.)

Identifying best practices can be a bigger challenge because unlike technical and financial disciplines for which there are established standards, marketing and sales are much more fragmented. Further, there aren’t many formal and universal credentials to provide assurance, although resources like Marcus Sheridan’s book “They Ask You Answer” are available. Many marketing and sales approaches evolve in the technology and software as a service (SaaS) industries, and several of those approaches can be adapted to an industrial environment.

A Sequence of Revenue Growth Process Steps

At a high level, the ORE framework comprises four categories:

1. Strategy
2. Marketing
3. Sales
4. Technology

From there, you can dive into concentric levels of detail, starting with five qualitative considerations:

1. How clearly has the board defined the revenue expectation? Do any independent directors bring contemporary marketing and sales insights to guide and oversee the CEO?
2. With what accuracy has qualitative and quantitative research defined the problems your buyers seek to solve, the business outcomes they desire, the map of the buying journey, and the buying team’s roles?
3. How do buyers want to access and digest information? What competitive weaknesses can you exploit? How can you best reach buyers?
4. Are partnerships effective in fostering access and credibility to reach buyers?
5. Is your SEO effective to help you rank for the right terms to drive the right traffic to your site?

After that, take a look at six quantitative measures:

1. Click-through rates for nonbranded organic search (often only 10%)
2. Visitor to lead conversion rate (often only 2%)
3. Lead to meeting conversion rate (typically 10% if reps follow up at least eight times)
4. Meetings to possible projects (20%)
5. Projects to qualified opportunities (50%)
6. Opportunities to closed/won (35%)

While the qualitative measures are difficult to quantify, the resulting ORE for achieving the percentages illustrated in the quantitative measures (product of efficiency) is 0.0007%! Even if you consider only those who hit your website, it’s still 0.007%. If you improved each of the quantitative performance metrics by a mere 1%, you would take the ORE from 0.007% to 0.0127%, an 81% improvement!

While a net quality production rate of 0.0127% is likely to induce nausea, the 81% boost in revenue efficiency illustrates the opportunity of adapting manufacturing rigor to revenue growth.

Logical, Linear, Incremental Improvement

Visualizing revenue as a linear process like manufacturing will help.

Reaching the right buyers at the right time with the right information in the right format is somewhat like incoming raw material quality control. This step requires integration of marketing and sales disciplines, because research shows that buyers often are 70% of the way through their buying journey before they want to speak to a sales rep.

The sales process, methodology, and understanding of the buying journey can be compared to production fixtures that help you achieve consistent quality output and takt times. The right technology stack, training, coaching, and tools like playbooks and dashboards help keep you accountable to your engineered processes. Flexible approaches like chatbots and SMS communication help buyers connect with you quickly, according to their preferences, just as process engineering helps you accommodate custom orders without errors.

Understanding the root causes of sales challenges—discounting, too few meetings, and opportunities that end in no decision—allows you to develop and implement remediation, and also helps you to hire second and third standard deviation talent in the future.

And technology that enables accurate measurement and reporting of predictive and retrospective KPIs allows you to manage proactively, adjust quickly, and improve continuously.

Once You’ve Seen It, You Can’t Unsee It

Each fabricator might take a slightly different approach to bringing production rigor to sales and marketing. But once you’ve seen the opportunity, it’s hard to simply revert to treating the disciplines so differently.

The techniques that are second nature in manufacturing provide a handy toolkit for improving sales and marketing. All you have to do to begin is apply them patiently, deliberately, and consistently.