“We do have a strong marketing department”, said Prakash, Managing Director of Raj Machine Tools, the makers of quality pharma equipment. Of late, sales was slowing down and the company was facing a lean quarter. Enquiries were many and quotes were being sent for many crores each week and yet, orders were not coming in. Receivables were also delayed which was creating fears of a cash flow challenge. Prakash was a bit worried, as he was speaking to his other Owner Colleagues during his monthly sounding board forum.
Trilo, as he was called, was a longtime member of the Advisory Board in which Prakash had joined recently. He was known to be vocal and blunt. He repeated his statement, “It is obvious to me that you do not do any marketing at all!”. He was looking mischievously at the facilitator, who was also smiling. Trilo had been through this very situation last year and had seen a magical transformation in his business, thanks to the Board. He was now enjoying playing the advisor to his fellow Owner.
Often, the words Sales and Marketing are used interchangeably and neither is implemented in its true essence. SMEs in general and B2B (Manufacturing/Projects) companies in specific, do not always differentiate between Marketing and Sales. One department handles all activities relating to winning orders and bringing in the money. From time to time they may engage outside agencies to help them in advertising or creatives.
Most company call “technical sales” as marketing and believe “marketing” to be external communications, like advertising, branding, websites, etc. This is a common mistake and actually limits many SMEs from growing profitably since they rarely do any “real” marketing.
Trilo was explaining patiently. He said, “Let’s begin with a simple definition. Marketing is about ensuring that our prospective clients “find and want us”, while sales is about winning an order from a specific prospect on-hand. Looking at it another way, sales is about doing things for results here and now, whereas marketing is about the doing things now, but for future results.”
The facilitator quietly chipped in, “So, Prakash, almost all of what we usually do is sales – responding to enquiries, negotiations, technical support, quotations, external meetings, cold calling, collections, trade shows, et al. These are normally in the fire-fighting mode driven by our revenue targets. This means we are late into deals, following competition and desperate to win every deal on hand, which inevitably means price wars” “Is that not so?”, he finished with a question. Prakash was attentive by now. He realized he was onto something.
Prakash is not unique. Most Owners begin their business by “responding and reacting” to opportunities rather than “creating and finding” markets. They grow rapidly because they flexibly do whatever the customer wants. However, as they grow their business, and along with it, their overheads and team sizes, they find that the enquiries are being closed as always and prospects are pushing back on prices real hard.
They put it down to the fault of the team and blame their productivity. The team in-turn blame the market and of course, competition. To cope with revenue pressure, they rush to close any and all deals, come what may – which forces prices down, gets bad payment terms and creates losses in operations.
Many then try exhibitions, digital marketing, participating in on-line portals, expanding products and all other things which further add to spends. Results don’t follow and very soon, they are caught between hope and costs.
The main reason for this reality is forgotten. It is the lack of initiating long term strategic actions well ahead of time. Marketing is to invest quality time in long lead actions that get us predictable, profitable revenues and satisfied clients. Marketing must help our customers “buy” from our sales teams in a win-win manner.
Trilo was continuing, “This means, we must find leads ahead of time, rather than reacting to sales enquiries that find us. It is too late at that point in time to get quality deals.”
Prakash was confused, “Is that not what we do through advertising, digital presence, listing on trade sites, brochures, trade shows, etc.?”
The facilitator stepped in, “Of course, but these come later, much later. What precedes this is the ‘heart’ of marketing. It begins by asking ourselves some strong but seemingly stupid questions. Who is our customer, what do they really want, why do they buy from us, how do they make their decisions, what are the alternatives they consider, what else do they want that is not being currently offered….the list is interesting and long. But, a structured approach can make a huge difference.”
Prakash was eager to get to the crux, “So, Trilo, did you see results and how quickly?”. Trilo, laughed and said, “Well, results were brilliant. But, the process took its time. It was not easy to change mind sets, even within my partners and my own sales teams. I had to take some hard decisions. Today, I have a completely new set of happy customers, better order books and a charged team”.
“Did you have to do a lot of things and how much did you spend?”, asked Prakash. By now, few other members were also eager to share their experiences. Hameed said, “Very soon you will realize that in the process we follow, we spend nothing and get everything. It is called focus.”
Badri finished by adding, “You need to start at a seemingly innocuous measure, which is often not even tracked in SMEs, called “conversion ratio”. It can show us the way to simultaneously improve revenue and profits. As an analogy, if at all we are to search for a needle in a haystack, is it not better to get a strong magnet rather than search all over?” Soon, all others were also sharing their own successes, as Prakash was beginning to see light.
Marketing begins by right qualification of customers which creates a “pull” even before we “push” sales. Right qualification means focused offers, better value perception and sharper customer service. Internally, it leads to easier training of teams, clarity of delivery, standardization, better utilization of resources, fewer communication gaps.
Smartness lies in “shaping demand”, not merely working hard to supply. This is the way a SME becomes a PLE – Profitable Large Enterprise!
