Sean Riley:
Welcome to the podcast, Ed.
Ed Marsh:
Thank you, Sean. Great to be with you today.
Sean Riley:
The pleasure is all ours. You and I have been talking a little bit about some things off-air, and you've got this theory that machinery manufacturers have a secret weapon that's rarely deployed, which can help them, as you say boost revenue growth. Maybe you could tell our listeners about-
Ed Marsh:
Sure, absolutely. The premise is this, manufacturers have done an amazing job over the last 20 or 30 years building incredible rigor into their production and operations. They use all kinds of tools and statistical analysis and continuous improvement of process engineering and measuring to management, and they are managing to measures and they put in place fixtures and jigs and processes and all those kinds of things that improve quality, improve consistency, all that stuff to second nature. And then you can compare that or contrast it rather to the way they run their marketing and sales, which is almost universally done in a much more casual and ad hoc and kind of disorganized sort of a way. And so the secret weapon I would say is the mindset and capability that they've already honed and refined and developed on their production side that they simply need to bring and apply to their revenue growth side.
Now obviously there's in some ways going to be easy, in some ways there's a lot of challenges based on it. They tend to focus on product and one of the hard changes as a company thinks about doing this kind of thing is accepting what I know is going to be a very painful pill to swallow, but nobody cares about your product. They care about the outcomes that it's going to deliver for them. So certainly it's not necessarily an easy transition, but neither was transitioning their production back when they began to do that process. So it's a journey. You can think of it as a progression against a rubric or a maturity model. But that is what I would call their secret weapon, the ability to bring that rigor from production and apply it to revenue growth.
Sean Riley:
Interesting. Okay, so that's making some sense to me. Could you give me some more details on how they can actually deploy this strategy?
Ed Marsh:
Yeah. I mean it's got to be actionable. It can't be overwhelming. I've got a framework that talks about a couple hundred different elements of doing this kind of thing and that can, somebody's eyes glaze over when they're worried about keeping enough folks showing up in the factory and managing supply chain and all the other kinds of things that they're juggling at the same time. And so it's important to understand that again, you can take a continuous improvement approach to it or a solve the biggest problem first and then work toward the next one and prioritize what you're working on. I think one of the key things is to think of sales and marketing in the same context in terms of technology. People have incorporated a lot of technology into their manufacturing to help ensure consistency and efficiency and all of that. We can use technology in the marketing and sales and the revenue growth side in many of the same kinds of ways. We can use it, for instance, to help reinforce a consistent sales process that will lead us to a consistent predictable outcome.
Many companies think of CRM just as contact management, but it should be so much more. You can almost build like a four for the process into your CRM to make sure that it's going correctly. We also have to think of it as an integrated system. And an example of that is to say, okay, let's think a good analogy is OEE, overall equipment effectiveness, where you may look at a line and say, "okay, we understand how this all fits together. The good news is each piece is working at 97% efficiency except the problem is over 10 pieces". That means your whole line is only 83% efficient. And so manufacturers get that. If we apply that to the revenue growth side, then we can think about all of the kinds of steps that have to happen along the way for somebody to go from potentially a prospect or a suspect, if you will, to a repeat order.
That means they have to understand the buyers and markets. And if they don't understand that, then they're introducing error inefficiency. They have to create relevant content that answers the questions buyers are asking, not the things they want to talk about themselves. They have to get found by people searching the web. After they get found, they actually have to get clicked. And once they get clicked, they have to engage somebody on their website. Then they have to take that person who's now engaged and convert them from a visitor to a contact. And then of course from a contact to a lead, and from a lead to a meeting, and a meeting to a qualified project, and a qualified project to actual closed one in revenue, and then of course to a subsequent order. So we can think of those steps in the process as exactly the same as analogous steps in a manufacturing process where we have to improve the efficiency of each of those in order to improve the OEE or what I actually call the ORE, overall revenue effectiveness, for something like that.
And that hinges on accurately measuring things along the way. Just like on the production side, you have to measure each step along the way. You have to measure your sales team, you have to measure your marketing performance, you have to measure sales candidates to make sure that you're hiring the right ones who actually will perform. Not just can perform but will perform because empty territories and hiring mistakes are so expensive. You have to allocate your marketing budget properly with trade shows and media and digital and content, NPR, all the different kinds of things you have to invest in. And all of those decisions and all of that concept of continuous improvement, hinge on accurate measurements. So really that, I think, is kind of the core of how you take this theory and make it actionable.
Sean Riley:
Interesting. But I guess what I'm thinking is what about change management? I mean, many companies have been following the same sales process that's similar to what has built them up to be substantial companies that they are today. So how are they going to go about flipping that on its head and changing that?
Ed Marsh:
It's a great question, and I won't lie it can be traumatic sometimes. So I would answer that in two ways. First of all, let's again harken back to the transition they made in production and operations. There was a lot of change management involved there, and there were some long time loyal employees who actively opposed or passively aggressively opposed that kind of an initiative said, "that's not for us. We can't do it. That works in Japan. It doesn't work here. Our customers aren't worried about that. It's going to cost too much". Whatever the case may be. There was a lot of resistance and they pushed through it. And there was some unhappy times, some difficult times, but they came out the other side and they realized that it's exactly what they needed to do. Same thing here, particularly with sales teams that tend to like to run a little bit fast and loose and they're the rainmakers and they strut around. And it's hard to impose accountability on a team like that that hasn't been as accountable as their colleagues in operations and production, and especially when in many of these companies that are privately held, closely held, family owned.
It could be that the brother-in-law has been there for 27 years and Thanksgiving dinner becomes an unpleasant circumstance when you say, "geez, I'm sorry, we've talked about this for two years. You're having a hard time changing. We got to figure out something different". But accountability is critical and that means that people will have to change it, and that means that management has to be very clear on why this is important. And just like you read all the time in change management, just consistently and clearly communicate that.
Sean Riley:
Interesting. With that in mind, I mean some of the things that you've been talking about are all of great interest, but how about on a broader scale? What's changing in markets that might not be obvious yet but would be important for packaging companies to consider?
Ed Marsh:
Well, I think I would really toss out two categories. Number one is again, this idea that nobody caress about your product. And I know that's anathema to many companies where the product is the outcome of years of sweat and toil and careful thought and innovation and tweaking this and tweaking that. And all of that is what makes it what it is today, but none of that is what delivers the value for the buyer. So we have to think about everything in terms of the buyer and the customer. So our sales process, what we call our sales process with a traditional linear arrangement of departments from marketing to sales, needs to shift because that's creating friction for buyers. So we need to think of what the buying journey is like, and we need to try to map to what the buyer needs. We also have to recognize that increasingly we still talk about a decision maker, but the reality is that decision maker is kind of an ephemeral idea at this point.
Most large decisions like complex buying decisions like around capital equipment, like what your PMMI members sell, is really often done by buying teams. They're consensus decisions. The alignment between marketing and sales is critically important, has to shift. Most companies that build machines may have a marketing team of a half a person or a couple people and a sales team of five people or 20 people, and they coordinate trade shows and kind of coordinate product literature and that sort of thing. The problem is, when we think about it, buyers often say that they're 70% of the way through the buying journey before they want to talk to a salesperson. So that means that marketing owns the majority of the relationship with the prospect before sales gets involved.
Sean Riley:
Interesting.
Ed Marsh:
So how do marketing and sales work together? What does marketing do to sell more, to set the stage to introduce the salesperson earlier in the process so they can participate before 70%? It's also common, I see manufacturing companies tend to project their own preferences or what they think are their preferences. They say, chatbots are a great example, "our buyers don't use chatbots". And then you go and you watch over the shoulder of their procurement team interacting with potential vendors, and what is their procurement team doing? Using chatbots. What do they do when they want to research an idea? They sit down on the couch with a cup of coffee and their tablet on Saturday morning and do a Google search. It just blows my mind, the number of people that have told me, "well, we don't think the digital really works in our space". That ties into having content that matches the buyer expectation. We each kind of have preferences for how we consume content. Some people are auditory, meaning they like to read. Some people are visual, in other words they probably want to watch a video or see some sort of a graph or a diagram. Some people are kinesthetic, they want to be able to touch and experiment with a demo.
And we need to offer tools to people that have each of those preferences. So it's really about understanding the buyers driving the train and how do we match for that. The other piece that I see increasingly is growing risk aversion, and this ties in with the buying team and consensus decisions. And there's a great book that came out last year called the JOLT Effect.
Sean Riley:
Okay.
Ed Marsh:
What that book, boil it all down and the premise of it is that the first part of the buying journey is based on FOMO, the fear of missing out. And this is what salespeople are classically trained. Find the pain, quantify the pain, hammer on the pain, emphasize the pain, magnify the pain so that somebody feels compelled to make a decision.
What's happened though, is partway through that journey, the FOMO maxes out and it begins to fall off. And instead it's replaced by FOMU, the fear of messing up. And so people increasingly, you can go back to Kahneman and behavioral economics and the pain associated with a loss, far exceeding an analogous benefit from a gain. People are really worried about screwing up. Nobody's going to get fired for not doing something in most cases. We don't replace a machine, we don't add another line. Who can argue with that? You can make a case for why that's what you should do. On the other hand, if you go out on a limb and say, "we're going to tear this old one out and put a new one in, we're going to add a completely different technology to the factory". There's a chance that it doesn't work or doesn't work as well as planned. And as soon as somebody owns that, then they put themselves at professional risk and ego risk. And so increasingly I see that risk aversion leading to many, many, many, many more deals that just kind of fade away. We call it lost to no decision, call it lost to indecision. They never say no, they never buy a competitor's machine. You never lose the deal. It just fades away. So I'd say those are two big background things that I see going on.
Sean Riley:
Yeah. And they were big and they were very substantial things that people definitely need to think about. This is all fascinating food for thought for our listeners. So I want to thank you, Ed, for coming on here with potentially be a secret sauce, the secret weapon that could be used for machinery manufacturers with sales. So thanks again for taking time to come on the podcast with us.
Ed Marsh:
Well, thank you very much for having me, Sean. I love talking about this stuff and I've loved, for years, watched your content and the work that you've done with the media group and the different content that you create. And I've got great admiration for the work that you and your team do.
Sean Riley:
I appreciate that
