We thoroughly recommend you buy this book, here is a summary of the book Marketing for Manufacturers, by Carl Jarvis. In it, Carl states that 80% of small to mid-sized manufacturers mismanage their marketing. Carl started off his working life as an engineering apprentice and later had a successful corporate career in sales and then marketing before becoming a Marketing and Business Advisor.
Here is a summary of some of the key points, 10 chapters distilled into a bullet-pointed list below:
- There are approximately 30,000 small and mid-sized manufacturing companies in the UK generating £151Bn and employing over 1.1m people. Many of these manufacture world class products. As good as they are at making things, it is generally accepted that they are ‘universally poor at marketing them’ and their ‘products are the best-kept secret in the market.’
- Carl estimates that the inability to market correctly is costing companies around 20% of their potential and estimates that this is costing the UK around £24bn/year and accounting for one of the major reasons for business failure.
- This isn’t a how-to book on marketing though. The book sets out to inspire manufacturers to embrace marketing and to let go of the old ways such as relying on 3rd parties and word of mouth.
- Many manufacturers have filing cabinets full of contacts, lapsed customers, web enquiries, prospects that have been quoted but not won. Contacts that could be entered into a CRM system, contacted and nurtured and followed up. Lapsed customers that could be called and asked why they have gone elsewhere. Existing customers who could be upsold and market researched to ensure they stay ahead of the competition.
Part 1: The Inconvenient Truths about Marketing
- Manufacturing companies are set up by manufacturers and engineers who tend to have very little professional sales and marketing experience, if any at all.
- Very few companies have one person of authority responsible for managing the marketing function. It may sit with the MD/CEO but does it ever have as much focus as operations or finance?
CALL TO ACTION: Give marketing the same weight as production planning, QC, materials handling, stock control, scheduling and WIP. Your marketing needs that same level of commitment and focus to succeed.
- Be in control like you are with operations and don’t leave the reputation of your company to chance.
- Your sales and marketing process should replicate your production processes. Bring in raw materials (leads), convert the materials into products (lead conversion process), package, ship and fulfil the order (sales then convert them into a first-time customer and wow them), so they become a regular, repeat customer.
- Every business has 3 functions:
- Production (make it)
- Finance (manage the flow of money)
- Marketing and Sales (promote and sell it).
- Jarvis states that in all his years he has never met an MD that is strong in all 3 areas (4 if you separate sales and marketing).
- Jarvis: ‘If most companies ran their financial and production departments like they run their marketing function, they would be in complete and utter chaos.’
- One of the biggest challenges a business owner will face is finding highly qualified leads or prospects to convert into rewarding profitable business, whilst simultaneously developing and expanding their existing customers to increase order value and order frequency.
- CALL TO ACTION: MDs should balance the business and get support on marketing. If they delegate to a junior member of staff, they should get support from an external source.
- Look at your organisational tree and delegate marketing to a senior person and support them with the resources required to deliver results.
- Develop a marketing strategy and an annual marketing plan and budget. Then resource it correctly to ensure results are achieved. See guidance on marketing budgets below.
- Make sure you implement! Take action, as failure to implement is a primary reason for business failure.
- Many manufacturers do not have an adequate marketing budget.
- Some think they will allocate the budget AFTER the sales come in. It never happens.
- Recommended marketing budgets: Jarvis quotes a MORI poll on behalf of the Chartered Institute of Marketing 2010 with some interesting insights:
- The average marketing spend as a percentage of gross annual turnover is 7.29% (excluding marketing salaries).
- The average spend by sector is: Financial services-7.79%, Manufacturing is lower at 5.83%, retail -7.61% and technology – 7.76%
- Average UK marketing spend by annual gross revenue:
- Below £1m T/O -9.96%
- £1m-£10m T/O – 7.61%
- £11m-50m – 4.72%
- £51m – £100m – 6.64%
- Jarvis surmises that you should be spending 8%-11% of gross annual sales on marketing.
- McKinsey & Co recommends a minimum annual marketing spend of 5% of gross revenue.
- Drew McLellan blue chip marketing expert suggests a 7%-8% spend of gross revenue.
- Jarvis asks a leading question: Why is it that manufacturers can always find money for a new machine but rarely if ever for marketing?
- CALL TO ACTION: Work out how much the lifetime value of a customer is worth to you. Decide how much you are prepared to pay to buy each new customer. Allocate the budget and ringfence marketing as this is the activity that will generate future sales and profitable growth.
- Look at your customer lists. Review your top 20% of customers. Have a formal review with each customer every year. Discuss their future plans and needs.
- Create customer records and make systemised contact Make a list and develop marketing materials that make it easy to get the message out there and include videos. Stop just sending data sheets.
- Is your website too product focussed? Get an independent review of your website and develop it as the hub of your campaigns to download information and datasheets: ‘A website is for life, not just Christmas’.
- Who is writing your marketing and sales copy? Get professional help with your sales copy as this will have a significant impact on your results.
- Does your marketing material reflect the quality of your products and services? Who designs your literature? Is it in-house by an experienced graphic designer? Is it professionally designed and professionally printed or is it a DIY job in-house? Don’t go cheap on this as the quality of your product/service deserves better.
- Is your marketing fragmented? Make sure it is integrated and coordinated. Develop regular marketing habits and review every year.
- Make sure you identify your key markets and follow up again and again by systematically taking them on a customer journey. Ditch the stuff that isn’t working and do more of the activities that do and always ask for the order!
- Build the profiles of your top engineers and communicate these to your customers.
- Create case studies, articles and blogs.
- Arrange speaking engagements at conferences.
- Let go of the past and get social.
Part Two: The Mechanics of Marketing Strategy
What is Marketing?
- A list of definitions:
- At its highest level, the purpose of marketing is to make selling unnecessary
- A lifelong method of building trust and educating your customer so they believe in the benefits, advantages, value and beneficial results of your product or service.
- Marketing is developing an intelligent process for increasing the customer’s desire for your products and services.
- Marketing is forging lifelong, ongoing relationships with the customer.
- Marketing is about bringing the market to desire your product or service. Sales is to close the deal. – Dr Eliyahu M. Goldratt, originator of the theory of constraints.
- Strategic vs tactical marketing. Think first, decide key objectives then implement.
Three Critical Questions in Marketing Effectiveness
- What is your primary mode of marketing?
- What is your primary origin of sales?
- How do they differ or compare?
- Why would anyone buy from you?
- Why do your current customers buy from you? Ask them.
- Market and sell end outcomes.
- Develop customer avatars of your ideal customer. Who are they? What do they really want from you? Who makes the final decision?
- 80/20 marketing. 80% of profits will come from 20% of your customers. Why not target and win more of these types of customers?
- Where is your area of excellence?
A first in this sector, Marketing for Manufacturers is an easy read and makes a lot of sense. It is not a ‘how to market your business’ book (there are hundreds of these out there). This is a well-considered attempt to educate MDs and owners of UK manufacturing companies as to why they need to get better at marketing their business and when to ask for professional help.
Marketing for Manufacturers by Carl Jarvis is available on Amazon.
If you would like to explore how to get more of the right kind of customers, then please contact a member of the Stratique team on 01827 69772.