Sales systems are a regular feature of the CRM suite, and if you didn’t know better you might think that garden-variety sales force automation (SFA) is about the only thing you need. That might have been true a few years ago, but we’re seeing that changes in markets and economies can have a great effect on what we sell and how we sell it. Consequently, the software we use to sell must evolve as well.
Recently I have written about different kinds of sales environments and the need to adapt. In a piece on the call center a few weeks back, I noted that call-center operators are beginning to focus more on cross-sell and up-sell opportunities. Last week I examined how BlueRoads and perhaps other vendors in the PRM space deal with the channel sales model to support distributors and resellers.
Today, we’ll look at the complex world of the manufacturing sales process and the life of manufacturers’ representatives or agents.
Many companies in the manufacturing supply chain use these agents. Manufacturers of electronic components, chips, board assemblies and similar items often have little or no sales talent on staff. Agents are different from resellers, functioning more like commission-only captive sales representatives. They get territories and quotas and work on contracts that frequently run for a year. Like a baseball pitcher, an agent can be yanked from the game in a flash — all a manager has to do is walk out of the dugout and ask for the ball.
Globalizing the Production Chain
Globalization has been going on for a long time, and it has balkanized what were once vertically integrated manufacturing processes. By globalization I mean the process of developing an idea and designing a product in one country, prototyping it in another, and producing it in a third. Not that long ago you could reasonably expect that all of these processes and more would be performed by a single company in a single country — that was known as vertical integratation. With globalization, each part of the process can be sent to whatever partner company offers the lowest cost and fastest turnaround.
Consider, for example, an agent who represents a company that makes chips for cell phones. The agent is responsible for providing specifications to a phone maker and doing the sales work associated with trying to win the business at the design stage. But the agent will be able to follow the process only as long as the work remains in his or her territory. Once the design is made, work might go for prototyping to another country, where another agent would take over the sales process. Still another country and agent could be involved in actual production, with the whole process taking a year or two.
As you can see, selling in this environment is not for the faint of heart. It’s hard enough working on straight commission, but when you add to that the need to track a deal — and your piece of it — over a couple of years, the complexity mounts. People involved in this process have historically tried to track all the information on spreadsheets.
New Pain, New Gain
I have always believed that, to figure out what new applications would be appearing in the near future, all you have to do is understand what people are tracking on spreadsheets. Twenty years ago we tracked sales leads on spreadsheets, and many SFA companies still compare themselves favorably to the spreadsheets they wish to replace. Now it appears that this non-conventional area of selling is proceeding along the same path.
I recently encountered a young company called Escend that is focused on solving this problem. The company is a restart and has some fresh capital, as well as some new customers and a decent pipeline. Will they succeed? I don’t know, but I would give them good odds. Escend could make a category out of this niche. Considering the deep domain expertise that is required to be successful in this area — not to mention that this is a high-level executive sell — I don’t imagine there will be many other companies chasing them into the niche until the category is established. And then it will be too late.
Very often we hear about new companies that are simply trying to carve out a corner of a growing niche such as SFA. Often the new company tries to be different by being cheaper. But lower-cost producers don’t typically do well when there are well established brands, as there are in SFA today.
It’s great to hear about a new company with a new category that looked at the market and identified an uncovered or insufficiently covered area. It’s also worth noting that this niche probably did not exist until globalization really got going, because prior to that point there simply wasn’t enough pain in the process — spreadsheets worked pretty well until the work started skipping from continent to continent. This case shows that there’s plenty of reason to revisit old, familiar areas just to see what’s changed and what new opportunities have sprouted.
Denis Pombriant is founder and managing principal of Beagle Research Group. An influential thought leader in the CRM industry for more than five years, Pombriant researches emerging trends in CRM and publishes research reports that can be found on the company’s Web site and on other influential Web sites in the CRM market. In 2003 CRM Magazine named Pombriant one of the most influential executives in the CRM industry. He is also quoted extensively in Paul Greenberg’s CRM at the Speed of Light, third edition. His latest report is titled “KeyFindings: CRM Market Events, Observations, and Analysis 2004.”