Industrial product manufacturers create added-value in their production cycles by converting materials into finished products. Examples are in the pharmaceutical, heavy engineering, food and beverage, oil and gas industries, farming and agriculture and extend into power and water utilities.
Their finished goods are then sold into target markets by largely field-based marketing and sales teams, operating and supporting distribution systems.
Industrial and business-to-business (b2b) service industries are now 80 % of the UK’s GDP. Examples include management consultants, accountants and auditors, professional engineers and automation systems integrators. They look – in comparison to industrial product manufacturers – to be rather “inside-out”.
Their added-value is created from their knowledge and know-how. It is intangible and not easily measured, picked-up, felt and weighed. It lies inside b2b service industry providers’ organisations and is delivered to their customers by their very valuable and knowledgeable internal expert employees who go out to interact directly with their clients.
Commonly, no salespeople are involved in this business model. Marketing and salespeople can only initiate the b2b service sales cycle, opening sales projects. Closure of projects must remain with the added-value experts in the body of the service providers’ organisations. This situation frequently poses difficulties for these organisations and, for example, management consultants’ businesses often limit their sales revenues by not understanding this situation fully.
To operate this business model, b2b service providers’ marketing and sales teams require a “hands-off” approach. Who really owns their clients? Any disruption of the intimate relationships between current clients and the internal “experts” providing the added-value will have unintended but very negative consequences for their business relationships, sales and profits.
So how should marketers operate in industrial and b2b service industries?
Their focus for these industries should be on developing new business. This is a more difficult, time and resource hungry process than winning more business from current clients but creates new revenue streams to drive significant increases in future profits.
This imposes a duty on marketing and sales professionals in the b2b service industries to develop a very close and intimate relationship with their internal experts as they research and develop new business. Business strategy should be developed together with and “sold” to the internal experts and strategic direction changed only following careful debate.
B2b service industries’ boards and senior management should understand this situation and develop shallow management structures which are very close to both their internal experts who deliver the added value and to marketing. To do otherwise will mean a loss of business and future profits.