TRANSFORMING MANUFACTURING RELATIONSHIPS: A UNIQUE OPPORTUNITY FOR CREATING VALUE

Controlled, predictable changes in how you manage relationships with customers and business partners can make it possible to identify and act on new opportunities and realize additional revenue.

In this ebook, we review the current state of manufacturers’ customer relationships and discuss how technology can help you improve and capitalize on them. Sikich consultants can help you achieve better returns from customer and vendor relationships and avoid vulnerabilities that could provide an opening for the competition.

MANUFACTURING CUSTOMER RELATIONSHIPS TODAY

When Sikich teams work with manufacturing companies, we see certain patterns of customer relationships over and over. Successful manufacturing companies generally excel at managing the people and processes involved with production. They also align supporting and back-office roles, such as finance and HR, with their goals for growth and efficient management. The strategic priorities of the executive team and the board of directors tend to set the agenda for those business groups and processes that focus on relationships – sales, marketing, services, and distribution. There is no question that customer relationships are essential for a thriving business. However, in actual practice they don’t always receive the strategic, holistic treatment they would deserve.

In companies that produce complex or highly customized products, the customer-facing individuals in sales, product engineering, services, and marketing usually have a deep understanding of their customers, their business challenges, and how the company’s products can help them. Often, they have to educate their colleagues and ensure that leadership and other business groups also appreciate the concerns of customers and prospects, even if they never hear their actual voices. Employees who interact with customers may use specialized marketing and sales software tools that offer up-to-date, comprehensive information on customer accounts and histories. Other business groups may not have access to the same data and might not be able to see how that lack might compromise their decisions.

In other manufacturing organizations, which produce commodity items in great quantities, the understanding of customers is often more rudimentary. These companies sometimes operate remotely from the users or beneficiaries of their products. They may even rely on third-party distribution channels or outsourced sales and service specialists to convey customer perspectives to them.

WHEN YOU LEAVE RELATIONSHIPS UNATTENDED

What are the possible risks and consequences manufacturers face when they work from a limited understanding of customers and delegate customer focus to certain business groups or even outside parties?

The most important observation is that they are likely to miss opportunities where they could serve customers. This can take many forms:

• Sales and account executives may find it difficult to communicate requests for product enhancements or adjustments to engineering and operations, and customers may then find that their changing needs are no longer met.
• When sales, marketing, services, and finance management teams work with different sets of customer information, understanding revenue opportunities and the actual value of individual customers may be challenging. Account and campaign planning might not focus on the most valuable customer segments or the most promising opportunities.
• Executives might not consider the most comprehensive and current customer information in their strategic and investment decisions. Instead, they may rely on incomplete data or be swayed by influencers who claim their attention. Without considering actual customer drivers and trends, company strategy might follow an unproductive direction.
• More customer-connected competitors may be faster in delivering a new product, feature, or service for which customers are ready to commit budget.
• For marketing and sales executives, it may take longer than would be desirable to identify and pursue new markets and sales avenues.
• Companies may focus on sales and revenue growth only from new prospects, leaving existing customers unattended or in jeopardy of a competitive takeover, and lose out on additional revenue from those accounts.
• It may take a long time to negotiate complex or large transactions when contract and legal departments have only a limited understanding of the company’s most important customers. That could delay production and revenue generation.

HOW CUSTOMERS EXPERIENCE A LACK OF FOCUS AND ATTENTION

From the perspective of individual customers, working with a manufacturer that does not manage relationships expertly can be unsatisfying and unproductive. For example, customers might experience the following:

• People in various departments may not be in agreement with each other, and communicate different commitments or positions.
• Products may be shipped, installed, and in operation later than expected.
• Installation and maintenance service professionals may not be aware of customers’ operating conditions and requirements, and may need to receive education from customers instead of their own organization.
• Communications can become inefficient or fraught with errors.
• Innovative customers may want to participate in updating industrial and machine products to their changing requirements and the industry trends they know. They will be forced to consider other options if their manufacturer cannot grow into a more collaborative relationship.
• When customers prefer to consolidate product and service vendors for the sake of efficiency and consistency, manufacturers that are not ready to provide services or partner with service organizations make this difficult.

DO VENDOR AND SUPPLIER ENGAGEMENTS STILL FIT THE BUSINESS?

When manufacturers find it challenging to understand and serve their customers, they may also experience other essential relationships as unproductive or difficult to manage. Such business groups as finance, sales, marketing, and the executive team may use different sets of information and a variety of software tools to direct the engagements and interactions with distributors, suppliers, and vendors. Without reliable reporting on the exact value that relationships with, for instance, global logistics companies or outsourced parts makers contribute to the business, it will be next to impossible to improve their performance. That, in turn, may make it difficult to identify which of these business partners could best support a manufacturing company that has ambitious goals for meeting customers increased expectations for quality and value.

Similar to customer relationships, whose management is too often siloed with the sales, marketing, and service groups, key vendor engagements are frequently left in the purview of operations managers, who may not even be aware of the challenges and opportunities presented by the company’s customers. In consequence, manufacturers may continue to use vendors that are no longer a best fit and which may be hard to realign if a company decides to innovate its products and enforce more demanding standards for quality, accuracy, and timeliness, or if it wants to assess and improve vendor performance based on metrics.

INDUSTRY LEADERS ARE CHANGING THE PACE

Manufacturing companies should not underestimate the visibility and influence of the still-recent innovations by prominent industry leaders. Some of these manufacturers have been successful and continued to grow because they understood better than their industry peers that investing in customer relationships can pay off and fuel the transformations that can help manufacturers thrive. In recent years, some manufacturing businesses have surrounded their products more and more with value-adding services, or recast products entirely as service offerings, also changing their revenue model in the process. Those changes would not be possible without a deep understanding of customers and the ability to align the entire organization behind the goal of creating value.

A FOUNDATION FOR MANAGING CUSTOMER RELATIONSHIPS

Some manufacturers lose important customers and face threats of reduced market share and poor competitiveness before they decide to change how they manage their relationships with customers and key business partners. Even then, they may believe that they can accomplish better outcomes with minor measures that aim to adjust employee’s attitudes and update the company culture and branding style with a stronger focus on customer value.

While reforming corporate culture plays a role in how people think and go about their work, the effort cannot be transformational and sustained if workers don’t also receive the right tools that allow them to understand and serve customers. For many manufacturing companies, that means replacing spreadsheets and specialized software products for tracking and interacting with customers and business partners with more powerful functionality that can support employees across the business groups and which can draw on financial and operational data from the company’s business management systems.

Serving customers will look different depending on whether you are a CEO, a product engineer, a finance manager, a sales rep, or a field-based services specialist. However, manufacturers need to provide their entire organization with certain capabilities. These are probably the three most important:

• Single system of engagement and record. There needs to be a way to document customer-related information regarding contacts, contracts, accountabilities, next steps, purchase histories, planned transactions, goals, challenges, requests for products and services, and communications in a single, centralized resource that is accessible anytime to employees anywhere. If companies continue to run disparate systems to manage customer data and relationships, they will find it increasingly difficult and costly to pursue an effective strategy in serving customers and growing their business with them.
• Contextual, comprehensive data pool. Current customer information should be augmented by data from the company’s history and industry sources to enable a more in-depth view of customer lifecycles, including why and when they stop being customers, how they accomplish growth and reach their goals using a manufacturer’s products, and how market trends impact them.
• Reliable, real-time information regarding product performance and use cases. Manufacturers of complex machinery and industrial products also need to understand how these assets perform in real-life conditions at customer sites and act fast if they fall short of customer expectations. Once they have customers’ permission for gathering and analyzing information, manufacturers could collect data from their products in operation, equipped with sensors connected through the internet of things (IoT). Without this, it will be difficult to be proactive or even timely in improving product performance or offer additional services.

TECHNOLOGY TOOLS TO ENABLE HIGH-VALUE ENGAGEMENTS

Most manufacturers already own most or all of the relevant data to support transformational customer relationship management, but need to identify and deploy the tools to enable their business roles to change their practices. To avoid fragmenting the technology environment and correlate all customer information, they have to connect these tools with financial, engineering, and operational systems. Implementing and integrating the technology typically requires expertise and assistance from a technology partner with a seasoned manufacturing industry and innovation background of empowering people and organizations to create more value from their key relationships.

Customer relationship management (CRM) systems have been used for many years as discrete software products, and most current ERP systems also include CRM capabilities. In recent times, CRM solutions have expanded to help companies manage relationships with suppliers, distributors, investors, analysts and other external stakeholders in addition to customers. The once-popular XRM acronym, which meant to imply management of various relationships, has largely disappeared.

Today’s leading CRM solutions, including Salesforce, NetSuite, and Microsoft Dynamics, can be implemented in the cloud and configured to give the right level of secure access to customer data for people in different business roles—sales, marketing, service, executives, and others. For mobile employees in the field, customer-facing teams at company locations, and business users in marketing, finance, or business leadership, they are equally fast to learn and easy to use.

These solutions can serve as comprehensive, centralized repositories for all information, communications, activities, and documents associated with individual customers or customer segments. They come with analytical capabilities that manufacturers can configure to reflect their KPIs and other metrics. Standard integrations with IoT analytics and other business insight tools as well as manufacturers’ engineering, production, service management, and other systems are robust and can be efficiently managed in the cloud.

WHAT COULD TRANSFORMATIONAL CRM MEAN FOR A MANUFACTURER?

If you aim for a cultural or values transformation and want to re-orient your teams to focus on customers and delivering value, that effort can become successful and measurable when you provide people with the CRM tools and data to be effective in understanding and serving customers. As soon as the software is implemented, you can advance the transformation of how you manage the relationships with customers and business partners. A number of advancements can then become possible:

• Unify the team. You can more easily overcome organizational silos when sales, marketing, service, and business management share complete, current customer information and can align their efforts based on pervasive visibility. Instead of the service team or the sales team, employees can collaborate as the customer team. When your entire operation runs on the same, shared foundation for relationship and business management, customers won’t be dropped or made to wait when a representative takes a vacation or leaves. Opportunities are tracked and somebody else can pick up the trail.
• Collaborate strategically. Business execs and customer-facing employees may have plans and good ideas on how to serve customers and deliver value throughout the customer relationship. Now, they can bring these to fruition by collaborating around goals and the most fruitful initiatives to pursue. They can create communications strategies, set performance measures, and target high-potential customers.
• Understand customer trends and timing. An analytical review of customer histories can go beyond the anecdotal level and highlight moments in customer lifecycles when customers are vulnerable to competitive intrusions or might be open for enhanced product or service offerings. Your teams may be able to identify customer trends, such as a request for a new product functionality, that previously they could not pinpoint and address.
• Generate incremental revenue. In business development, many companies concentrate on winning new accounts and leave it to individual account executives to retain the loyalty and garner more revenue from existing customers. When representatives are busy and doing well, they may not give much attention to that side of the business, and you may lose out on incremental sales opportunities and referrals. In a CRM system, you can set policies to enforce and reward tracking and action on referrals and add-on business from current customers, involving inside sales to complement field reps. It can be far less costly and work-intensive to develop new business from existing clients than garnering new customers. That effort should be managed with clear accountabilities and performance measures reflected in the CRM software, or it might not yield meaningful results.
• Gain customer transparency. You can combine industrial equipment product and performance data, including findings from IoT data streams, with customer information in the CRM software, using intuitive dashboards to make the information meaningful and actionable for your people. That can help service professionals resolve customer issues and make their site visits more productive. It may also pave the path toward the introduction of predictive maintenance. In addition, this information can assist product engineers in understanding how they could best improve their design, and it can help business planners determine optimal costs and margins.
• Expand the portfolio. You can pinpoint the most promising likely customer group for testing and launching a new product, product feature, service component, or branding element. Then you can run a focused, metrics-driven campaign, watch the results, and make adjustments in your communications or offering. If you perform project manufacturing, where every product is unique and complex, you can use your customer data to identify the core group of high-value customers who will be open to closer collaboration to meet complex needs, and design profitable offerings for them that you might eventually standardize for the larger market.
• Elevate the customer experience. Without integrated software tools that help manufacturers document customer feedback and assess every touchpoint with customers, it will be difficult to understand the true quality of the customer experience. Communications from individual customers will be important in shedding light on specific accounts, but it takes a full set of data to understand and improve a company’s overall impact on its customers. Modern CRM software can make that documentation and tracking efficient and complete, so you don’t make employees lives more complicated and still miss crucial elements of the customer experience. Your business analysts and finance managers will be able to assess the lifetime value and profitability of customers in the CRM system. They can also use it to evaluate the actual contribution of vendors, distributors, outsourced services, and other business partners, based on complete, current information.
• Reduce dependency on experts. In manufacturing companies, experts with vast experience often manage major accounts. They may spend years serving the same customers, and become extremely skillful at pulling in finance, legal, or engineering teams at the right time to close business and support customers. Sometimes, these account execs fall out of sync with organizational directions and policies, or create domains where clients are loyal to them, not your company. When they move on or retire, your accounts may be at risk. In a CRM system, you can keep all account managers and customer accounts closely connected to the company’s resources and strategy.
• Build tomorrow’s workforce. Across the industry, manufacturers are struggling with recruiting and retaining the workforces that can ensure their success and viability for coming years, and the current wave of generational change and large-scale retirements is not in their favor. If you can show potential hires and early-career professionals how you use technology to empower them, that can go a long way toward building a strong team with the – right people. Your CRM system can help them get up to speed quickly, understand how your company works, and effectively assist customers. You can connect CRM with digital-learning tools and content to create a structured or informal training and skills development program, and help your employees hone their skills rapidly and in sync with company goals.

REALIGNING VENDOR RELATIONSHIPS

Most businesses prefer to work with fewer vendors, not more. Some manufacturers outsource installations, scheduled maintenance, warranty management, repairs, and upgrades of their products to third parties and prefer to focus on what they feel they’re best at — creating and producing valuable, competitive products. For customers, that may be a minor concern if everything goes well, but it can be worrisome and wasteful when it does not. Often, important details are lost in the hand-over from the manufacturing company to these service providers, and a quick recovery or correction may be necessary to maintain the quality of the customer experience. Commodity and mass manufacturers sometimes disregard this element of the business, also because customer relationships may be mediated for them through third parties.

Deploying a powerful CRM solution makes it possible to reset your relationships with outsource service providers. You can take two main directions in accomplishing this:

• Bring services back in-house and generate more revenue. In your CRM solution, you can manage the transition from sales to services seamlessly and ensure consistent, informed customer interactions and communications. If you already have the resources to perform deployment, maintenance, and other services, this might just be a question of giving service teams access to CRM and putting them to work. Alternatively, if you no longer have a service organization, it may be time to quantify the opportunity and its possible advantages in terms of revenue, customer goodwill, market share, and competitiveness. Depending on where you want to take the business, it may be worth staffing and training a service team.
• Take control of vendor relationships. You invest trust, time, and resources into developing relationships with the service companies and vendors that can reliably and consistently meet your needs and align with your values when it comes to serving customers. Do you know what the actual returns on these relationships are and how you could improve their business performance? In your CRM software connected to ERP and other business systems, you can review commitments and communications with vendors and suppliers in context with transactions, quality assessments, performance metrics, reviews from your managers, and other details from the history of each third-party engagement. You can set up a dashboard and reporting so you don’t just receive a snapshot of your vendors’ business value every so often, but can keep tabs on their contributions in real time. That means you can make adjustments and planning decisions, or conduct vendor negotiations, based on data evidence.

SIKICH AS YOUR RELATIONSHIP TRANSFORMATION PARTNER

Today’s CRM systems offer a wealth of foundational and advanced capabilities, and their manageability and usability are superior to what business software tools were like even just a few years ago. Many sound choices are available, and manufacturers have to determine which is the best fit for them. Even thorough research, in-depth demos, and vendor reviews may not always generate the confidence to take the next step. That’s when a technology partner like Sikich can simplify your decision-making and create a CRM environment that fits your company.

Sikich often collaborates with manufacturing companies which have realized that there is unrealized potential in their relationships with customers and key business partners. We understand the manufacturing industry and its challenges. Sikich manufacturing practice members have developed their careers in the industry before they joined us.

As industry participants, we know how challenging it can be when manufacturers aim to maintain and grow their businesses while competitors nibble at their market share and margins are under the threat of erosion. We also see that many manufacturers hope to benefit from digital transformation and Industry 4.0 initiatives, but shy away from the high risk and cost that can be associated with these efforts. Focusing on customer relationships, a core value-creating element of your business, can make it possible to control transformation, align it with tangible goals, and minimize its risks.

TECHNOLOGY AND MANUFACTURING EXPERTISE TO POWER CONTROLLED TRANSFORMATION

Sikich alliances include such leading providers of CRM solutions as Salesforce, NetSuite, and Microsoft Dynamics. We know the technologies inside out, and have many opportunities to contribute the voice of our customers to their continuing development. In successful projects for hundreds of manufacturers and thousands of clients, we have refined the art of helping our clients manage organizational, process, and technical change in the least disruptive and most efficient manner possible. We continuously update and evolve our implementation methodology, Sikich HeadStart, which follows industry-best practices in a low-risk, outcome-oriented approach to deploying software. You can count on us to provide knowledgeable guidance when you need to integrate CRM with ERP or other business systems or when you want to ensure a streamlined, predictable, productive move to the cloud.

COLLABORATIVE, EMPATHETIC PROFESSIONALS WHO SPEAK YOUR LANGUAGE

We often hear from clients that their Sikich consultants, deployment teams, technologists, and support groups operate from a level of professional empathy that they have not seen elsewhere. We keep your goals and transformational opportunities top-of-mind, no matter whether we help you deploy your CRM solution for all the users in the company or if we troubleshoot and resolve a seemingly tiny issue in how well business software works for you.