Manufacturers of industrial products create added-value in the production cycle by converting materials into finished products. Some examples are in the pharmaceutical, heavy engineering, food and beverage or oil and gas industries, in farming and agriculture, and extending into power and water utilities.
The finished goods are then sold into target markets by largely field-based marketing and sales teams, operating and supporting distribution systems.
These industrial service industries, now 80 % of the UK’s GDP, include management consultants, accountants, professional engineers and automation systems integrators. They look – in comparison to industrial product manufacturers – to be rather “inside-out”.
The added-value they provide to their clients is derived from their knowledge and know-how. It is intangible and not easily measured, picked-up and weighed. It resides inside service industry providers’ organisations and is transferred to their clients by their very valuable and knowledgeable internal expert employees who go out to interact directly with their clients.
Often, there are no sales people involved in this sales cycle. When and where there is a sales involvement, they can only initiate the sales cycle, opening sales projects. The closure of the projects must remain with the added-value experts in the body of the service providers’ organisatons.
To operate such a business model, the service providers’ marketing 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 the business relationships, sales and profits.
So how should service industry marketers operate?
The focus of marketing and sales teams for the service industries should be on attracting and winning new business. This is a more difficult and costly 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 to develop a very close and intimate contact with their internal experts. Business strategy should be developed together with and “sold” to the internal experts and strategic direction changed only following careful debate.
The board and senior management should understand this situation and develop a shallow management structure which is very close to those internal experts who deliver the added value…. To do otherwise will mean a loss of business and future profits.