Sunday, November 14, 2010

Industrial Marketing is Not a Department

A recurring theme in this blog centers around two ideas: (1) that the practice of industrial marketing cannot be taught in an academic setting, and (2) in industrial most so-called “marketing” decisions are made by general management.

Industrial marketers have a tough job because most learning is obtained on the job. Since the key decisions are often made at higher levels, industrial marketers must constantly strive for consensus and coordination among other functional groups. What industrial companies need, therefore, are not strong marketing departments, but a strong sense of market oriented thinking at all levels.

But thinking has to turn into doing, and most non-marketing people don’t really know what to do. The concepts are easy to understand, but when it comes to every day marketing tactics and marketing-oriented behaviors, it’s difficult for most people to make it happen.

Why? Because effective industrial marketing takes place across functional boundaries. It’s difficult – or impossible – for effective tactics to occur unless top managers are committed to making it work, and simultaneously have the savvy to know what types of activities need to occur. In the day-to-day chaos of running a businesses, it can be extremely difficult for any one manager, let alone a core team of managers, to attain the type of focus needed to sustain this effort.

Yet, lots of companies do it, and so can you. Dr. Jim Hlavacek, educator, consultant and author (his most recent book, Profitable Top-Line Growth for Industrial Companies, American Book Company will be reviewed in a future issue) offers numerous examples of how a company can develop market-oriented thinking. Hlavacek says that industrial marketing, as such, cannot be taught. It has to be learned on the job, in real-time, with real problems. Small to medium-sized companies are generally the most successful.

When we observe what these companies do, what we see are lots and lots of “little things” going on that don’t usually happen in other companies. Market-oriented thinking isn’t a massive restructuring of a company’s culture. It’s more like a dawning of awareness that manifests itself in a series of small changes, that develop over time.

Tips for Improving Market-Oriented Thinking

  • Double the number of marketing presentations you make internally. Engage more people in a continuing dialogue about customers and the marketplace.
  • Distribute feedback from customers across the organization. Don’t just talk about your own products, but share what customers say about competitor’s products as well.
  • As soon as possible, find at least one ally in another organization, and begin implanting your own list of “little things.” As you achieve success, document what you have done.
  • Set up a cross-functional team to address these issues
  • Set up a benchmarking visit to another company for your top managers.
  • Send your team to Dr. Jim Hlavacek’s course, “The Best and Worst Industrial Marketing Practices.”

Little things

  • Top management talks to customers regularly
  • R&D people talk to customers
  • Conduct regular competitor quality panels
  • Conduct “competitor game playing,” especially with new entrants
  • Customers called back after purchase
  • Strip one layer our of hierarchy
  • Establish market-focused measures of customer service level performance
  • Formal and informal awards for service personnel based on market-focused measures, not just internal measures like cost, yields and headcount
  • Focus groups to determine key service dimensions of customer service
  • Training of service personnel focused on how to deliver value dimensions, not just how to handle the machinery of the job
  • Hire retirees to read and interpret articles in trade journals, then write up the implications of the articles and distribute to front-line personnel
  • Customer research to understand financial impact of good customer service
  • Require front-line service experience for rotating functional groups
  • Establish a “core curriculum” of roles new manager must rotate through to eligible for promotion, that includes sales, customer service, manufacturing, and engineering
  • Phantom buyers report on customer service levels
  • Top management commitment/involvement to change typical shared values on service
  • Key functional managers spend 2 hours per month conducting customer telephone surveys
  • Non-sales people sell for at least 3 months in the field
  • Functional personnel spend one day/month telemarketing
  • Pay salespeople’s spouses to check competitor products & prices
  • Conduct customer satisfaction surveys
  • Tear down and analyze competitor’s products
  • Benchmark performance against competitors
  • Survey competitor’s customers
  • Top managers spend ½ day per month on the complaint desk
  • Production people meet customers
  • Marketing and sales people work 3 months for a customer or distributor
  • Salespeople spend 1 year in the factory, and must implement a cost reduction or quality improvement idea
  • Interview your supplier about your competition
  • Give away product in trade for feedback
  • Tour competitor’s factories
  • Customers design or name product
  • Educate customers, distributors
  • Calculate your customer’s true costs to purchase, use, and dispose of your products. Compare this cost with the cost of using alternative solutions and competitor’s products.
  • Conduct a monthly informal training/feedback session using Internet web conferencing tools.
  • Understand the features and benefits of your competitors products well enough to sell them — if you had to.

Sunday, November 7, 2010

A Customer Needs Model

This post is provided courtesy of Chuck Sander, president of Underdog Consultants, specialists in Six Sigma implementation at industrial companies. Underdog's website is

Several years ago I attended the Worldwide Lessons in Leadership (Wyncom, Inc. simulcast. My main reason for attending was to listen to one of my favorite motivational speakers, Stephen Covey.

Covey spoke about the leader’s need to “feed” the core elements of human nature: the Mind, Heart, Body, and Spirit. These are also the four basic human survival requirements. Covey maintains that the role of leadership is to ensure that these survival needs are satisfied. The leader must develop the Vision (Mind), Passion (Heart), and Alignment (Body) for the organization. These three items are then centered by the group's Conscience (Spirit). The Conscience is the compass needle that keeps everything on track. With today’s pace of change, a leader cannot tell his employees how to respond to every new situation. They must have the internal core principles to guide them (the Conscience).

I liked this leadership model so much that I wanted to take a moment to see if I could extend it to customers. Let’s call it a type of customer leadership model for the moment.

Today, unprecedented numbers of people have the freedom of choice. Through competition, technology and information, your customers have real choices. Like Covey, I maintain that your customers will base their behavior on the drive to satisfy these four basic human needs. It is your job as a supplier to fulfill these needs since an unmet need provides an opening for your competition. Let’s start again with the four basic human needs as Covey describes them: the Mind, Heart, Body, and Spirit.

The Mind represents the requirements or problems your customers are experiencing. Your ability to satisfy these requirements completes the customer’s need for alignment (Body). The degree of satisfaction your customer’s have with your products addresses their need for loyalty (Heart). All of these factors impact the customer’s inner compass (Spirit) or freedom of choice. I’ll call these the Customer (Survival) Needs: Customer Requirements (Mind), Performance (Body), Satisfaction (Heart), and Freedom of Choice (Spirit).

Covey believes that ignoring any of the four basic employee needs will be disastrous for a leader. If trust is not developed, employees begin to act in their own interest. They try to survive. Likewise for the customer. Ignore any of the components of the Customer Needs profile and the organization creates an unfulfilled customer. The customer will seek to fill this void, and may look to your competition to do so.

But how does you know if this is happening and how do you prevent it from happening?

Knowledge is power. Six Sigma provides the means of knowing when a customer’s needs are unmet and also helps determine how to correct this situation. Six Sigma focuses on three things: Customer, Process, and Performance. This focus aligns with the Customer Needs model extremely well.

The table below summarizes how Covey’s Leadership Model maps to the Customer Needs model and the Six Sigma methodology.


Customer Needs

Six Sigma Methodology


Customer Requirements

Voice of the Customer



Process Indicator



Process Sigma


Freedom of Choice

High-level indicators (market share, retention, etc.)

Through the application of the Voice of the Customer you develop an understanding of the Customer Requirements (Mind). Application of customer focused In-Process Indicators (Body) and calculations of Process Sigmas (Heart) determine the performance against both the customer requirements and estimates of customer satisfaction. This can be used to determine how and why a customer expresses their Freedom of Choice (Spirit).