As markets turn up, those EMS firms that act will outperform those that don’t.

One of the challenges electronics manufacturing services companies has is the length of the sales cycle. New accounts being called on today are likely a year away from closing. And after a long recession with less-than-stellar sales results, attempting to justify increased budget for sales and marketing efforts may seem a highly risky endeavor. But these are times when those of us who have watched EMS cycles (which I’ve been doing since 1981 when I joined SCI Systems) recognize there can be dramatic shifts on the playing field. Companies that position their value propositions and sales team efforts to capitalize on these shifts will outperform those that continue on a conservative tack.

While there will be variation by industry, OEMs demonstrate typical behavior patterns when the economy begins to shift from recession to recovery. Anecdotally, I’m seeing all these behaviors occur in the OEM accounts I have contacts in, so this economic cycle seems to be following predictable patterns. Here are key dynamics to consider in developing a robust sales strategy:

• Personnel turnover. Decision teams are adding and losing staff. While some of this was driven by layoffs, in many cases it is simply a case of a decision team member deciding there is a better opportunity elsewhere. This trend is significant for two reasons: First, decision team changes can result in account vulnerability, particularly if new members are in senior positions, or the person who has championed your company leaves. Second, people who move to better opportunities may represent a new “open door” if the existing relationship is maintained.
• Supply base rationalization. OEMs are focused on two issues right now: cost cutting and risk. Downsized decision teams are focusing more on total cost vs. unit cost, so issues such as ease of doing business and alignment with OEM business goals will be strong selling points. Additionally, a shift to recovery means variable demand in many markets. OEM teams seek minimal inventory liability, yet capacity to meet spikes in demand. Flexibility and responsiveness are strong selling points here. However, that desire to mitigate risk will also drive decision teams to ask hard questions about the systems in place that support that flexibility, because most experienced procurement professionals are very skeptical about vague claims. In some cases, OEMs simply will be looking to change a couple of nonperforming suppliers, but in other cases, they may be doing fairly significant supply base reevaluations. While we are starting to see some good news on the demand horizon quarter-to-quarter, year-to-year declines are still in double digits, and that large a decline over the length of this recession will change the way many companies structure their business.
• Tier One triage efforts. When demand drops, Tier One EMS providers do their best to convince every possible account they are the best choice. When demand increases, these same companies recognize that a small account costs as much to manage as a large one – and tend to favor the latter. Customers that find service levels dropping or prices rising then have an epiphany and realize it is better to be in a supplier where they are similar in size to the majority of the customer base than to the smallest account in a global Tier One. When this happens, mid-tier companies that have pursued a relationship or that are part of their secondary sourcing strategy may be in the best position to win the additional business.

What EMS Companies Should Do Now

From a marketing perspective, this is the time to be turning up promotion efforts to make sure your company is visible to OEMs that may be starting to shop. From a sales perspective, this is the time to really analyze the existing sales funnel. While it is nice to profile market segments and develop strategic plans that plot how you want to divide the business base, right now the best return on planning time investment is likely to come from a short-term tactical focus.

First, if you haven’t already, map the decision teams in your key accounts. Have any people changed? If so, where did they go and do they represent an entry point in a new account? Are new people present in the existing account? Do you have a strong relationship with the new team members, or are you just depending on the old team to educate them? Is the team fully aware of your company’s current value propositions? Are you aware of what keeps them up at night? Have their needs changed in the last year, and have you offered solutions to address that? Your tactical account plans should answer those questions.
Second, use social networking tools like LinkedIn. One of the positive aspects of a bad economy is that people are posting a lot of information on social networking sites to facilitate their job searches. That same information can be a great networking roadmap for sales teams smart enough to tap it. This is a great tool for finding decision team members who leave a company, and for learning more about the new team members. When appropriate, adding prospects as network contacts is one more way to remind them you are out there.

Third, focus on results vs. activity. In a recession, it is easy to get in the habit of seeing sales calls as a measure of productivity because things simply aren’t moving quickly. In this market, it is more important to focus efforts on accounts with higher win probabilities that are a good long-term business fit. Are accounts being pursued truly good prospects or simply those still willing to schedule sales calls? Do they fit your company’s profile of ideal business? Is there forward momentum in these accounts? Given the length of the EMS sales cycle, the best measure of productivity is migration between specific phases in the account acquisition cycle, not the number of sales calls or prospects.

Finally, celebrate your successes. It has been a tough market for the last year with a lot of belt tightening, fear of job loss and general stress. These are the times that test even the best-performing salespeople. Find ways to celebrate sales success both individually and as a team.

Positive momentum has a way of gaining steam. It is important to note that many EMS companies are hiring salespeople and actually may prefer to hire someone currently working vs. someone currently unemployed. Failure to treat your top performers well may motivate them to move to a competitor. 

Susan Mucha is  president of Powell-Mucha Consulting Inc.; (smucha@powell-muchaconsulting.com). Her book, Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services, is available through barnesandnoble.com, amazon.com, IPC and SMTA.