Embracing the fear-based sell.

In times of uncertainty, the fear-based sell can be very effective in the electronics manufacturing services industry. There is no question that the past two years – and the current one – qualify as times with a lot of uncertainty. The difference between the prior two years and this one is that the uncertainty factor was so high in 2021-22, many customers were afraid to rationalize their EMS supply-chain strategy due to component availability concerns. OEMs are shopping now, however. The question becomes: How do you differentiate your company from the rest of the industry? The solution lies in the fear-based sell. In its barest form, the fear-based sell advertises a fear that keeps customers up at night and then discusses how your company keeps that from happening. The differentiating value proposition can be more elaborate, however.

Years ago, when I was vice president sales & marketing at Elamex in Mexico, we had a similar situation. Demand for Mexico was high, yet inconsistency was prevalent among EMS operations in Mexico. Some were excellent. Others were not. We focused on the high-mix, medium-volume market, while most Tier Ones at the time were focused entirely on high volume. Enough horror stories had made the rounds about indigenous Mexican EMS companies that OEMs were very concerned about outsourcing in Mexico. Our team looked at that fear factor and built a plant tour designed to address it.

We created a team focused entirely on new product introduction (NPI) and they built a generic Gantt chart that covered about 330 line items, from product customs qualification issues to regular production concerns to outbound logistics. We printed it as a D-sized drawing. During the tour, the NPI team would give a presentation on their process and then lay the drawing on the table. The rest of the meeting migrated to the OEM team asking questions about those line items relative to their product. We won just about every account with that tour, even when we were number two or three in price, because none of our competitors was selling a strong NPI approach.

The fear today centers more on material availability. It’s a little early to promise the ability to get any part, or not require longer-than-usual forecasts. It isn’t too early, however, to start discussing systems, support engineering and supply-chain expertise. Just like the NPI process example, the better you can illustrate a repeatable process for how material-related issues will be identified in NPI and dealt with, the better off you will be. Many EMS providers have developed good IT solutions to deal with material challenges. Many larger EMS companies also have engineering support resources who can be thrown into the mix. The ability to be able to tell stories of how challenges are getting solved is important right now. So is the ability to demonstrate repeatable processes for dealing with those challenges, versus a reactive, fire-fighting approach. OEMs in shopping mode aren’t looking for a silver bullet. They are looking for consistency.

It’s also important to discuss what’s ahead. Demand in industries that were causing a lot of the supply-chain imbalances has dropped. A recessionary environment will cause demand to drop more. Another thing keeping customers (and EMS providers) up at night is the huge amount of inventory that has built up across the industry. It is important to demonstrate the systems in place that monitor that liability and the plans for ensuring inventory levels drop as material availability increases. Companies that discuss that element will likely differentiate themselves in selection processes. Feast always follows famine in the electronics industry, so good processes in this area will not be a wasted investment of time.

Other areas to highlight in sales presentations and plant tours that tie to OEM concerns include:

• Bench strength – how are you retaining and recruiting the talent you need?
• Continuous improvement – costs are going up no matter what, but what is your team doing to improve efficiency and quality to eliminate unnecessary cost in the areas you do control?
• Sustainability – what redundancies are built into the manufacturing location; how do you address the potential for disruptions?
• Specific solutions – how do your facilities address the need for shortened supply chains, cost reduction or specialized builds?
• Best in class performance – where do your systems, equipment, processes or personnel stand out from what is commonly available in your segment of the industry?

OEMs are shopping, but it is a cautious process. Understanding what keeps those customers up at night and tailoring your sales presentation and plant tour to address those fears will make your team stand out. Never overstate capabilities, because this is a long-term relationship where the OEM will quickly separate fact from fiction. Think through the processes you want to highlight: a well-crafted, repeatable process or system that actually improves outcomes is both a powerful selling tool and money in the bank, in terms of the profits it can drive.

Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Service; smucha@powell-muchaconsulting.com.

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