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Interviews show variances in EMS business models.

The point when handoff occurs between sales and program management in new account acquisition varies in EMS business models. There is no perfect model for dividing up the activities associated with bidding and closing new business. Factors such as company size, geographic coverage, scope of project and expertise of personnel can influence choices in this area. This month we look at some of the variations and discuss perceived advantages and disadvantages with personnel at several EMS companies.

The variation in division of labor is quite broad. Some EMS companies use sales personnel as door-openers and depend on program management to actually close the account and handle quoting. Others have sales play the dominant role through project launch, handling pricing and all negotiations and, in some cases, directing program management activities. Others have a transition model where salespeople may evolve into PMs. In some smaller companies, sales and program management may both have limited tactical roles with critical negotiation and pricing activities handled by senior management. In larger companies, negotiations may be handed off to specialized contracts departments or division management.

At WKK America (Holdings) Inc. (wkka.com), customers work with the sales team on product ramps, design issues and testing requirements, explained Henry Protzel, project support manager. "Once the customer has been groomed to our process it transfers to our project management team where they will have someone assigned to handle the account. All initial quoting is done by sales. Once it transfers to project management the PM will do the quoting."

Meanwhile, at Beyonics Technology Ltd. (beyonics.com), "Sales handles new customers and program management handles existing customers which includes new business from the existing customers," said Raymond Yee, vice president, sales and marketing.

Similarly, at Teledyne Electronic Manufacturing Services (tet.com), the PM has the responsibility for established customers and follow-on business, said program manager James W. Murray Jr. "On new leads it can be a shared responsibility depending on the PM. For new customers or different divisions of an existing customer, the sales group may handle the proposal process up to contract negotiation. Program management and contracts own the negotiation responsibilities."

In addressing the advantages and disadvantages of each model, there were also varying perspectives. Protzel felt that a major advantage of having sales focused on new account acquisition was that it enabled PMs to focus on projects rather than repetitive sales activity such as ensuring a complete quote package. "When the transfer from sales to project management happens, sales will hand project management a neat, complete package. The disadvantage is there may be some technical questions the customer may have at initial ramp that would be more pertinent to project management vs. sales for long-term manufacturability."

Yee focused on relationship issues in looking at benefits and potential disadvantages in his company's model. "Sales will be freed to focus on developing new customers but will be unable to deepen contacts and relationships with the newly secured customers after the project has moved into mass production where program management has taken over," he said.

Murray's assessment looked at both expertise and time management. "In terms of advantages, the PM has a better relationship with the customer, the contract person working the negotiations and knowledge of the factory operations. He also has a better negotiation position based his history and knowledge of existing programs and how the customer actually does business in comparison to the proposal and scope of work. However, there are also disadvantages for the exact reason as above. The PM could be too close to the customer or distracted by other program duties."

Another point of variance is the question of which function should be responsible for long-term account growth. A classic industry concern has been that given the choice between trying to establish relationships with new accounts or growing business in existing accounts, most salespeople would prefer to spend time in existing accounts with established relationships, because the sales cycles are shorter and the win probability is higher. Managers worry that this inadvertently creates a class of salespeople earning large commissions for business likely to close without a strong sales effort.

In the WKK model, the PM is responsible for existing customer growth. "Once Sales transfers to project management, Sales is out of the picture. One of the responsibilities of program management is customer service. The PM talks to the customer almost every day and knows them, plus the account history and the customer's perception of our company. Comparatively, sending a salesperson who has no clue on what has happened behind the scenes may be a disaster. The disadvantage can be tying up project management time on an activity that a salesperson could be doing," said Protzel.

"Program management, or what Beyonics calls business unit leaders, is responsible for growing additional accounts," said Yee. "A potential disadvantage is that Sales is not credited for total long-term account potential of the new customer although Sales has made the biggest contribution by securing the business against external competition in the first place. Once the customer is in with us, the challenge of capturing follow-on projects is normally much easier." Yet Yee notes that the responsibility of the PM to protect an EMS provider's interests in ongoing pricing negotiations and resolving technical issues could create potential challenges to growing new business that would not necessarily be present for a salesperson.

According to Murray, program management has the ultimate responsibility and sales will stop in as a courtesy call. "In terms of advantages, it gives the PM a total understanding of the program and a better feel for the possible issues/exceptions that were taken during the quote process, as the PM already has a relationship with the customer. It can aid in negotiations, and help ensure a successful program kick-off. However, it can become time consuming and take away from other responsibilities, depending on the PM, and his workload opportunities could be missed," he said.

Regionally, only two respondents saw differences in their business model. Yee noted strategy differences when managing customer accounts in Asia and the West. "Japanese customers tend to take a longer time to make an outsourcing decision, where apart from looking at EMS provider's plant capability, business fit, quote proposal, etc., they would base their selection on relationship, familiarity and comfort level with the team presented to them in the early business development phase. So they would prefer that the same salesperson would take on the role of PM for their project," he elaborated.

Murray said that expediency sometimes came into play. "Sometimes it is not feasible to get the PM to a customer for numerous reasons. In this case the PM would request that the salesperson make a courtesy call," he explained.

All three had opinions on qualities that were important in sales personnel. "Niche business remains relationship-based," Murray said. Most of Teledyne's sales team are former PMs, said Murray, who looks for customer and industry knowledge, technical knowledge and "relationship-builders." WKK's Protzel notes that Sales must navigate between the well-traveled senior customers and those who have never left their hometowns. "Sales must have the ability to understand and work with these extremes." A strong technical background is also useful, he says. Beyonics prefers a degree in engineering, supported by appropriate "personal attributes," said Yee.

In discussing the account-specific challenges of determining a good division of labor strategy, Murray pointed out customer size could be a factor. "There is not a one-size-fits-all model for this process. Large customers especially need a combination of the two organizations to maintain a physical presence with the customer and provide channels for communication."

Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm focused on optimizing EMS account acquisition processes, and developer of the EMS Integrated Marketing and EMS Concentric Selling training programs; smucha@powell-muchaconsulting.com.

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