Processes must drive strategy and ensure opportunities are acted on.

With the EMS industry’s 12-to-18 month sales cycle, growing a customer is faster and more economical than acquiring a new one. Some EMS companies do an excellent job of growing accounts, but others miss the mark. Typical reasons existing accounts don’t grow include:

Integration. Unlike product-line companies where company acquisitions are transparent to customers, in the EMS industry, often a company’s “brand” is closely aligned with its culture of service. When a company is acquired and its culture begins to change, it may motivate long-term customers to look for an alternate supplier. If the customer is a bad fit for the new business model, this attrition may be healthy. However, in some cases, customers with substantial growth potential may leave as a result of perceived drops in service quality. In addition, some acquired accounts with significant growth potential may remain untapped because improvements in capabilities or internal resources are not well communicated post-acquisition.

Overextension. There are a number of program management models in the EMS industry. Some divide account growth duties with sales; others give the program manager a strategic role by providing a lower-level administrative resource to focus on day-to-day tactical account issues, and still others assign the program manager full responsibility for both tactical issue resolution and long-term account growth. In the latter model, a program manager may be so focused on the tactical side of the account that growth opportunities may get overlooked.

Communication. When an EMS provider is initially selected, the customer decision team usually does a thorough audit that assesses how the supplier’s capabilities align with their requirements. Over time, this audit information may become inaccurate as capabilities are enhanced. Similarly, customer requirements may change over time. The result can be a current supplier not considered for follow-on projects because of a mistaken customer perception the EMS firm lacks needed capabilities or willingness to invest to support the customer’s changing requirements.

Attrition. EMS providers typically are selected from a cross-functional decision team that may include members of senior management, sourcing, quality and engineering/operations. Once the account is won, a subset of that team generally serves as the project’s primary interface. However, project growth decisions may still involve the larger team. Failure to cultivate relationships with the decision team as a whole through periodic contact can result in missed opportunities. Worse, if key team members leave and relationships are not quickly established with their replacements, the door may open to competitors that do have relationships with these new team members.

Misassumptions. When good two-way communication exists between management teams, customers often do approach the EMS provider with new business opportunities. But, this does not happen in all cases, particularly when the bulk of account communication is focused at the tactical level. Without internal processes that drive periodic focus on identifying potential account growth opportunities, good follow-on business often can be missed.

What processes help drive account longevity and growth? Two tools can make a big difference: Quarterly review meetings and account growth plans.

Typically, larger accounts have a quarterly review meeting. Smaller accounts, particularly in smaller EMS providers, may meet infrequently or not at all. The primary focus of these meetings usually is account status and often the customer drives the agenda. However, these meetings are also an excellent venue for EMS providers to discuss new capabilities and possible business growth opportunities since attendance may include higher levels of the account decision team. Similarly, this is a good venue for extended relationship building with higher levels of management at the customer. When the meetings rotate between EMS provider and customer, it provides greater visibility into each other’s companies. A tour of the customer’s facility also may be an opportunity to identify additional projects.

While no program manager welcomes additional paperwork, establishing a growth plan for each account can help drive a manageable strategic focus. At a minimum, the plan should list:

• Key decision-team members.
• A description of the current project.
• Short- and long-term project goals for revenue and profitability.
• Unaddressed customer key requirements.
• Potential concerns or risks associated with the account that should be monitored.
• Potential growth opportunities either within this business unit or throughout the company.

This plan can become the roadmap for driving account longevity and growth. While the initial internal strategy session may take some time, periodic updates are easy for program managers to manage. Good update timing can be concurrent with preparation for quarterly review meetings. Internally, the plans can be used at overall facility or company strategic planning meetings as “snapshots” of account potential and likely capital equipment or internal resource needs. Externally, edited portions of the plan can be shared with the customer as part of a discussion of account growth options. In the event of company acquisition, the plans provide good detail of likely account needs to the acquirer. This can minimize perceived culture change shock and also point to benefits for emphasis when discussing upcoming organizational changes with the customer.

Susan Mucha is president of Powell-Mucha Consulting Inc. (smucha@powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies. Her new book, Find It, Book It, Grow It. A Robust Process for Electronics Manufacturing Services Account Acquisition, is available through Amazon and other online retailers.