Sales & Marketing Science - An Interview with Randy Byrne
Randy Byrne, President of Transformational Scientific Marketing talks to AZoNetwork about his experience of 20+ years working within the Scientific Equipment Industry.
How has the sales and marketing of high-value analytical instrumentation changed over the last 20 years?
The market and the customer has changed much more than the manufacturers and I think that represents opportunities for some and challenges for others. Companies that are product focused are being left in the wake of those who are customer or value focused.
"The customer is now in charge of the buying process, the sooner companies realize that, the better."
Frankly, I still think there are many scientific equipment companies that are so focused on trying to control the selling as opposed to the realization that, these days, we all know it's the customers in charge of the buying process, and the sooner companies realize that, the better.
What do you mean by “The customer is in charge of the buying process?”
It's everything that I think millennials take for granted that, the sales team, still want the best-quality leads and to learn about the lead earlier in the process, but the reality is, they're not going to because customers aren’t ready for a sales conversation.
"Marketing has changed more in the last five years than the previous 50."
Twenty years ago, when the customer wasn't very knowledgeable about the product, a salesperson would often deliver the brochure.
Nowadays when we buy anything, from a camera to a car, we do a whole lot of research before we speak to a salesperson and get a sales pitch. I think there are a lot of people that are still coming to grips with that reality in the scientific equipment field.
The way the customer goes about buying these days is different than how they used to have to do it 10, 15, 20 years ago.
Even in scientific equipment sales people decide what they want to buy based on online and social media research. they call for a quote, and two weeks later they place an order for $200,000.
What do you believe is the best way to measure the health of sales and marketing within a company?
We all know that the world of sales and marketing is becoming more data-driven.
The word "measure," implies objective more than relying on gut feel. It's more about trends over the long term. It's sales and revenue growth over a long period of time.
Ask about digital marketing
Still to this day, I interact with companies that get so excited that they had a good month and they don't realize that there are ways to tell that the next three months are going to be difficult. The smarter companies are measuring lagging indicators but also looking at leading indicators. Trends are important and I would say the following metrics give a better indication as to a company’s health from a Sales & Marketing perspective:
- Conversion rates:
- Visitors to Sales Qualified Leads
- Sales Qualified Leads to Opportunities
- Opportunities to Closed Won Orders
- Pipeline Growth
- Sales Growth
It’s one thing having metrics in place to measure the sales team, however the operations or customer experience team need to match them as this is when the real benefit of building relationships begins.
Everybody that interacts with the customer contributes to the customer experience, and I see more and more companies starting to realize that, even if they don't necessarily know how to measure it.
How can you reliably forecast sales within an industry where sales cycles can take months or even years?
Having grown up in the industry in the U.S, if your salesperson is over-target, you don't care if they're golfing two days a week. That either means you set a low target or that they over-performed. You were ultimately so results-focused that you didn't worry about the details.
Again, a whole lot has changed, CRM systems have come along, and I think the smarter companies are realizing that to achieve a sales goal, a salesperson has to do a number of specific activities (i.e. calls, visits, demos etc.). 25 years ago, nobody was talking about sales process. These days, the industry leaders are not only talking about needing to know what your sales process is, but tracking every point along the way.
"25 Years ago it was only about the result, with Technology nowadays it’s about the detail as well"
People that are not necessarily looking at what leads to a sale, and in this industry it's often, if you take a step back from an order being received, the next closest measurable activity that happens to an order being received is typically a quotation for a particular piece of hardware, if we're talking about an analytical instrument, then generally somewhere along the line, a demonstration is needed.
The smart companies are defining their sales process by measuring everything along the way: Orders, quotations, demonstrations, opportunities, leads, web traffic. Somewhere early on, there needs to be an opportunity qualification process – Do they have a suitable application? An active project? How are they funded?
I have seen instances where companies have a good quarter of results, and therefore they feel that momentum will carry over into the next quarter.
The problem is, all the other measurable parts of the sales process are going down, number of quotes are going down, number of demonstrations. Those are all leading indicators that 3-12 months from that time, either business is going to be down or action needs to be taken now to take care of the mid-longer term.
B2B Decision Making Process
Most customers that I know of have much less understanding of how something is bought within their company. Many companies are use automated systems that are like CRM systems for buying.
Gone are the days where you could walk an order through purchasing for a trusted supplier. The decision making process has become so convoluted and unnecessarily complicated – It may require 4 or 5 sign-offs before it can be processed.
I think because of the proliferation of all these systems, it has made forecasting for the salesperson much more challenging, and it is frustrating. However, the problem stems from the customer themselves; if they can't accurately forecast when they will buy something and if they don't know how their own process works, it becomes a guessing game.
"Forecasts are only accurate 46% of the time – That’s less than half the time!"
The reality is, in B2B, I've read that forecasts are only accurate 46% of the time. Lots of managers want better forecasts, but they don't have any suggestions on how to do it better. There's been a lot of mergers and acquisitions, and as companies have gotten larger, their customers don't even know how things work within their own systems.
Increased decision making teams explain why forecasts have gotten less accurate and why companies have to measure the steps in the sales process much more closely than ever before to make sure that the metrics are giving more confidence to the forecast, especially if people are forecasting more than one month out.
Who would you say are the invisible decision-making stakeholders who may put a roadblock in the process?
If it's equipment that's less than $50,000, there's fewer people involved in the decision, which makes things simpler.
For equipment that's between $50,000 and $500,000, there are around 5.4 decision-makers. For each purchase, there's a financial decision-maker, there's a technical decision-maker, there's the various types of them, and again, the challenge is the fact that the salesperson for the equipment company generally meets with and only has one or two contacts in the CRM.
Hidden Decision Makers and Influencers
There’s a whole lot of discussions and decision-making happening behind the scenes where the salesperson isn't able to influence these “hidden stakeholders” involved within the buying process.
This is where marketing can help sales with specific content targeting each decision maker:
- An end user, in a lab for instance.
- The person who's driving the sale, the internal champion.
- The gatekeeper that's having most of the interactions with the vendor.
- A colleague within the same department that can benefit from the equipment.
- A more senior manager in, let's say, the research group.
- A financial decision maker who doesn't necessarily know anything about the science but is responsible for managing the capital equipment budget.
That could add up to about five or six people that have a say in things, but this is generally not obvious to a salesperson.
How do you view the role of social media within the analytical instrumentation industry?
I find very few people in scientific equipment that understand the power that LinkedIn and other Social Media has in categories like account-based marketing or retargeting. It's just changing far too fast for most marketing people that are more product and science-focused than they are social media-focused to keep up with.
It's a generational thing that what I see is the younger marketers coming along and understanding much better the power of social media because they're using it themselves. They just get it. I think there's a thin number of people in marketing in scientific equipment that don't use it themselves yet they know they have to be doing it so they're only dabbling in it.
Outsourcing is Key
When you don't have enough resources and there's things that can benefit you. Outsource it and get some expertise. The reason a top salesperson would always get an audience with me was I'd learned something from them; they’d teach me something new or keep me updated on a complex topic (i.e. Social Media or SEO) i’d pay for their expertise with my time and attention.
How important is data management from a sales perspective?
As previously discussed, data management is very important for forecasting, cashflow, and ultimately the overall health of the business. There are 100s of things you can measure but it is the critical leading indicators which are important.
Intelligent data management allows you to identify where there are gaps in your pipeline. You can then do something about it, by ramping up brand awareness, lead generation efforts or addressing conversion rates issues. In the old days, you only had the Sale Revenue as your one and only metric, and by that stage it was already too late.
Where do you see the future of sales and marketing within analytical instrumentation?
I see big changes coming. In this country, for sure, a lot of companies are struggling to grow now, and it's for a few specific reasons:
- China is not providing the easy growth that has been helping so many companies.
- For American manufacturers, the value of the dollar is hurting their export.
- The oil and energy industry is and for companies that have a high proportion of their business coming from that sector, they're all down.
As product innovation slows down and more competition comes around, for example in the nanotechnology sector and in the life science sector, they have become so competitive, I know some typical instrumentation areas now have 12 competitors in the space. Everybody's getting squeezed to grow and the product innovation is not driving the path for growth that it used to. There's just not as much innovation when it comes to the technology.
I think the leadership in the scientific equipment companies are doubling down with less effective activities such as trade shows, print media and advertising. It's still a bit amazing to me to see how much print advertising is being done in this industry. Also, I get bombarded with very product-focused outbound emails where people are still shamelessly pushing their commercial offerings.
"Growth will be driven by the companies who focus on the customer experience"
I see some sales leaders still focusing on outdated cold-calling or prospecting. Gosh, that's much less effective now, because scientists can hide behind voicemail, caller ID, don't have to answer emails. The companies who find new ways to influence people and use technology to support their sales and marketing efforts are ultimately the businesses I think that will be able to drive growth.
It's not only through R&D and Product Innovation. It's going to be by being more innovative when it comes to how they interact with their customers. That's how this industry is going to continue growing profitably ... If the SMEs don’t figure out how to grow more quickly, they're going to be victims of acquisitions from some of the big players out there which will lead to even more consolidation within the industry.
What mistake do you see being made in marketing within these companies?
Speaking from experience, the easiest way to go when you are confronted with the unenviable task of creating a Marketing plan is to take the last one and make some minor tweaks. That does nothing to modernize branding and demand generation activities.
"If greater than 50% of your budget is spent on trade shows and advertising, the company doesn’t understand the modern customer."
I've come up with my own burn rule or simple rule of thumb that if greater than 50% of your marketing budget is spent on trade shows and advertising, especially print advertising, it tells me that that company doesn't understand the modern customer. They're still focused on, “We have a marketing budget and this is how we do marketing here at Company X”. That tells me they're just going through the motions and making small tweaks.
I think the true marketing leaders are re-evaluating their marketing strategies and tactics and taking advantage of the fact that marketing has changed more in the last five years than the previous 50. That represents a potential competitive advantage for the leaders in this space, and they are the ones that are taking advantage of all these new opportunities that are out there for marketers. That's my story and I'm sticking to it…
Listen to Randy Byrne talk about Marketing Scientific Products on the Marketing Science Podcast.
Listen and Subscribe to the Marketing Science Podcast
Subscribe | Spotify | Stitcher | Apple | iHeartRadio | Mobile | Download