Archive for October, 2017
Everyone is struggling to fill their factories these days, as the fight for more business heats up. It used to be that contract manufacturers had a good solid base of good customers, they could depend on year after year. Many of them were satisfied to pick up a couple of customers a year as their base remained stable, But, all of that has changed for a couple of reasons. The first being that attrition has set in, stuff happens, companies go out of business, or change direction, or have their products built overseas or they are acquired and somebody new and more powerful is making their contract manufacturing decisions.
So now my contract manufacturing friends have to find new and innovative way to capture more business. And, as we have been talking about, the last few week, finding new contract manufacturing opportunities is a much more intense process than selling bare boards, for example. Winning new EMS customers is a much longer and more arduous process, one that takes more planning, persistence, and yes, patience. This means that if you want to increase your business you have to start early, in most cases so early, that you won’t even feel you need new customers when you start in. Or, I have a better idea, never stop the first place.
Working with CM’s over the years, it has always surprised me that many of them managed to keep their companies full with little or even no real sales and marketing effort. When I’d asked them how they got their business they would tell me that it was word of mouth, or just a good reputation, or a good base of a few solid customers.
But now things have changed, and many CM’s are out there looking for new business, if you are one of them, here are five things you can do to kick start your sales and marketing effort going forward:
- Get your name out to the marketplace. No one is going to buy from you if they have never heard of you. Develop a good marketing and branding plan that includes social media, and implement it immediately. Tell your company’s story. What are you good at? Why do your customers like you? Why should potential customers work with you? Make sure you get some of your good, longstanding customers to vouch for you. Get their testimonials, these will be the most effective and powerful part of your marketing plan. Remember, you have over one thousand competitors out there and you have to be the one that is outstanding.
- Offer quick turn to new product introduction companies. Quick turn assembly services are in demand right now. You customers want to be able to get their initial products very quickly, and they are willing to pay for this service. Many times, they will provide you with the complete kit and you just have to assemble it ,I know that many of you don’t like to this because of lost revenue on the parts, but be patient, offering this service will pay off in the very near future. Your chances of getting the production business go up ten-fold if you have built the prototypes.
- Be willing to collaborate with other companies. There is always strength in partnerships. Instead of being limited by your own brick and mortar capabilities, be willing to extend a hand of partnership to other CMs who cannot do what you do and also CMs who can do what you cannot, because together you will be much stronger, and create a much stronger offering to your customers. There are many large CMs both domestic and offshore who are looking for smaller and more flexible CM’s to collaborate with to use as their new product introduction partners. Seek one of those and partner with them. It will be good for both companies.
- Find some good independent sales reps. And I mean good ones. Make sure they have business at hand that they can bring you. Let’s be get real, a good rep can bring you introductions. She can bring you RFPs but she cannot bring you the business. You are going to have to win the business yourself. But a good rep can bring you the opportunities and that is what he is paid to do. Find two or three very good reps and then treat them like part of the company, part of the family and they will deliver for you.
- And finally, pay attention to your customers. Go out of your way to always give them spectacular customer service and they will love you for it. They say I most businesses it costs about ten thousand dollars to acquire a new customer, but I would suspect that it takes even more of an investment to win a contract manufacturing customer so protect your investment at all cost. When you finally win that customer, do everything you can to keep him.
And finally, one more, always under promise and over deliver, right? Never stop, never ever stop your sales and marketing effort once you have started it. Keep it going, week after week month after month year after year and always be improving, getting better at it all the time and in the end, it will pay off. It’s only common sense.
Contract manufacturing is a service not a product. As CEMs, we are actually building someone else’s product, someone else’s baby. Our customers are putting the fate of their companies in our hands. If we build the product incorrectly our customers will be the ones to pay. In the end they are the ones who have their name on the product. They are responsible for designing, engineering, and marketing the products, we are responsible for the manufacturing of that product.
Think about that for a moment. Consider how much trust comes into play when our customers decide to turn over the manufacturing of their products to our contract manufacturing services. They are putting their company’s reputation in our hands, they are putting the entire future of their company in our hands.
This is a huge decision on their part. They must make sure that we are able to handle all their needs. They should be certain that we have all the processes in place to deliver a product that is as good, if not better than the one they themselves could produce, and at a better, more competitive price. So, these companies have two very difficult decisions to make. The first being if they should use a contract manufacturer in the first place; and the second, which contract manufacturer will they select in the end? And this is where, we as professional sales people come into the picture. It is our responsibility to convince our customers that they will be in good hands if they decided to trust out company with the fabrication of their product.
When you consider all these factors that go into a decision like this, it become evident that ours is not a simple sales process. It’s not merely holding up a product and giving a sales pitch for why the customer should buy our product. No, not at all. This sales process is very personal and some would even say emotional. In a way is almost like turning over your child to be raised by others.
When selling contract manufacturing services, as great sales people, we should focus on making our customers feel completely comfortable and yes, safe, and secure, enough in our company to choose us to build their products. This means that when selling to these customers we must focus on the following key factors:
- Reliability: They need to understand, nay believe, that we are completely reliable. The best way to do this is through references and testimonials. They should be able to see a track-record fully based on happy and satisfied customers. Customers who are happy enough with our performance that they are willing to talk about it to other customers. If our target accounts see that we have customers who are willing to stand up and vouch for our reliability they will feel safe a secure in making their decision to engage with us.
- Consistency: When potential customers come to our company we must prove to them that our process is in control and that are production lines are putting out the same great consistently high-quality products from the first assembly, to the last. We must demonstrate that we have all the right systems like ISO in place, assuring them that we have a fool-proof quality assurance system.
- Credibility: This is key. They need to know that we are completely truthful in all our business transactions. This is the time for open-kimono discussions. Our company must be on an open-book basis to our customers. We should concentrate on showing them that we are a real, viable, and yes financially sound company, that will not only be there for them today but in the future as well.
- Flexible and easy to work with: This is so very important. As a CEM, you are literally their business partner in a relationship that is much more intense than the typical vendor/customer relationship. As a great CEM partner, you must always have the customers’ welfare at heart, realizing that you are playing an integral part in their success as well as yours. You have to always be prepared to walk that extra mile to assure that your customers are selling the best products money can buy, products that your company is producing for them.
As a salesperson, it is your responsibility to convey all of these points to your customers, to assure them that your company will indeed treat them as true partners. But you cannot do it alone. The most important thing to remember about selling contract manufacturing services is that the entire team should be involved in the sale. From the owner/president of the company, to the program managers, to the Quality managers, to the department leads, to the all-important purchasing manager, everyone should take part in convincing your customers that your company is unquestionably the most qualified, reliable, consistent, credible, flexible, and capable company in the industry to build that their products, it’s only common sense.
Does anybody know your name?
Unlike PCB shops where there are now less than 200 left in North America, there are well over 1000 contract manufacturers of all shapes and sizes. Everyone knows the big guys from Celestica, to Flextronics, to Sanmina to Plexus all of them doing hundreds of millions to billions of dollars, but what about all the others? Most of them are under twenty million dollars and many of those are under ten million. There is nothing wrong with this, most of these companies are very good, very well-run companies.
But the true problem lies in the sheer numbers, there are so many of them that it’s hard to tell one from the other. There are very few of these companies that can be identified by more than a handful of companies who, work directly with them, which is the very reason today’s contract manufacturers need to develop and implement their own ongoing marketing and branding plan.
I say “implement”, because that really is the key to any good plan, especially a marketing plan. Here are the more basic steps to developing and implementing your own customized marketing and branding plan:
- Tell your story: This is where it all starts. What is your company’s story, when you did you get started? Who started the business and why was it started? What is the company’s mission and vision? Talk about some of the history. This will be the foundation of all your marketing. It is also helpful for your own team to have a good understanding of the company that are part of.
- What are you good at? What separates your company from the rest of the pack? This is sometimes called your unique value proposition. What is your forte? What do your customers like about you? Why do they keep coming back?
- Who is your ideal customer and why? Speaking of customers, who is your best customer? Why are they your best customer? What markets are they in? Develop an ideal customer profile and use it as a template when going after other customers. These are the customers and markets you should pursue.
- Getting the word out: Now we get down to it. You know what your company is good at, you know what customers and markets you want to pursue, now it’s time to put your marketing together and get your message out there to the right companies. Done right, this can be very effective and will not cost you much money at all, in fact, you can do it yourself if you want. The first thing to know is that marketing is a mosaic and all the marketing options listed below are the tiles making up the mosaic. It’s up to you to decide what you want your marketing mosaic to look like based on which of these, “tiles” you decide to use. Here are three of the most important “tiles” to use in your marketing mosaic.
- Interviews: This is your chance to tell your story. You can be interviewed by one of the trade magazines like this one I-Connect 007, which offers all types of interviews from print, to audio, to even video. They will give you the opportunity to talk about our self and your company. Your story makes a great cornerstone for your marketing because as in the case of I-Connect your story is put in front of their thousands of readers, and once it has been published, you can use it for your own marketing and social media. You can put the interview on your web site and your newsletters. You can send the link to your customers. You give it to your sales team for them to send it to customers. If its print interview, you can have it reprinted in a glossy magazine style format complete with photos and use it as a hand out. All very effective and powerful ways to market your company.
- Press releases: Please send out press releases about everything that happens at your company; from hiring a new sales person, or general manager to buying a new piece of equipment, to updating your technology. Press releases are a great way to keep your name out there. And just like everything else you can re-purpose your press releases through your own marketing and social media once they have been published in the trades.
- Newsletters/ technical bulletins: This is the very best way to get your name out there to the right people. But this is not a “It’s Sally’s birthday!” newsletter. The best newsletters are filled with content that is valuable and appealing to your customers. Each newsletter should contain:
- A president’s message that highlights what has been going on at the company as well as what is contained in this issue.
- Anything you had had published since the last newsletter.
- Some helpful technology tips that will help your customers
- A special call to action
The newsletter will go out to your entire customer base and will serve as a valuable “touch” to those customers once again keeping your company’s name and services in front of the right people.
And yes, in the spirit of under promising and over delivering, there is one more “tile”,and that’s social media. Don’t groan! It’s about time you went there. Linkedin and Twitter are the most useful and powerful forms of business social media right now. Stop bragging about the fact that you don’t even know what Twitter is anymore, it’s no longer cool to do that and sorry but you’re showing your age. There are many books and seminars on social media today so it’s for you to get on board very quickly. My friend Bruce Johnston (firstname.lastname@example.org) is one of the world’s leaders in LinkedIn and he offers excellent training courses for you and your team to learn how to use LinkedIn effectively. The good news is that everything you do as part of your marketing plan can be re-purposed via social media reaching many more people and reaching them very quickly
One last thing to remember, and it’s worth restating, marketing is a mosaic and you should develop a complete annual schedule of the marketing you are going to be doing for the next year, month by month, quarter by quarter so that you will always know where you are going by following this time-lined road map. And by the way I have a great sample marketing plan I can send you if you contact me.
So please, start working at getting your name out there. You are competing with over one thousand other companies and in the end the true winners are going to be those who marketed the smartest and yes, the loudest. It’s only common sense.
We have talked a lot in this column about how board shops should treat their customers. How they should try to get to know their customers and their needs. So now let’s switch things around and talk about how customers should treat board shops, how they should work with board shops to get the best products and the best performances out of them.
For years now we have been talking about the new way of doing business. We have discussed things like what I call the “gray market” where companies like to buy their PCBs on line without ever having to talk to anyone, which by the way I consider the ultimate step in the commoditizing of the printed circuit board as a product. The trend in the electronics market has been to trivialize the circuit board to the point where the technology is considered pedestrian, repeatable and in some cases not even worthy of its own ITAR protection.
Companies can buy boards off web sites with a computer and a credit card without ever having to talk to anyone.
The sales people I work with find themselves overwhelmed with frustration caught between a rock and a hard place with their management whipping (yours truly included) them to get out there and visit those customers. Meet with them face to face; while those wily customers do everything they can to make sure that doesn’t ever happen, putting up barriers made of anything they can imagine to keep those sales people from seeing them face to face and in person. And that’s just the buyer, forget the chance of ever seeing anyone from the rest of the project team.
In short the relationship between the board shops and their customers is now virtually (no pun intended) non-existent.
And that spells trouble. Big trouble. All business is about people, people talking to each other, people understanding each other and yes people caring about each other. And now that has been lost. People are not talking to each other…pretty much never.
So where does that leave us? It leaves us to where we are today when we have the biggest gap between the people who design and engineer the end product and the people who build the boards that go into that product so that now the people building the board have nothing more to go on than what they are asked to build actually; just what is in front of them. They are operating in a vacuum.
In the old days, back in the days before the internet these people used to talk to one another. The customer’s project team would visit the board house or vice versa or both and then they would discuss the project. Then the customer would talk about the project in detail with her vendor. He would explain what they were doing, she would explain why the boards needed to be the way they needed to be and make sure that the people building the board understood why the board needed to be the way it needed to be. In these meetings the board guys would get a good understanding of what their boards were going into and why certain parameters were extremely critical. They would be exposed to the whole picture to the point where the customer’s call outs would make sense to them. And yes often around that meeting table ideas would be exchanged. The board guys could and did come up with suggestions and improvements for making the board a more effective component of the end product as well as more easily manufacturable and yes often, surprisingly often, less expensive.
And then through this process another thing would happen. The teams, the customers and the fabricators would bond, they would start becoming one team, real partners to the point that they were all working on the same project with the same goal in mind, the success of that project. They would become brothers and sisters in arms working for one common goal. This of course would cause them to be open and honest with another. People from both sides of the relationship would get to know each other. The company to company relationship would far exceed the buyer to salesperson only relationship (if you want to call it that) we have today. The teams would get to know each other all of them from engineers to the quality people to program managers they would work on the project together. If the boards were particularly difficult and the shop was having a hard time building them; their customer, their partner would send their team in and they would work side by side solving the problems and thus successfully producing good boards…together….as a team.
Now the irony is that today our end products are more sophisticated than ever. The PCBs to go into those products are more complicated than ever but now we have no partnerships. People in both companies seldom if ever talk to each other never mind actually meet. This has got to change. We have to go back to those pre-internet days where people met, discussed, came up with common solutions and goals, got to know and trust each other and work together building the products of tomorrow. As an old PCB guy I am looking right at you our customers right now and saying clearly and in plain English. “Dear customers we can’t do it without you. Come and visit us, Let us visit you, come and get to know us, come on let’s work together on making your products better than they have ever been.”
Stay tuned as in future columns we’ll talk about the specific steps we have to take to develop those partnership; steps that will make both of us better together than we can ever hope to be apart, the way things are going now. So check in with me next week and we’ll go there…together. It’s only common sense.
Choosing the right PCB vendor is critical to your success
Choosing the right PCB vendor is not as easy as you want to think it is. There are still many contract manufacturers out there who believe the myth that all PCB shops are the same and that in the end it’s only a matter of basing their decision on price and price alone. Oh, sure you’ll make yourselves feel better trying to know more about who you are dealing with. Some of you will actually visit potential vendors and perform surveys on them. This is a good thing, sometimes, because there are some shops who look fantastic when you visit them, pass your surveys with flying colors, and then go on to be a disaster when it comes to day by day performance. That’s because selecting the right board shop goes further than what it looks like on paper, or what it looks like period. I know some great looking shops that can’t perform worth a darn and then some of the ugliest shops you’ll ever see that are great performers.
Putting all of that aside, here are five good ways to choose the right PCB vendor for your contract manufacturing company.
- Ask them about their delivery and quality performance. Actually, ask them to back up what they claim their performance is. Ask to see the charts, the numbers. They are all going to tell you that their delivery and quality numbers are in the high 90’s don’t believe them, ask for proof. I mean look them in the eye and ask for proof, hard evidence, of this stellar performance they are claiming to have. Ask them how they measure this performance. An honest measurement for delivery is whether or not they meet the original date. Some companies will get a new catch-back date from their customers and then meet that date and call it on time. That is not on time. Meeting the original delivery date is true on time performance, no exceptions!
- Get references. Why doesn’t anyone do this? Ask them for references and then call those references and ask what their experience has been. It’s even better if you now someone who is or has been one of their customers and get their opinion of what’s it’s like to deal with this vendor. Find out for yourself. Do your research.
- Ask them if they are financially sound. The last thing you want is to invest in a vendor that will be out of business three months into the relationship. The repercussions of that situation are endless, especially when their doors are locked and your product is held hostage.
- Ask them how they handle customers issues. You will find that most customer/vendor relationships are formed in hardship. Any time you work with a PC shop there will be issues, there always are, and how you are treated dealing with those issues will end up making or breaking the relationship. Ask them to tell you about a time they had an issue with a customer and how it was handled.
- Once you decide to use a shop, start them off with a fairly simple order. Too often customers will lead off with their most challenging board. The one that they’ve had a difficult time sourcing, the one that everyone has had a hard time with. Do not give them that board. The first order should be an audition order. It should be simple and straightforward technology. You are checking out how their system works. How efficient their quote process is, how easy it is to place an order and of course how they perform on that order. Once you have a good feeling about their logistics, then start placing more orders and even get to the more challenging ones.
And one more, in the spirit of under promising and over delivering there is one more thing to think about and that’s the people. In the end it’s all about what you feel about the people you will be dealing with. You are after all, getting married to these people, not the company but the actual. people you will be dealing with. What kind of vibe do you get from them? Do you sense they respect their customers or do they delight in telling you some “the customer was stupid and we were so smart stories”? don’t laugh it happens all the time. Remember that your company and this company, your people and their people are going to be significant partners working towards the success of your company, so choose wisely my friends. No survey form ever tells the true story of the actual people you will be dealing with.
And, finally beware of board shops offering great price incentives, because in PCBs, like everything else, you get what you pay for. In the end a ten or even twenty percent discount will not make up for boards that are late holding up your production lines and causing late deliveries or worse yet, boards that have poor Quality causing eventual field failures on products that have your name on them, not that board shop’s. Once that happens, buying the cheapest board that money can buy will no longer seem like a great idea. It’s only common sense.
Artwork courtesy Bob Tarzwell (gallerydeboer.ca/portfolio/tarzwell-robert/)
For many years now, too many that I want to count, I have been a real pain in the neck advocating that all board shops need marketing, they need to advertise, send out newsletters, hire and manage, measure, and motivate sales people, create forecasts, and account plans and pay attention to their customers’ needs. Interestingly enough, up to a few short years ago there were only a few tier two contract manufacturers who were doing the same things. I know, because I managed to work with the few of these rare companies who were willing to invest time and money into their own sales and marketing efforts.
I was never sure why there were son few CMs interested in sales and marketing? There are over eighteen hundred contract manufacturers out there and the vast majority of them and I mean a real vast majority of them are under fifteen million dollars in annual revenue, in fact, most of them are under ten million. So, I wondered what was the deal here? Why did so many contract manufacturers feel little or no need to pay the slightest attention to the sales and marketing end of their business?
One of the reasons was I came up with was that they didn’t really need to go out and find new business because it always came to them one way or another, they always had all the business they needed. So, I dug a little deeper, why did they have all the business they needed to stay busy and keep making a profit? It did not take long to discover that many of them started their business to service a larger company that needed them to produce a special unique assembly for them. Often the people who started their own contract manufacturing company had done so at the requests of a large company, often one they worked for. Often, the person who started the CM company had run the assembly department of that larger company, or they had been responsible for specific product line that the larger company was producing and that finally powers that be decided that it would be more economical for them to have those products built outside of their company by another smaller company they would help launch. It was amazing, how often this was the case.
And then, from that guaranteed base of business the new contract manufacturer grew by adding just one or two other customers a year to the level where they always had enough business. In fact the company that had originally helped launch them, did not want them to have too many other customers.
But now all of that has changed. These companies have grown where now they have to maintain a certain level of business just to handle their overhead costs. Often the original projects that had started them in business in the first place have disappeared. So now they find themselves in the position of having to get out there and find more business.
Unfortunately, this is proving to be a daunting task for a couple of reasons. The first one being that they do not have the sales and marketing infrastructure to grow their business. They need to hire sales people and develop and implement sales and marketing plans; and the second reason being that the sales cycle, the time it takes to acquire a new customer, is a long one in their business. It can take from eight months to a year to find and win a new customer, and then in many cases it takes at least six months to scale that customer up to production levels. It is also much more difficult for contract manufacturer to handle a lot of customers. By the very nature of their business, they are structured to handle only a few good customers at one time. At least most of them.
Because of these factors it is apparent that contract manufacturing companies need as much help with sales and marketing as the board shops always have. So, it’s with that in mind that I am going to focus my next two columns on contract manufacturers, helping them to develop sales and marketing programs that will help them kick start their sales efforts and started on the road to successfully filling their shops.
In next week’s column, I’ll be talking about how to find and hire the right sales people. And then how to manage, measure and motivate them. I’ll talk about incentive packages that assure results and how to keep sales people focused to success. I’ll also discuss the pros and cons of direct sales people versus independent sales reps.
The following week, I’ll talk about marketing, including creating and implementing great marketing and branding packages that will help contract manufacturers stand out in their marketplace. We’ll talk about social media, advertising, newsletters, and all other aspects of marketing your contract manufacturing company.
And sometime in the next few weeks, I’ll dedicate a column to how to select the best possible PCB vendors for your specific needs, something that is near and dear to my heart. Stick around it’s going to be fun, and good for you too. It’s only common sense.