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Selling and industry maturity.

Our sympathies should go out to foundry sales staffs. In this industry dominated by operational concerns and manufacturing executives, the sales staff is routinely caught between a rock and a hard place.

For example, sales staffs are routinely criticized for their inability to generate significant quantities of new business. Yet, when new business opportunities are presented, these are often rejected as "not a good fit for the foundry." When new work is acceptable to the manufacturing leadership, but ultimately turns out not to be very profitable, the sales staff (and often the customer) gets the blame. In either case, it's a no win situation for foundry sales.

While there are any number of explanations for this longstanding plight of the foundry sales staff, non is more powerful--or more on target--than the reality of industry maturity. By this I mean that most foundries today still sell, and still structure their sales efforts, as if ours was not a mature industry.

If asked, most in our industry would say that the job of foundry sales (and sales management) is to sell, and that "selling" means aggressively seeking new business and growing top line revenues. While this bit of conventional wisdom may have been valid while the industry was still in the growth phase of its life cycle (pre-1980), it is clearly not so today.

Focusing Sales Efforts

By definition, industry maturity means no real market growth. This reality suggests that a foundry sales effort focused on volume growth is wrongheaded. The impact of this wrongheaded approach is manifest as the head on, pitched battles between undifferentiated competitors for market share.

History and experience plainly show that there are no real winners in these fights. Everyone loses as admittedly shortsighted casting buyers play one foundry against another, cheapen cast products and devalue the industry's future. Like so many skirmishes fought in so many wars, only the number of casualties grows as the battle wealth fight over and over again for brief and inglorious control of the same piece of less and less valuable real estate. Unfortunately, foundries have been willing accomplices in this carnage over the years. As an industry, foundry pricing policies have been wholly and completely self-destructive.

A foundry sales organization that is in harmony with industry maturity is one that is structured for and focused on account optimization and profit maximization. In these organizations, volume growth is a secondary of even tertiary consideration.

Therefore, instead of expending increasing amounts of time and money on business that is diminishing in value, the mature foundry sales effort focuses its attention on keeping what it has (compatible accounts and sales) and perfecting what it can (value to the customer, share of target accounts' compatible business, internal processes and costs, strategic costing and pricing). The mature foundry sales organization is not driven to create a bigger company, but a better one. It is extremely selective about the new business opportunities it pursues so that the foundry's owners can be as stingy as possible about the facilities related investments they need to make.

Identifying Industry Maturity

Specifically, the mature foundry sales organization is not staffed by impatient, aggressive, "smokestack chasers," but by careful planners, focused, patient prospectors, attentive listeners and politically savvy relationship managers. The mature foundry sales organization does not worship and exalt revenue growth but provides meaningful incentives to its sales staff for long term account development and profit enhancement. The mature foundry sales organization is not automatically seduced by an opportunity for considerable non-compatible volume from a new account. It understands that these opportunities are mere phantoms--attractive on paper but rarely in practice.

Moreover, the mature foundry sales organization does not expect important results quickly, though it gladly accepts them when they come. Instead, management and staff alike understand that developing a target account is expensive and time consuming, and are not at all reluctant to make the investments needed to sustain the relationship and business development effort over two of perhaps even three years. Further, management understands that only a select few opportunities can and should be developed at any one time, and that success in such endeavors requires a team effort.

Industry maturity requires a different, smarter approach to selling and to the management of the foundry sales effort. This begins with a different set of definitions and organizational expectations and flows through different personnel and skills, different selling strategies and tactics, and a different set of performance standards and measures. As always, this new approach must be catalyzed by the CEO and implemented and managed by a new breed of executive who is not a "sales manager," but instead, a legitimate marketing manager.

Dan Marcus

TDC Consulting, Inc., Amherst, Wisconsin
COPYRIGHT 2003 American Foundry Society, Inc.
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Title Annotation:CEO Journal; metal castings industry
Comment:Selling and industry maturity.(CEO Journal; metal castings industry)
Author:Marcus, Dan
Publication:Modern Casting
Geographic Code:1USA
Date:Dec 1, 2003
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