Sales and Marketing Survey of Manufacturing Sector


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published March 19, 2003

US Manufacturers have been hit with one management improvement revolution after the other. Total quality management, lean production, just-in-time inventory, work-in-motion, reduced cycle time, and flex teams are a few of the profit improvement techniques that have changed manufacturing forever. In keeping with these changes, labor productivity in the manufacturing sector has increased by 3% per annum over the past 50 years according to the US Bureau of Labor Statistics. Yet, despite these productivity improvements, the manufacturing sector has been unable to keep up with the overall economic growth. According to the US Bureau of Economic Analysis, in 1968 manufacturing represented 27% of the US GNP. By 2001, manufacturing only represented 14% of the US GNP. To combat this decline in sales, have the US manufacturers embraced the sales and marketing improvements that accompanied the CRM revolution?

The Customer Relationship Management (CRM) revolution that began in 1995 and reached a height in 2000 brought focus to the revenue producing arm of every business. For most companies serving business markets, CRM began as a technological improvement in maintaining customer records, managing the sales process, and conducting marketing efforts, and later evolved into a management technique for improving the relationship between a company and its customers.

In the past three years, there have been a number of articles highlighting the failure of CRM initiatives to deliver value. Part of the value that the CRM revolution promised was with respect to measuring the sales and marketing process, converting these metrics into executive decisions, and improving the operation. Focusing on the management aspect of CRM, The Wiglaf Journal undertook a research effort to discern whether manufacturers have found some of the aspects of CRM important.

On March 3rd, we surveyed 48 manufactures and distributors at the National Manufacturing Week 2003 conference at McCormick Place, Chicago, IL. The survey focused on the collection of sales and marketing data, the use of the data in making executive decisions, and the importance of the data to company performance. The compiled results are below.

The survey revealed the top five sales and marketing measurements to be (1) Sales by Customer, (2) Sales by Product, (3) Customer Retention, (4) Sales by Territory, and (5) Customer Service Performance. The respondents also listed these as being the top five metrics that are effectively used to deliver revenue and profit results. When asked which metrics are important to the company, Marketing Effectiveness displaced Sales by Territory in the top 5 list of metrics. These results indicate a high correlation between that which is measured and that which the executives surveyed found important.

Perhaps the most surprising result was that few executives reported measuring the sales pipeline and win/loss analysis. These metrics are related to the sales funnel analysis. Sales funnel analysis enables management to reflect on its ability to attract new prospects, qualify these prospects, convert sales opportunities into closed sales opportunities, and close the sale. If there are too few prospects in the sales funnel, management can increase the marketing function to draw more prospects. Alternatively, if the close ratio is too low, management can review its sales process to determine the mismatch between the value proposition and the prospect demands. Only 48% of the surveyed managers reported examining these factors.

To understand the paucity of importance placed on measuring the sales pipeline and win/loss analysis, we should contrast this fact with the high importance placed on sales by customer. Together, these facts reveal that manufacturers and distributors are far more concerned with customer retention issues than customer acquisition issues.

We also asked who was involved in making decisions that are related to these metrics. Most of the manufacturers and distributors listed the CEO and the sales and marketing executives as being responsible for these issues. At times, finance and operations officers were also listed as being involved.

From the high percentage of firms undertaking these measurements and converting them into decisions, and by the level of executives involved in the decision making process, the survey reveals that many of the CRM techniques have penetrated the manufacturing and distribution organizations, yet there is still room for improvement.

Thank you to Ms. Pamela Strateman and Mr. Bob Cermak for their aide in performing this survey.

Posted in:

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.