The Manufacturing Executive: Episode 4
Episode show notes
I did something a little different in this episode. As opposed to bringing in an outside guest and interviewing them, I did a solocast.
It’s just you and me talking about things I’ve learned while serving the industrial sector for the last eight-plus years as a sales and marketing consultant.
Today, I discuss how to stop giving away engineering and consulting services for free.
Here are some of my thoughts from this episode:
- How to package your expertise so you don’t go down these long time-suck paths where you give away free insight and engineering work
- Examples of how paid engagement can work, including a site audit, a second opinion service, a research report, and a product sample
- An idea I call “The Spectrum of Value Creation”… And how your buyer’s mindset changes when you approach them this way (and why that’s a great thing for your business!)
Transcript of episode
Manufacturers who sell complex engineering-driven solutions are often giving away hours upon hours of technical expertise upfront for free, and just to win the job.
Welcome to the Manufacturing Executive podcast, where we explore the strategies and experiences that are driving midsize manufacturers forward. Here you’ll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles. And you’ll learn from B2B sales and marketing experts about how to apply actionable business development strategies inside your business. Let’s get into the show.
Welcome to another episode of the Manufacturing Executive podcast. I’m Joe Sullivan, your host, and the cofounder of the industrial marketing agency Gorilla 76. So, I’m going to do something a little bit different today, and I intend to do this from time to time, maybe once a month or so would be my goal. But what I’m going to be doing here is recording a solo cast or a one person episode. This is just me as opposed to bringing in an outside guest and interviewing them. I’m going to lean on some of the things that I’ve learned serving the industrial sector for say the last eight plus years as a sales and marketing consultant and agency co-owner. And bring some of the topics to the table here that have really resonated, have helped manufacturers that we’ve consulted take big steps forward.
And the first of those topics today has been one that, it’s a more recent topic for me, but it’s really taken off. I’ve been a guest on other podcasts talking about this. I’ve written a series of… well, two articles. A set of two articles on the topic. A lot of the content I’ve posted on LinkedIn has really resonated. And so, I thought it would make a new brain or topic here for a solo cast.
And so, the topic is essentially this, how to stop giving away engineering and consulting for free. And this is a pattern that I’ve started seeing with manufacturers as we consult them. Really what’s going on here is manufacturers who sell complex engineering driven solutions are often giving away hours upon hours of technical expertise upfront for free and just to win the job. This is before there’s ever a purchase order with the customer, they’re diving in and they’re leaning on some of their best internal people to demonstrate that we’re capable of doing this. We can help show you what the solution looks like and to earn trust so that this potential customer winds up saying, “Yeah, you’re the ones for us. We’re going to write the check.”
And I understand why you did this and why you do this if you do it because frankly, there are a lot of parallels to how marketing agencies operate. And we’ve been in this trap in the past too. Now, we’ve figured out for ourselves how to get out of it and to start charging for that expertise in a way that’s not driving away potential opportunities, but actually bringing in more of them and better ones too. And I can’t help but think that the same idea of bringing in a new customer through a small paid consulting engagement can be the way to earn their business for the longterm, for the bigger engagement that you really want to sell.
So, you might be sitting here thinking, not in our industry, it doesn’t work here. The challenges that our customers face are super complicated, and we can’t give them an off the shelf solution. Everything needs to be custom and delivered to them upfront in a very custom way. And we have to earn their respect and attention first. And yeah, that may be true. And it probably is true for a lot of you, but it doesn’t mean you have to give it away for free. So, bear with me here and I’m going to get into it. And I’m hoping that you walk away from here at least thinking, huh, I wonder if this is something we should explore. I wonder if we could think about the way we approach new business a little bit differently, and maybe figure out how to package our expertise in a way that we don’t have to go down these long time suck paths of giving away all this free insight and engineering work or whatever that means for you.
So, let’s get into it here. So, I want to start here by drawing a little bit of a parallel to the way a marketing agency works because it’s really not all that different. If what your customers buy is a complex big ticket solution that requires a consultative sales process, it’s probably a long buying process or probably multiple people involved on their end from engineers to plant managers, to CEOs, to procurement. If all of that is generally true for your business, that you’re not selling a widget off the shelf, then I think this applies to you. And so, the way what I’ve seen for our business over the years is, the expectation is we’re going to come in there and maybe listen to the customer for an hour on a call. And then we’re going to dive into this long process of putting together an unpaid proposal, where I’m pulling in strategists and writers and experts from my team to help figure out what solution makes the most sense for this customer.
And in the meantime, it’s distracting their time from our paying customers. There’s going to be a good chance we don’t win the work anyway, and it’s going to be hard to get the attention of the right people on the customer’s end if we’re just sort of another vendor who’s quoting the job. So, we kind of looked at this a few years ago and said, “Hold on a second here. I think we need to be doing this differently. We need to be paid for this expertise and we need the customer to have some skin in the game, or we’re just going to be another interchangeable company. And it’s going to be very hard to differentiate ourselves from anybody else.”
So, my idea here and what we have done for ourselves with success and what we’ve started helping other manufacturing organizations figure out how to do for themselves is essentially [inaudible 00:06:12] take the first 1% or 3% or 5% of what your flagship engagement you’re generally trying to sell would be, and design and brand a… call it the, your company diagnostic. Or something along those lines where this is step one in any new customer engagement, it always starts the same way. You do some sort of analysis where you’re putting your best people on it because you can afford to, since you’re being paid for it. And you’re helping the customer figure out what solution makes the most sense for them.
And so, I think this could be a lot of different things. And a few examples of the form that this paid engagement could take would be one, maybe a site audit. If you’re say an automation company or somebody who builds custom machinery, can you get on site, be paid to do so? But have a very defined process for coming in and evaluating A, B, C and D leaving, and then providing a report on everything you found and a set of recommendations along with expected ROI or how it would transform operating efficiency on the floor or whatever that might be.
But a site audit would be a great way to do this. And maybe you could charge, even if it’s a few thousand dollars for it. Now you’re covering the cost of sending your person, put them on an airplane, sending them across the country and spending a day in the facility and their time afterwards. I don’t know what the right price tag is for you, but anything is better than zero. I’ll talk about why in a few minutes. I’ll talk about why your customer is probably more open to this idea than you may expect.
Another thing to do would be a second opinion service. We’ve seen this work well in the construction industry, and I think it could work well with manufacturers as well. Where if you think about it, the cost of switching a service providers often enough to delay change. So rather than asking a potential customer to completely make the switch from whoever’s been serving them for years, you can come in and do a small second opinion service and get paid a small fee for that, so that it can kind of baby step in with you, but see your thinking and your expertise come to light. So, that’s another way to do it.
Some kind of paid consultation could be another way. Maybe it’s an hour long free consultation over the phone, followed by some kind of paid consultation or engagement where you can help them figure out the solution and not have to worry about sucking your team’s time away from other paying work. We do something like this for our clients or our future customers that we call the industrial marketing roadmap, where we’ve defined a very specific process. There’s a discovery survey that’s filled out ahead of time. There’s a half day workshop with leadership. There’s a couple of weeks of research and there’s delivery of a plan, what’s your version of that?
Another thing you could do would be a research report. How about conducting some investigative work to explore a variety of solutions, and how could you package up those insights or maybe there’s customer interviews involved there. Where you actually interview existing and past customers of theirs and try to understand what actually matters to them, and then deliver all of that recorded audio files and a summary report to help them figure out what maybe, what changes they need to make, what direction they need to go in. Another thing you could do is knowledge transfer. Could you rather than coming in and doing all the work for them could you arm some of their team members to tackle some of the low hanging fruit and in the process of doing this, so you establish yourself as an expert consultant. So, that’s another way.
Or maybe a product sample. Some of you listening probably give our product samples already depending on the industry you’re in. We work with some companies in packaging and label manufacturing, and that’s a common practice for them. But maybe in your business there’s a way to do a small version, whether it’s free or not free, could you create a small version of a prototype I guess would be another thing to do, but actually be paid for that. So, those are kind of some ideas for what that… taking that first few percentage points of the bigger engagement could be and delivering it in a paid way.
Now I want to shift gears here for a second, because I think that’s one of the early steps, but I think that there’s this concept that I have sort of named the spectrum of value creation. And if you think about all the ways you could create value for your customers, most manufacturers that I see are either they’re doing something like a free consultation like we’ve talked about here. Giving away all this expertise for free, free engineering work. And then there’s the big flagship implementation which is probably some 50,000 to $1 million solution. Whether it’s a product or some service that you provide, but it’s the big sort of flagship thing that you really want to sell, and there’s very little between that.
And so, what I would challenge you to do is say, almost you draw a horizontal line and put that free consultation somewhere towards the left side, not all the way to the left. Put that flagship implementation all the way to the right as the biggest thing. The biggest way you could create value for a potential customer. And then what you need to do is start filling in the gaps between that. So, if you think about all the expertise and experience your team has before you would offer a free consultation, there are other ways you could get your customers engaged with your company. And processing all this knowledge you have and consuming the insights you have to offer. And I think the best way to do that is to simply publish articles on your site. It’s the smallest possible transaction between a prospect and your company.
If you can say, what are the most common questions we get and answer them in the form of say 500 word blog posts or articles published them on your site. Now you’re creating an opportunity for somebody to see the way you think and the problems you’re capable of solving to demonstrate you’ve seen these issues before, and there are different ways to solve them, but here are some of those options. So many manufacturer websites are all about themselves, and it’s just like a digital brochure and nobody really cares about that until they believe you understand their situation and have solved their types of problems.
So, the smallest simplest way you can create value for somebody on the path to the bigger sale is a free published article or short video of you talking, or a webinar you could record for example, so that’s one thing. I think the next step in terms of creating value would be what we’d call a gated resource or something that would require somebody to submit some contact information. And so, now they’re sort of giving you permission to market to them or to pick up the phone and call them because you’re trading them something of value. And that could be a tool like an ROI calculator. It could be asking them to register for a webinar or subscribe to your newsletter, a lot of different ways to do this.
But now you’re sort of moving into this place where your prospect is essentially paying for something, but they’re not paying with cash they’re paying with the currency of online lead generation, which is their contact information. Okay. And then from there, as you start moving more to the right on this spectrum of ways you can create value. Then maybe there is that free consultation. But instead of 40 hours worth of free engineering work that you give away, maybe it’s a one hour call with one of your senior engineers to sort of dive into the situation and determine whether there’s a fit, and to sort of introduce the paid baby step consultation that would follow.
So, that would be the next one, right? The paid consultation, your version of that industrial marketing roadmap that we do, that I described, brand it. Call it the, your company diagnostic or the your company audit or whatever you want to put on it, but think about what all the steps are and clearly articulate those. Create a little PDF and hopefully a page on your website that can sort of say, this is the process everybody goes through with us. This is how much it costs. This is exactly what you can expect to get out of it and from there, we’ll help you determine how to proceed, how to implement this. So, that’s the next one.
And then I think there’s, then you start moving towards the bigger engagements. Once you’ve done those types, that sort of preliminary engagement now you’re opening up the door to a bigger engagement, the flagship thing you sell. So, I think there are a lot of benefits to doing things this way and the mindset of your buyer is just going to change when you can engage them in different ways than just, here’s this free consultation. And then here’s this huge engagement with nothing in between. And so, some of the things that I think are going to change are A, the sale is going to start before you even talk. Your future customers are going to buy on their schedule not yours.
So, if you can create an opportunity to build trust with your customers and your prospects before they’re ready to talk, well, they’re going to consume sort of bite after little bite of your expertise in the form of articles or videos or webinars or white papers or podcasts like this, or whatever medium you choose. This is your chance to start earning their attention before they’re ready to pick up the phone. So, the sales starts before you talk is the first benefit. The second benefit or way that the mindset of your customers is going to change is they all of a sudden have skin in the game that is going to earn the attention of decision makers. And this is really the biggest surprise that I found when we started operating this way ourselves.
Before we had this paid $5,000 industrial marketing roadmap engagement, and we were giving away all this expertise for free which really wasn’t that different process-wise it was just, it was free. Well, the CEO very rarely came to the table. The people we wanted at that meeting would sometimes show up and sometimes not. Ultimately procurement was haggling with us over price if we were being considered for the job. And we were just another vendor, that was the reality. We were another vendor. All of a sudden when we decided we were going to put a price tag on this to find the process, we all of a sudden earned the attention of the C-suite. The VP of sales would be there. The CEO and president would be there. They would communicate to the rest of their team that this is important. So, having some skin in the game just completely changes the way you’re going to be perceived as an expert rather than a vendor.
The third benefit or mindset shift is that now you can give it your all. So, when you’re giving away all this free consulting or engineering, it’s a massive time suck on your most valuable resources. Because of course you want to put your best people on it, your most experienced people to help figure out what the solution should be. But you can’t really do that when you can give the future customer who’s not paying you that your full attention in a lot of cases, because you need the time of those people on paid engagements. But all of a sudden when you’re getting paid for these engagements, you can afford to budget time of some of your experts to give this discovery process or this pre-engineering process the time that it really requires to do it well, and to come up with a solution that makes the most sense, so there’s that.
Number four, the fourth benefit or mindset shift here is your customer is not going to want to backtrack. So, one of the biggest objections that I’ve heard when I sort of talk about this process of not giving away consulting for free is that people are afraid that their prospects are going to take all this information that was presented to them, and then go elsewhere with it, and hire somebody else to actually implement the remaining 95% of that job when you’ve sort of done the first 5% at a smaller fee. But here’s the reality, this is my observation. This is what I’ve seen for us. This is what I see happening for other companies. If you have spent hours upon hours working with that future customer to arrive at the perfect customized solution, how likely are they really going to be to say, I think I’m going to go elsewhere and see who else could implement this for me instead of you. I’m going to go see if I can get the low bid from somebody else.
And even in the unlikely scenario that they do go elsewhere, it’s okay because you’ve been fairly compensated for what you have done to date. So, if they want to run in the other direction, whatever, right? It probably wasn’t the right fit for you anyway. So, that’s sort of the way I offset the objection that, well, what if they don’t hire us? What if we don’t ask for the full project upfront? Probably not going to happen, probably not a problem you’re going to run into.
And then the fifth point or benefit mindset shift that I’ve sort of touched on already is just this idea that you are no longer seen as a vendor. If the stakeholders are now at the table from the beginning, you have the opportunity to earn their trust and attention not just the lower level people at the company and the procurement team. You’ve got the C-suite there, you’ve got the decision makers there and imagine all the time you’ve been able to spend with them now influencing their buying process as opposed to just shooting another proposal out there at them, or some bank of engineering work that you gave away for free along with a whole bunch of other companies that did the same. So, it’s really a differentiator in terms of positioning yourself as the true expert.
So, that pretty much sums it up. I hope this was helpful. I hope this at least got you thinking about whether the way you’ve always been doing it is really the way you should continue doing it. We have a few articles like I said, that we’ve written on this topic. I will link to those in the show notes. So, that’s all for today. Thank you for joining us. I hope it was helpful and we will hope to see you next time on the next episode of the Manufacturing Executive podcast.
You’ve been listening to the Manufacturing Executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you’d like to learn more about industrial marketing and sales strategy, you’ll find an ever expanding collection of articles, videos, guides, and tools specifically for B2B manufacturers at gorilla76.com/learn. Thank you so much for listening, until next time.