Marketing Custom Products

This is the first case study in a series of three focusing on the marketing; establishing the value proposition; and determining the optimum product supply chain for custom products.


Situation:


Jake was having a bad day in the early spring. His service business was now stable after the horrific collapse of the market with bankruptcies. His base customers had reopened with the demand for their products was improving. His headache was that his business unit had no penetration at additional customers for their expensive custom products and services.


The market was declining each year as more modern products were introduced. Jake had the new alternative product but struggled with the transition to the new product while the traditional mainstay was profitable. The problem was aggravated by the large amount of custom inventory needed to manage the long lead times for new product and establishing the value to the customer of the company’s higher cost but longer lasting product.


Perceived Solution:


Jake and his team talked to the sales force and attempted promotional programs along with discounted products and services without successful results at new customers. Customer service was improved and the expanded programs worked at current customers indicating the products were high quality and a good value. No new customers were penetrated.


Process Tools Deployed


A problem solving process tool was applied to the problem. Customers were surveyed on how they make decisions on suppliers. The questioned centered on what they believed were the advantages and disadvantages of the company’s products verse the competitors. The information was captured in a disciplined manner and analyzed using a paredo analysis.


The cross functional problem solving team then addressed the factors using the customer focused business strategy model. The model was used to identify the characteristics of the best channel to market for non-customers.


Some of the key characteristics identified where appropriate to most industries and companies:
1. Downsizing at the company had left their engineering staffed overburdened with work, so the qualification of a new vendor was difficult.
2. Customers were looking to the vendors to supply broader value added services and solutions to their industrial service and maintenance demands.
3. Industry experts within the competing companies were the most trusted source of referrals for suppliers and service recommendations.
4.Industry experts on efficiency and performance were also seen as good sources of information when considering new products.


This data was utilized to develop a new market channel for the penetration of these products into new customers.


Solution


The solution was to develop a customer symposium consisting of a variety of industry experts to assist the maintenance personnel in managing their business. The first symposium hosted by Jake’s service business with the partnership of a monitoring system controls company, an electronic measurement company, an equipment builder, and a lubricant company. Since that date other partners have come and gone including industry experts, cooling system companies and advanced product maintenance experts.


The format of the program was the presentation of critical product data and successful maintenance practices by these providers. There was no attempt to close agreements or solicit future orders directly. The presentations generated a great deal of discussion and interaction between the participants from the various competitors.


The participants were intentionally fifty percent current customers and fifty percent potential customers. The current customers became the best sales people for the product and services offered by the participating companies. Ideas for new products and services were test marketed during the product presentations.


The presentations were always directed at solving a customer problem , deploying effective products and services to accomplish the solution. Competitors' services were spoken in factual terms and where their product was better those advantages were disclosed as well. Throughout the years as the participants went to new locations or to competitors they took Jake’s products and services with them.


The unexpected consequence of the symposiums was the referrals for business between the various presenters' companies as one penetrated an account, they were asked for referrals. On occasion in a difficult situation with a customer, the company called on the experts who had worked on the symposium to help solve the customer problem.


Results:


The symposium is credited in the first five years in developing a fivefold increase in customer base for the service business. Each year, the symposium generated an average $1M+ in additional sales through the contacts and the presentation of proven solutions.


The symposium as a market channel to develop new customers was only one part of the industrial service success story. On Wednesday, an article establishing the value proposition of an industrial service and rebuild product will be posted for view. On Friday, an article on establishing the optimum product supply chain for those services will be posted. Join me every Monday, Wednesday and Friday for a new look at leveraging your human capital to attain a sustainable competitive advantage.