New Marketing Technology for Established B2B ManufacturersNew Marketing Technology for Established B2B Manufacturers

New Marketing Technology for Established B2B Manufacturers Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White.

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White and joining me today is Carman Pirie. How are you doing, sir?

Carman Pirie: I am doing well. Delighted to be here and you?

Jeff White: I’m doing great. You know, flubbed the first time we recorded the intro, which doesn’t happen very often. But you know.

Carman Pirie: You can only refer to that if you’re going to leave the flub in the final edit.

Jeff White: And we’ll let Rich edit something into that. You know, for promotional purposes.

Announcer: You’re listening to The Kula Ring.

Carman Pirie: Exactly. Beyond the flub, which made me very excited. I’m really excited for today’s guest and conversation because it really you know, it’s easy I think for those of us in marketing to think that you look at the more advanced side of the profession, if you will, or the more advanced side of some of the tactics and kind of options that are available today. But there’s an awful lot of manufacturers out there that are, you know, really building a foundational level of marketing capability to fuel their operation. And in today’s day and age that’s not like a bad place to be. It’s often representative of a business that was very good at generating lead flow and other ways previously. And they’re just kind of, you know, pivoting to improve and modernize. And I just think it’s a worthwhile topic and it’s nice to kind of peel back and kind of hear the experience of a market is kind of living through that.

Jeff White: Yeah. And learning how to operationalize that, you know, that sales process with the sales team, too. Yeah, very, very interesting. So joining us today is Matt Lukens. Matt is the marketing director at Flex Interconnect Technologies. Welcome to The Kula Ring, Matt.

Matt Lukens: Thanks so much for having me, guys.

Carman Pirie: Matt, I want to start by having you introduce Flex Interconnect Technologies to our guests. You know, tell us a little bit about the company and what you all do there.

Matt Lukens: Sure. So Flex Interconnect Technologies has been around for a little over 25 years out of Milpitas, California, right by San Jose and Silicon Valley, primarily as a fabricator of flexible and rigid-flexible circuits. So custom circuitry, that’s kind of where we play. Today we’re getting into more assembly services as a part of that. And, you know, scaling up from being more of a historically kind of a quick turn, low volume and now we’re able to handle larger volumes as well. So, you know, we’ve been serving a lot of innovative companies out in the Silicon Valley area for 25 years. And at this stage, kind of growing beyond that, growing to all of North America and beyond in some ways and with some clients kind of on the focusing on the new product introduction side of things.

Carman Pirie: And it’s really cool. I mean, it’s interesting as you imagine, you know, expanding your market and the customers that you serve from people that you could probably drive to and visit most generally, you know, in the early days of the company, etc., to now having to pivot to engineer for a very different lead flow.

Matt Lukens: In some ways, yeah, it’s organic too. And, you know, I think it’s it’s one of those surprises when I came to the company last year was, you know, what’s our definition of success? What do we need here? You know, where are we today? And hopefully, as I said, it’s been around for over 25 years and it’s been cash-positive every year. There are no outside investors that we’re beholden to or anything like that. So it’s a very I think for me it’s a unique place because I haven’t been at a company like that before. I’ve been at other manufacturing companies that are much larger or public or VC-backed, and this is a little bit of a pivot because it’s kind of like, okay, you’re not just doing this one thing anymore. You got to roll up your sleeves and do a little bit of everything.

Carman Pirie: And give us a bit of that background and texture, if you would, where you know what were your previous roles Because you say seven months you have been with Flex Interconnect?

Matt Lukens: Yep, about seven or eight months. So prior to that, I worked for Proto Labs on-demand manufacturing for injection moulding and CNC machining, and that was really the other end of the spectrum. That was a very large public company. And you know, I was overseeing all the digital marketing at that time, which included a multimillion-dollar global budget for ad spend. And so that’s kind of one end of the spectrum. I’ve also worked for an on-demand machining company out of the Bay Area and later we moved to Atlanta and then also for a rigid circuit board assembly company out of the Bay Area as well. So yeah, kind of ran the gamut there, I guess sort of backwards, I guess in one way, like the big company first and then whittling it down to smaller and smaller organizations.

Carman Pirie: Yeah, it makes sense to me. I think we can learn so much so quickly in one of those big organizations, but is this you know, it’s interesting to extend that kind of know-how in the smaller, smaller organizations.

Matt Lukens: Well, I’ve had fantastic mentors along the way who have helped me learn more about how to run a business. And I think a lot of times for marketers, you lose track of how to run a business. And when you’re a very specialized marketer in a very big machine, you can lose sight of all the different elements that are impacting your balance sheet at the end of the quarter. So I’ve been very fortunate to be a part of those balance sheet reviews and helping plan those quarterly reports in somewhat smaller organizations. It’s helped me to gain a better understanding of what it takes to run a successful business beyond just, you know, the firehose of leads that we blast over the fence to the sales team. So, yeah, I kind of like where I am now because I can play in many different sandboxes.

Carman Pirie: Yeah.

Jeff White: Man, I’d love to do a show another time. Just about the idea of how much business do marketers and others in this field need to understand in order to truly have the impact that they should? You know, because certainly…

Carman Pirie: It varies. 

Jeff White: There are varying levels.

Matt Lukens: Yeah, yeah. And some companies want that very insulated. Right. And others are happy to kind of open the books up and let the marketers dive in and think a little bit more critically about their role.

Carman Pirie: So we’re coming into this new firm. You know, you’re eight months in. It’s a bit of a different beast and you’ve worked with that before I guess is there to give us a bit of that texture about what you found when you were there. And so I guess kind of go deeper into that. What was the state of affairs when you arrived and what do you see as being there or what have you seen as being the key early foundational elements that you’ve needed to put in place?

Matt Lukens: Yeah. So, you know, the CEO, it’s a small network. Everybody kind of knows everybody in electronics manufacturing. So the CEO had reached out to me last summer and reached out to some other folks who know me and kind of we had a very lengthy interview recruitment process, which is great because he shared all of the business stuff right then and we can have open conversations and we’re the company had grown successfully for 20 some years up until COVID and then kind of plateaued a little bit. And so the challenge going in was how do we get out of that? Right. And it’s been great to have open conversations with company leadership about how they’ve had the wonderful success that brought them to this point. But getting beyond this point might have to look different in some ways as we talk through that And we talked about company goals, one of the things that kept coming up was, well, we need new companies, we need new accounts, we need new businesses to work with. After I got kind of under the hood in our CRM a little bit, I started questioning well do you really? Is the goal new companies or is the goal a certain revenue number for the next year? Right. Just for the next year, not forever, but for the next year. And as we talked about it and I kind of put the screws to the leadership a little bit and just said, like, if I got you this revenue number without new companies, would you be happy? And they were like, well, yeah, that is more important. Yeah, we want. So that’s where we kind of looked at the database we had, and we had really good contacts and really good accounts in our database and lots of companies that had worked with us in the past, but maybe not the past 18 months. And so for this first year, our strategy going in was really like, Hey, before we open the chequebook, let’s really make sure we’re doing all the right things with all the assets we already have and really leveraging that. And then we can build upon that down the road once we’re sure and confident that we’re, you know, putting our best foot forward with some of the basics.

Jeff White: Matt, to dive into this with them before you joined, like did you have a sense that there was maybe a bit of gold in the CRM before you joined, or was this something that you discovered in your initial review of what you had on hand?

Matt Lukens: I think before I joined, you know, I was very upfront that my opinions might be different from theirs, right? Like in a constructive, respectful way. Like I understand you think we need to do X, but I’m pretty sure we can do Y instead. We talked about that a little bit, but I didn’t dive into I didn’t have full access to the CRM before I joined, but I did have a lot of questions for them about their CRM, how many contacts they had, how many accounts, how the regions were split up, what data they were keeping track of, things like that. And in those conversations, certain things kind of came to light where, you know, we hadn’t tracked that in the past. But yes, we see your point. That would be a good thing for us to track. And so that’s part of that foundational work this year has been like, what are those things we need to identify and track in our CRM to better operationalize our sales team and not just our sales team, but all the way back to our quoting team and our order management team. What kind of data points can we keep track of that maybe in the past, with fewer sales reps, they just know it? There’s just a lot of that deep knowledge of their accounts and they just know it. But that doesn’t scale very well. So a lot of the conversations were around having to get those basic pieces right in order to scale and acknowledging that if over the next several years we do double our bookings, we don’t have the infrastructure to support that. So kind of figuring out what steps along the way would indicate upgrades to that infrastructure.

Carman Pirie: First off not a lot of CEOs would mind hearing the advice, let’s not spend some money right now because we may have a very valuable asset that we’re underutilized today. And that’s pretty easy to find some receptive ears to that also, you know, so it’s a rare message to hear. It’s even more rare maybe to hear that 30,000 contacts haven’t been spammed with a terrible newsletter for the last five years or something to the point where they all march to the spam. So is it that actually hadn’t been abusing these contacts at all? They were just collecting the data.

Matt Lukens: That’s right. There hadn’t really been any kind of marketing emails to them. It was very transactional emails. 

Carman PirieYeah? That’s fantastic.

Matt Lukens: Yeah, I mean, I lucked out with that. And so but there was a little bit of a, I don’t know, bias to overcome, I think, because there was like, well, you can send an email but nobody’s going to reply. And so there was just overcoming those kinds of objections were like, I know no one’s going to reply to the first one, but by the third one, they will. And with the number of people you have, you know, this is what you need. But, maybe taking a step back from some of those tactical things where we really started was agreeing on what our bookings goal for the year was going to be and just doing that work based on what 2023 was, what 2022 was, you know, going back to I think we went back to 2019 a little bit and looked at bookings by week to try to understand what’s a realistic goal for this year. Then once we had that, we really had to build out what that marketing model would look like in terms of if we want to hit this number for bookings, what’s our conversion rate from an RFQ to a PO? So how many RFQs do we need to hit that and what’s our average transaction rate going to be? And from there we even backed it out a little bit further and said, okay, if we need this many quotes per week to hit this many, or RFQs to hit our goals, what kinds of sales activities do we need to be doing in front of that to hit those RFQ numbers? And you know, again, as a small company that’s just not something where they ever had that model before. And the early conversations around that got very anecdotal about, well, last year we had this customer place this big order, and this month and the year before, it was a different month with a different customer. And so we had to kind of agree like, doesn’t matter, just flatten it, you know, just start somewhere, make some assumptions, and then setting up kind of that cadence of meeting with the sales team and saying, this is your goal for the week, This is what, you know, we have to achieve this week as a team to hit our ultimate bookings numbers for the year. That was just something where they hadn’t had that before because they had very good salespeople that would just go work and bring in bookings and they were growing and, you know, they didn’t need it. But by doing that, we started getting really good feedback from the sales team too. Like I need this in order to hit my quote number for the week or I’d like to see more of this. I need more content I can share on social media that is kind of like a bottoms-up approach. It made it easier for me because now I have the sales team buying into what we’re doing on the marketing side.

Carman Pirie: Yeah, I really like that.

Jeff White: Pretty interesting approach. I mean, you’re almost like Peter Brand coming into the Oakland A’s, it’s a bit of a Moneyball sort of. Figuring out how much you need in order to hit it and then how you’re going to play it. I think I think one of the interesting things that you mentioned is you hadn’t been contacting these folks other than transactional emails. I mean, that also presents new challenges because they haven’t necessarily heard of you. So you have to, or they don’t remember that they had an interaction with you because it may have been several years back. How did you approach that in a way that would keep any sort of spam-seeming activity to a minimum while also kind of increasing the likelihood that they might engage?

Matt Lukens: Well, I was fortunate to join in the back half of last year because I think there was some seasonality we could play off of in some of our messaging. You know, a lot of OEMs have certain product development budgets they have to use up by the end of the year. So there was that kind of messaging we could include in those emails. The other thing we did was instead of just mass sending on the marketing side, you know, we had we got, I think, 2500 accounts roughly in our database. So let’s say a third of them are assigned to our sales team. We just decided kind of early, like marketing is not going to touch those, we’re not going to touch those. And what we did instead was within our CRM kind of built the email templates that the sales team can then send out one on one to their contacts where there’s already a little bit of relationship or context between the sales rep who’s been with our company for a while and the customer there. So that was a great way to kind of get an incremental boost of interest.

And RFQ, it was just empowering the sales team to do some of that outreach work. And then on the marketing side, the blasts were just like laying down cover fire, right? Those are the less active accounts. Those are all the accounts that maybe haven’t quoted anything in 18 months or more. So we’ll just provide some coverage there. And if anybody, you know, raises their hand and wants some help, we’ll get a sales rep involved at that point.

Carman Pirie: I appreciate the Moneyball reference that Jeff brought in there. Know, I can see that, you know, the conversion rate math at play. Of course, it would seem to me that I can make some arguments as to why that math is likely to actually be different in reality for net new contacts versus existing ones. And I could probably argue that in either direction because I’m contrary that way. How have you found that to be working so far as that conversion rate math held up? Did you overestimate the success? 

Matt Lukens: No. Not at all! 

Carman Pirie: Did you underestimate the success? What’s the skinny?

Matt Lukens: So we estimate our conversion rates around 50%. They’re a little bit lower than that. But our average transaction has turned out to be a lot higher than we estimated historically, which has been good. Our overall quoting volume is a little bit higher than where we thought we wanted to be. So that’s been great. But again, when you look at the conversion that’s lower, so it kind of didn’t shake out everywhere. But I’m going to, you know, you kind of started a good Segway here. One of the things we found was that we are not doing anywhere near as well as we anticipated closing new business this year. So there’s been this pushback from some of the stakeholders like, yes, we’re doing great financially, but we’re not getting new accounts and so by putting some of that foundational work into our CRM, we can now track like, well, let’s look at the new accounts. Let’s look at every quote that came in from a new account. Now that we’re tracking closed lost reasons, let’s dive into that and understand where is there a disconnect here. And I think a lot of what has happened has been that for so long and this is like, in manufacturing, it’s very easy to start competing as a commodity and competing on price. And that’s not where we want to be. That’s that’s not what makes us great. What makes us great is that our yields are going to be 98 to 100%, right? So there’s been those opportunities for us to look at some of these instances and say like, yes, we lost this new account, but they’re getting everything from overseas today and waiting six weeks. Like we have no business competing for that business. We don’t want it. That’s not good for us in the first place. In other instances where we can look and say, well, we’ve lost this one because of pricing and maybe we should have won that or we lost this one because of lead time, but maybe we should have won that’s really opened the door for us to have conversations all the way through the organization with the operations team, with the coaching team, and try to figure out, you know, how do we do better, how do we get a better capture rate on these new customers coming in? So, you know, back to the CRM for accounts, we’ve added fields to say what are the quoting preferences for this account. And then we’re passing that data through to our quoting software and our order management software just so that we have that visibility throughout the organization. It’s not tied to one salesperson anymore. We have a place for it where we can say, you know, this company, quick turn to them means five days, not four weeks, or this company is a defence company. A quick turn to them does mean five weeks. By keeping track of that, we’re able to do a better job presenting customers with compelling quotes and then closing the business on it.

Carman Pirie: Yeah, it can communicate your value better because you know what they value.

Matt Lukens: That’s right. Yeah.

Carman Pirie: I guess. How do you feel that you’re rounding the corner and getting the foundation kind of built so that you can now start to scale the flow and push more through? Or where are we at in this evolution in your estimation?

Matt Lukens: Yeah. And so I want to be clear. We did spend some money and we wasted some, and that’s okay. You know, we learned from it. I think our plan had been to try some things and figure some stuff out in the first half of the year. There’s this summer time period where, you know, in manufacturing things get a little bit slow. Some of that activity from customers gets a little slow. And the plan is still that, you know, come this fall, we’ll pick up more of some of that paid engagement opportunities. There’s you know, whether it’s trade shows, it might be some paid search, although that is really not what it used to be. LinkedIn, we’re having a lot of good success on LinkedIn. So there are some things that we’re going to, you know, layer in on top as we get into Q3 and Q4 for sure.

Carman Pirie: That’s interesting too. How has the I mean, you’ve brought a lot of change seems to me pretty fast to a sales organization here, and you’ve done it from the marketing side of the house and you know that our listeners can’t see you on camera, but I can, and you don’t appear to have a lot of bruises. How is that? Has there been a big culture shift there? How to talk to that change management side of it a bit?

Matt Lukens: Has it been, you know, I have a champion in the guy that hired me, you know what I mean? As he knows there’s an acknowledgment we have to try some different things and there have definitely been some points along the way where maybe it’s a little bit uncomfortable to present to the sales team like, Hey, this was our goal for RFQs last week and we missed it by 90%, right? Like, what’s going on? There is some of that that happens and it’s uncomfortable. But I think because I’ve tried to be transparent with the sales team, even as we go through all this strategy, work and foundational work, why we’re doing it, you know what the purpose is. And I think people are coming around and agreeing. And I don’t mean like agreeing like they’re going to buy into whatever I sell. No, it’s like this is what’s good for the business here. So one example that we’ve talked about recently is that, you know, we do really well with quick turns and we’ve been sending some quotes out where our fastest lead time does not represent that we do quick turns. So it’s those kinds of things where when we just bring everybody together and say, hey, we’ve all agreed we want to do quick turns, we can fulfill those and we can sell on those. So if this is the best lead time we can do that’s not going to be acceptable because that doesn’t align with that core value that we’re trying to establish there. So I don’t know. I think I’ve been bruised in other companies enough that I try to do a good job of building those expectations early and aligning on them early just to make sure that, you know, there are going to be road bumps along the way. And we want to make sure that those are as smooth sailing as possible as we get to those.

Carman Pirie: Well, Matt, it seems to me I’m listening to articulate your work here, that you know, you don’t come across to me as someone who thinks that it’s their way or the highway. And it’s just, you know, you’re right. Everybody else is wrong. And now you just should do it my way.

Matt Lukens: Oh I’m wrong all the time.

Carman Pirie: That attitude just does not seem to be coming out of you at all. I have to think that you’ve got to give yourself a little bit of credit on how to manage that, has been your approach really.

Matt Lukens: Okay. But I think you have to be like you’re we’re marketed we have to be willing to be rock. We’re wrong all the time. Like we’re forced to think we’re not like, you know, we.

Carman Pirie: We’re wrong to think we’re not wrong.

Matt Lukens: That’s right. But whether it’s like putting together a really stupid email message or campaign that just falls flat or, you know, and you have to be open about it. So we have tried some page searches and I’ve shown everyone, Hey, this isn’t working and this is why. And I was wrong and this is what we spent and this is why we’re not doing it anymore. So I think as marketers, we have to be willing to I don’t, you know, not necessarily celebrate our losses, but use them to build our own credibility and learn from it not just personally, but like let the whole group learn from this and move on together.

Carman Pirie: I love the notion of letting your losses help you build your credibility.

Jeff White: You have to set the expectations in order for that to work.

Carman Pirie: So counterintuitive to most marketers hearing that, right?

Matt Lukens: Yeah. And I mean, maybe there are some marketers out there that never have losses or mistakes, but jeez, for the other 99% of us, like it’s going to happen. 

Jeff White: Well, Matt, where are you going next? And you’ve been there for almost a year now, and this sounds like that foundation is getting in place.

Carman Pirie: You’re not trying to push them off to another company.

Jeff White: No, no, no, no. But what’s the you know, what’s the next thing?

Matt Lukens: So There’s kind of two things we’re working on right now that I’m really excited about. Number one is we’re building out the sales team because we have identified that that that’s where we have a limiting factor, right? We have a constraint around just looking at the number of great accounts we have that have worked with us over the last few years. We need more salespeople. So I’ve been heavily involved with kind of recruiting both inside sales and business development roles for us, that can help support us, hoping to get them in place over the next month or so, so that when we, you know, hit the fall, Q3, Q4 timeframe and we’re like hitting the ground running with them. The other thing that I’m really excited about that we’re working on that’s a little bit nerdier, I guess is really transitioning our messaging from more commodity-based to more value-based. And we kind of alluded to this a few minutes ago, but, you know, we’ve had a PowerPoint as an organization and we’ve had this sales presentation for a long time that does a great job talking about all of our capabilities. But the sales team doesn’t want to use it. And when we ask them why, it’s like, well, this just is going to lead to conversations on price because everybody does these things. So now we’re really working on, okay, how do we pivot beyond that? How do we have those value conversations for more value-based selling so that we can, you know, justify the premium that we’re charging in some cases here and not that we’re super high price? It’s just we know our yields are going to be 98 to 100%. So if we have customers that are used to getting very low prices on yields of 80%, well then we have to talk about that quality piece more. We can’t just talk about hitting their deadline and hitting their price point. We have to introduce where we talk about, you know, our exceptional quality or our applications engineering that we offer or things like that.

Jeff White: Sounds like an excellent differentiation strategy.

Carman Pirie: Yeah. It’s interesting to me that this notion of having a capabilities-based brochure or piece of sales collateral that they don’t want to use because knowing that all the capabilities are like what other people do drives the conversation to price.

Matt Lukens: That’s right. Yeah. That’s just, that’s where it ends up going. And I think it works sometimes, right? Like if somebody needs something really fast and they just want to validate, we can make it. And, you know, if it’s quantity five, there’s only so much you’re going to charge anyway. So they don’t really care, right? The delta there between a low cost and a high cost isn’t going to make or break them. So that’s fine. But when we were thinking about more strategic partnership kinds of things, we had to work on the value conversation a little bit more.

Carman Pirie:  Interesting. 

Matt Lukens: Been having very similar conversations with a construction company I work with sometimes everybody builds walls, and everybody delivers trusses. You have to be different here. Don’t let your sales pitches go into those conversations about the quality of your walls, because so what that’s the table stakes. So it’s really like you can offer risk reduction. You can get it done more quickly to be on time and on budget and things like that. And that’s where with Flex Interconnect Technologies, we need to have we need to operationalize our value proposition through our sales team a little bit better and through all of our teams.

Carman Pirie: I look forward to watching this unfold. If I were a betting person, my money would be on fax interconnect.

Matt Lukens: Well, now you’re putting pressure on me.

Jeff White: That wasn’t the intent. But we are impressed.

Carman Pirie: And we will be watching. So, yeah, there’s the pressure.

Matt Lukens: Okay, great.

Carman Pirie: Matt it’s been great to have you on the show. Thank you so much for sharing this experience with us. Has been awesome.

Matt Lukens: Thanks, guys. I really appreciate it.

Announcer Thanks for listening to The Kula Ring with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing That’s K.U.L.A. partners dot com slash the kula ring.