Alexander Group’s recent benchmarking study of global manufacturing companies found that manufacturers face strong external (low industry growth) and internal (complex cross-border operations) barriers to growth. As a result, they are rethinking their customer segmentation and trying to harness the best alternative routes to market (i.e., inside sales). Leading EMEA manufacturers agree that keeping costs in check while increasing resources is key to success.
Data from the EMEA Manufacturing Practices Study shows that sales expense to revenue (E/R %) ratios for EMEA manufacturers are 25 percent higher on a relative basis than U.S. manufacturers’. From the study, we know that sales teams in different European countries struggle to coordinate their resources, as they frequently operate autonomously; only 38 percent of participants indicated their sales forces are capable of truly streamlining cross-border operations. Companies that struggle to eliminate these inefficiencies will most certainly face higher costs.
Figure 1Data from the study also shows that, compared to the U.S., EMEA industrial manufacturers are growing revenues 18 percent more slowly on a relative basis. In addition, most manufacturers struggle to execute the right segmentation strategy to unlock hidden revenue growth potential: while over 80 percent of participants said it was important to segment their customers more granularly, only 11 percent felt they were capable of doing so.
Leading EMEA manufacturers in the study reported that they conduct competitive analyses to determine which customer segments or markets have the most potential, and then translate those analyses to the account level. This last step is crucial: if sellers are left to determine which accounts are most important, they’ll focus on the largest accounts by revenue, rather than the accounts with the largest growth potential.
Another important finding from the study showed that EMEA manufacturers pay particular attention to alleviating some of their cost pressures, especially by improving inside sales. While 62 percent of participants have established inside sales teams, 75 percent said their inside sales teams are performing below potential due to high turnover and unclear rules of engagement with field representatives. When properly configured, inside sales teams (and digital engagement channels) can lower hunting costs, help off-load field tasks, increase awareness of product offerings and autonomously conduct transactional sales with existing customers. When operating at full potential, inside sales teams can drive incremental growth in smaller accounts and enable field sellers to focus on selling complex, high-value solutions to high-potential customers.
Are you facing pressure to grow revenues while keeping costs in check? Where does your EMEA manufacturing organization stand compared to the market?
These are just a few of the takeaways from this insightful study. Get the full story on Alexander Group’s EMEA Manufacturing Practices Study and benchmark your sales organization to the market.
Contact a practice leader today to learn more.
Originally co-authored with Matthew Rosenthal.