Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue.
The engineers at Linden, Alta.-based Sparta Engineering put their creative energies to work designing equipment to solve problems in the oilfields. But their ideas run drier when it comes to how best to market their firm.
Established in 2007, Sparta has grown from three founding engineers to 15, specializing in the oil and gas industry. With its headquarters halfway between Calgary and Red Deer, the company has adapted to its location by running largely virtually, with eight of its staff in Linden and the rest spread out elsewhere in Alberta, Saskatchewan and Mexico.
Sparta has experienced “exponential growth” in the past two years, with revenue hitting $4.8-million last year, and expected to break through the $5-million mark this year, says Jason Thompson, founding partner, vice-president of operations and an engineer at the company.
But “we’ve got as big as we’re going to get from word of mouth,” he says.
The problem: The company has succeeded to date on work brought in by its own engineers and existing contacts. “We get out there with manufacturers, with people we know, and get some work, but we’re not doing any cold calls. We don’t have anyone to contact the people we don’t know – which is a lot,” Mr. Thompson explains.
The partners generate sales “until we are swamped with projects and are forced to switch gears from selling to actually doing the projects.” Then, “no sales will happen until we lift our heads and notice that we don’t have any work booked into the future, [and] then we will all rush out to get jobs, and the process repeats.”
This, he says, has resulted in a “very cyclical” workload. “It’s not a growth model,” Mr. Thompson says. “We need someone pushing projects down on us.”
The company would like to put a better sales and marketing strategy in place but doesn’t quite know how to approach it, Mr. Thompson says.
“We’re a little apprehensive because we offer a very technical service to a specialized market. To get a salesman in who understands what we do is not easy to find,” he says.
He is also torn about whether a high-priced salary for a “hotshot oil and gas salesman with experience” would be justified by the results, or whether hiring an inexperienced “young gun” would work.
The company’s location, he believes, might also pose challenges in luring a hire from a bigger city.
“We don’t know what direction to go in,” Mr. Thompson laments. “We love to design and build stuff, but, when it comes to sales and marketing, we’re really clueless. I’m an engineer. I have no expertise at marketing.”
The Challenge: What’s the best way for the company to go about building a sales and marketing strategy?
THE EXPERTS WEIGH IN:
Steve Farlow, director of The Schlegel Centre for Entrepreneurship at Wilfrid Laurier University, Waterloo, Ont.
Finding a true business development leader requires a thoughtful strategic process.
Steps to a strategy that increases the probability of success: [First], employ a search company that specializes in finding sales/business development leaders in knowledge-intensive industries. This firm must include psychometric testing in their process. An assessment of the personality, behaviour and character traits found in successful sales people is far more important than direct industry experience.
The full leadership team must be involved in designing the sales staff’s business-development strategy. This means a clear definition of Sparta’s unique value… and focus on the most aligned target customers. Set up the new sales person for some early wins. Implement a compensation structure that includes a competitive base salary and a performance component aligned with the company goals. Let’s hope the new sales leader is the highest-paid person in the company.
Charles Weinberg, professor of marketing, Sauder School of Business, University of British Columbia
What Sparta views as a sales force problem is really a customer opportunity. Sparta should identify who its best customers are: those who provide the most [profitable] volume and regularly use Sparta’s services. Find out from these customers what they most value about Sparta’s services, then provide even more value to these customers – by providing better service and not by cutting prices…Once the company understands the customers, determine which existing customers can be moved up and identify prospects who are likely to become high-value clients. This requires time and effort; choose a sales rep based not on experience, but find someone who would be devoted to customers and would listen to their needs, who is strong analytically, and who shares the values of the company’s founders.
Sandy Huang, president and principal consultant, Pinpoint Tactics, Vancouver
My own practice is actually a living example of a firm that’s lived through the exact challenge. My solution was to be both intentional and creative about carving out time for business development and marketing. As a business matures over time, the role of the principal) shift from doing the ground work..with the rest of the team to managing and drumming up business. If the principal(s) do not like selling, then they need to be able to let go and trust that whoever they hire to business develop...can deliver.
It’s important to make a distinction between sales and marketing. Marketing activities typically support sales efforts. Logically, selling is only one aspect of the entire marketing process. If Sparta is to successfully position itself in the marketplace, attract ideal clients and generate business leads, it needs to invest in both marketing and sales personnel. It’s possible that the new hire can be responsible for both roles - it is then important to make sure that the candidate has both sales and marketing experience, and the compensation reflects appropriately and fairly the responsibilities.
My past experience with clients indicates that the most success is typically achieved when a company has invested in both marketing and sales.
THREE THINGS THE COMPANY COULD DO NOW
Create a business-development strategy
Come up with a well-thought-out business-development plan, including clearly defining what the company has to offer, clients to target and input from existing customers. Distinguish between sales and marketing. The planning has to involve the full leadership team. .
Turn to a headhunter
Employ a search firm that specializes in finding sales and business development leaders in knowledge-intensive industries. The person doesn’t have to have direct industry experience but must demonstrate a devotion to customers and share the company’s values.
Tie compensation to performance
Offer a compensation structure that includes a competitive base salary as well as a performance component aligned with the company’s goals.
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