Changing Landscape of Sales Management in the Plastics Industry
by Ashley Burleson, membership and engagement manager
According to the Bureau of Labor Statistics, there are approximately 1.8 million sales representatives in wholesale and manufacturing-related sales positions. However, data from recent studies on sales professionals suggest that number may be on a steady decline. This decrease is accompanied by a change in how companies are managing the sales arm of their organizations.
The Manufacturers Association for Plastics Processors (MAPP) recently released its biennial Sales Management Report, which represents 187 plastics manufacturing organizations, more than $5 billion in annual sales revenue, over 900 individual sales professionals and approximately $80 million in sales expenses. This report revealed that the number of official sales personnel employed by plastics manufacturers has been declining, with some organizations slicing their sales teams by more than half, causing manufacturers to change how they approach the sales process overall.
Several factors are responsible for this decline in sales professionals, and it is likely this trend will continue. Between adapting to changing markets and increased competition, more than 25 percent of plastics executives report that new business development and sales growth is a top priority in 2017. Manufacturers now may be honing in on defining their niche and working on strategic sales. In doing so, companies are now leveraging additional employees outside of the traditional sales department.
Instead of conventional inside and outside sales representatives, organizations are redefining what it means to be a sales professional. Now companies have sales teams that include engineers, project managers, marketing professionals and senior leadership. These sales teams are more likely to be compensated with a base salary instead of commission or bonus structures. Using these cross-departmental teams contributes to the additional benefits of having multifunctional employees, minimizing costs and maximizing efficiency.
Those organizations that continue to utilize and find success with traditional sales teams are now having to do so with fewer sales professionals. The average sales staff has decreased from six to five, with small organizations reporting an average of two sales professionals. On average, these professionals have experienced only small changes in commission rates over the past four years.
To keep up with the pressure for increased business development, organizations are now more likely than in the past to use a formal database system to track prospective customer information. Plastics companies are consistently inputting new prospective customers through various lead generation methods. Processors report that the top five methods to generate quality leads are word of mouth, their company website, networking at industry events, exhibiting at tradeshows and cold calls. The least effective method reported: direct mail campaigns.
Regardless of the company size, sales staff structure or number of sales professionals, plastics manufacturers are investing more than ever before into sales. Sales expense budgets now include everything from compensation and development fees to travel to customers, tradeshows, marketing materials, website design, white papers, outside marketing assistance, customer and prospect entertainment, company car, insurance, gas and product samples. These budgets are a significant line item for organizations, on average ranging anywhere from $135,000 to more than $1.2 million.
Organizations that are serious about new business development are undergoing change across all parts of the sales management process. With increased customer demand, businesses are revamping their sales management process to allow themselves to be strategic, competitive and exceed expectations.
For more information about this report, visit www.mappinc.com.