1. PROFESSIONALIZATION AND SCIENTIFICATION OF SALES ENGINEERING GSSI 2014 PROF. DR.-ING. J. GÖRNE HTW AALEN, GERMANY Prof. Dr.-Ing J. Görne 1

2. CONTENTS Definition of Sales Engineering Relevance of Sales Engineering Professionalization Scientification Benefits Prof. Dr.-Ing J. Görne 2

3. WHAT IS SALES ENGINEERING? Sales engineers sell complex scientific and technological products or services to businesses* They must have extensive knowledge of the products’ parts and functions and must understand the scientific processes that make these products work* In contrast to consumer marketing the sold products are often co-created between supplier and customer Success in sales engineering has two components: Technical: convert customers requirements into products Commercial: sell the solution to the customer at the best possible conditions * United States Department of Labor, Bureau of Labor Statistics, http://www.bls.gov/ooh/sales/sales- engineers.htm, download 2.6.2014http://www.bls.gov/ooh/sales/sales- engineers.htm Prof. Dr.-Ing J. Görne 3

4. IMPORTANCE OF SALES ENGINEERS Sales engineers contribute to the companies in two distinct levels: They negotiate the contracts and are thus responsible for the sales price, the sales volumes and the margins They initiate customer orientated developments and influence investments Sales engineers Can improve a companies efficiency drastically by working with a focused market approach, matching customers requirements and suppliers capabilities Can wreck a company if they are trying to sell what the company cannot produce Prof. Dr.-Ing J. Görne 4

5. ECONOMICAL RELEVANCE OF SALES ENGINEERING According to the CIA World Factbook, the GDP of the world amounts to 87 trillion USD in 2013 (PPP)* GDP is the value of all goods and services produced in a time period (one year) 30% of the world GDP is estimated to be the industrial part – amounting to 26 trillion USD in 2013* This means that the value of 26 trillion USD is generated and sold each year in the industrial world This includes the value creation along the value chain from raw material until the final product * https://www.cia.gov/library/publications/the-world-factbook/, downloaded 1.6.2014https://www.cia.gov/library/publications/the-world-factbook/ Prof. Dr.-Ing J. Görne 5

6. SALES ENGINEERING VS. CONSUMER SALES Raw Material Parts Con- sumer Final Products Com- ponents V a l u e C h a i n Sales Engineering (B2B) Consumer Sales (B2C) Prof. Dr.-Ing J. Görne 6

7. SIZE OF SALES ENGINEERING GDP There is no information available on the value created in the industry before the OEMs. It can be estimated based upon some indications: According to the German car builder association VDA, the global value adding of the OEM is about 60% (B2C), leaving 40% to the B2B sector* In the chemical and electronics industry, the OEM share of business is expected to be significantly higher than 50% As a conservative working hypothesis we use 25% to characterize the share of the industrial GDP sold by sales engineers 25% of 26 trillion EUR is 6,5 trillion USD, which is about 8% of the worlds total GDP 8% of the total GDP worldwide is sold by sales engineers *VDA: *FAST 2025 – Massiver Wandel in der automobilen Wertschöpfungsstruktur, www.vda.de/de/meldungen/archiv/2012/11/13/3066/, downloaded 30.5.2014 www.vda.de/de/meldungen/archiv/2012/11/13/3066/ Prof. Dr.-Ing J. Görne 7

8. NUMBER OF PEOPLE ACTING AS SALES ENGINEERS WORLDWIDE According to the Bureau of Labor Statistics there are 260.000 engineers and 66.000 sales engineers (25%) working in the US If all US industrial B2B GDP was sold by sales engineers, each had to cover 13 million US$ (which seems high) Often technical products are sold by non-engineers, so the number of people acting in technical sales can be higher Using the US figures for Germany, each sales engineer has to cover 5 million US$ (seems more realistic) Extrapolating these figures to the world, we come to something between half a million and 5 million people working in sales engineering worldwide * United States Department of Labor, Bureau of Labor Statistics, http://www.bls.gov/ooh/sales/sales-engineers.htm, download 2.6.2014 http://www.bls.gov/ooh/sales/sales-engineers.htm Prof. Dr.-Ing J. Görne 8

9. CURRENT EDUCATION IN SALES ENGINEERING There is a great interest to have a professionally trained sales force taking care of 5 – 10% of the GDP Up to now there are very few educational programs available for sales engineers. Normal way to become sales engineer is to add the commercial knowledge to engineers in learning-by-doing This lacks of professionalism Typical engineers are not always the best sales people due to their focus on hard numbers instead of relationship In the last 10 years academic sales engineering education has been launched in Europe This is a major leap forward, but still there is a lack of scientific knowledge to support the academic education Prof. Dr.-Ing J. Görne 9

10. PROFESSIONALIZATION - SCIENTIFICATION Professionalization must be based upon scientification Otherwise the professionalization stays within the limits of „best practice“ or „we have always acted like this“ There is a lack of formally developed scientific knowledge in sales engineering Here is the link to GSSI, which has as target to implement sales as a science Prof. Dr.-Ing J. Görne 10

11. SCIENTIFICATION OF SALES ENGINEERING The target of scientification in sales engineering is to reveal The rules of business The inner dependencies of the supplier – customer relationship The success factors The parameters of making business Sales science will lead to the understanding of how to successfully tune the business parameters Prof. Dr.-Ing J. Görne 11

12. SCIENTIFICATION TARGETS The rules of business are specific for each industry type. They depend on: Size of business, complexity of product and degree of individualization, physical part or service Type of customers (current, new, lost…) Type of transaction (new purchase, repurchase, modified repurchase; product or spare part) Serial delivery, single delivery Market response time of industry type Competition level (monopolistic, oligopolistic, polypolistic) Number of potential customers Definition process of the product (supplier or customer defined) Prof. Dr.-Ing J. Görne 12

13. ROADBOOK FOR SCIENTIFICATION In order to establish specific and relevant knowledge, in a first step each industry type has to be examined and described In a second step, the inner logic and rules in each industry type have to be revealed Then, in a third step, common rules and underlying laws become apparent and will lead to a deep understanding of the sales engineering field A similar approach was used in the history of chemistry Prof. Dr.-Ing J. Görne 13

14. BENEFITS OF SCIENTIFICATION If sales engineering is scientificated it can be expected that Better negotiation results lead to at least 3% better margins Turnover is increased by 10-30% Efficiency of companies through focussed market approach will go up by 5% Prof. Dr.-Ing J. Görne 14

15. EXAMPLE OF A COUNTRIES BENEFITS… Expenses on the example of Germany 5 million USD per year could pay the work of 50 researchers and generate significant results Benefits Increase of cash-in due to better margins: 7 billion USD and more Increase in GDP: up to 24 billion USD Increase of efficiency: up to 24 billion USD savings Comparison The German expenses for R&D amount to 20 billion USD Prof. Dr.-Ing J. Görne 15

16. CONCLUSION Let us start to scientificate and professionalize the sales engineering! Prof. Dr.-Ing J. Görne 16