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Mark has a problem.
As the business development director for a growing services firm (we’ll call it Company B), he is charged with expanding Company B’s presence and business in the Detroit automotive market.
Company B already serves a wide range of other industries with its technology-related services and is headquartered far from the Motor City, and its executives recognize the huge revenue opportunity in the automotive mobility space.
The challenge is that Company B is virtually unknown in the Detroit automotive ecosystem and currently operates only a very small office in Motown.
Fortunately, though, Company B has recently done some credible work for an Asian-based automaker. B is hoping to tell its success story and to leverage its bit of automotive experience to open doors with the Detroit 3 automakers (and the larger Tier One suppliers) who need similar services but have many other options.
Being unknown in the market, Company B faces stiff competition from many other similar service providers who are trying to break into the industry.
Worse yet, Company B faces even more brutal competition from service suppliers who are already entrenched in the Detroit 3’s purchasing systems.
Tough competition from legacy suppliers
These legacy providers have been vetted, rated and qualified. They have met stringent requirements, have already received purchase orders and maintain ongoing relationships with the automakers.
Some even have preferred supplier status that takes years of superior performance to earn. Displacing these existing suppliers in the automakers’ minds is possible, but it will not be easy.
It will take a strategic approach, a lot time and effort and a steadfast commitment.
B’s biz dev director Mark understands all of this.
He realizes that Company B needed to mount an ongoing PR campaign that would help build awareness, position his company as a viable option, differentiate his company and ultimately, open the automakers’ door to his sales presentations.
Enter the PR Firm
Mark also recognizes that to succeed, Company B’s corporate communication staff needs some focused support – from a PR firm that specializes in the automotive OEM supplier PR sector and can bring automotive experience, insight and contacts, as well as senior strategy and flawless execution.
And after doing a thorough search, his communications people sent him to us.
After talking with Mark to learn more about Company B, its business and its goals, we recommended an ongoing PR program, which would meld storytelling, publicity, media relations and thought leadership, and would work in concert with, and amplify, the company’s growing in-house social and digital media and communications efforts.
It would educate the North American automotive market about the value, benefits and advantages of working with Company B, and it would help open the doors to the automakers’ Purchasing Department for B’s sales force.
We were happy to submit a PR action plan proposal to Mark, which he passed along to Company B’s top executives.
Sadly, after a week of waiting, we learned from Mark that Company B’s executives decided not to hire a PR agency at this time. It seems they just were not ready to make the required commitment.
Where it went wrong
Having been in the PR agency business for more than three decades, I can guess what happened.
My suspicion is that the owners of Company B – entrepreneurs who built this company from scratch about a dozen years ago – just could not bring themselves to spend the necessary five-figure sum required to mount a successful effort against their challenge.
We’ve seen it before. In fact, I often tell entrepreneurs that they can be either the worst or the best prospects for a PR firm like ours.
Worst, in that for some entrepreneurs, especially those who have bootstrapped their way to success, find it ridiculous to reach into their own pockets and commit to a year-long, five-figure expense for a service they’ve never had to buy before to support an effort that might not impact sales results for months … or even years.
That’s a hurdle they just can’t clear.
Best, in that other entrepreneurs have the vision to see beyond the cost of the program and see what’s really important: the value.
They don’t focus on what it will cost, but what it might generate. They look beyond cost to zero-in on return on investment (ROI).
Those that recognize the value and see the program as an investment in capturing new opportunities find they can benefit in big ways.
In Company B’s case, it appears they may have focused on cost, not value or opportunity.
What’s the value of a new customer?
Stepping back from Company B, let’s look at what a new automotive customer is worth.
Most supplier contracts are multi-year, high-volume deals worth millions of dollars, and typical, one contract leads to another, so supply relationships can last for decades. Meaning the lifetime value of a new automaker customer can be hundreds of millions of dollars.
So, if a $75,000 PR program can help open the door to one new customer… and that leads the way to multiple contracts worth millions with that same automaker, that $75,000 program looks like the best investment ever.
In our 28 years of doing PR with automotive and mobility suppliers, we’ve seen it time and again: PR, done right, doesn’t cost, it pays.
Let’s look at my favorite real-world example.
An ROI of 500%
One of our very first auto supplier clients was a virtually unknown joint venture which spent almost nothing on advertising but needed to raise its visibility with the Detroit Three automakers.
A five-figure, year-long PR program we developed and implemented with them had a major impact in just six months … even though I had warned the supplier’s CEO that it would take perhaps as long as 18 months to make his company “an overnight sensation.”
In fact, just one result of our efforts – one well-placed article about the supplier in BusinessWeek magazine – helped to connect our client’s CEO and an automaker CEO.
After reading this one article, the automaker CEO invited the supplier CEO in to meet with him and the head of Purchasing to discuss ways they could work together. The relationship blossomed and grew.
And that one article ultimately led to a tripling of the supplier’s annual sales to that OEM … generating tens of millions of dollars in additional sales with that automaker in just the first few years of the contract.
Based on that impact of that one article by itself – and excluding the impact of all of the other media coverage, speaking opportunities and visibility opportunities our year-long $70,000-program generated – our client saw an ROI of over 500% … with that one customer alone.
And that ROI does not include the extra new business that came as other automakers followed the first OEM‘s lead … or the value to the supplier’s recruiting efforts from the awareness and reputation the supplier gained through the PR effort.
The point is: even the most frugal CFO can see the wisdom in an “expense” that offers that kind of ROI.
The real power of a good PR program – the credibility and awareness it helps you to build – can drive prospects and talent to your website, position you as experts, get your company on to the bid list and help convince the customer to invite you in.
And in today’s auto industry, where the customer holds virtually all the cards, PR can be the key to sales success.
Pennywise and pound foolish
Let’s go back to Company B, which has decided it doesn’t want to invest $75,000 to make a name for itself and grow its opportunities in the automotive mobility capital of the world.
Sure, the owners can keep that $75,000 in their pockets and improve the bottom line, short-term.
But long-term, what is the lost opportunity cost … if months and months go by without Company B landing any automaker contracts because their sales team can’t even get a meeting with the right people?
What is the lost opportunity cost of letting a competitor take the contract Company B might have received and take the spot they might have earned on that automaker’s future bid list?
For Company B, the cost of lost opportunity is easily in the hundreds of thousands, perhaps even in the millions, of dollars. Maybe more.
So, Company B, the key question is NOT “Can we afford to hire a PR agency to help us expand in the Detroit automotive ecosystem?” …
The more important question is: “Can we afford not to hire that PR agency?”
Only you know the answer.
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