Randy Tinseth was appointed VP-marketing for Boeing Co.'s commercial airplanes division in 2007. Boeing's wares—the 737, 747-8 and new 787 Dreamliner—are as b-to-b as products get. They're usually sold through multibillion-dollar contracts, and the complex sales process can take years to complete and involve hundreds of decision-makers, including the banks necessary to underwrite these deals.
In this Q&A, Tinseth discusses how Boeing's marketing and sales staff handled the delays in the flight test of the Dreamliner and how the company markets itself as an environmentally concerned corporation.
BtoB: How has the economy affected your marketing efforts in the past 18 months?
Tinseth: Last year, there was an underperformance in air traffic around the world, with passenger growth off about 3% to 5% and cargo off 15%. It was a very difficult year. Our customers have been forced to adapt and change to meet the realities of the market. They reduced capacity. They worked at ways to cut costs, and part of the way they did that was to replace aging airplanes with more fuel-efficient airplanes. That was good for us at Boeing.
[Airlines are] all looking for new efficiencies and ways to reduce costs. It's a really tough environment for our customers. So we adapted to the realities of the marketplace. Fortunately, because we had built a very large backlog and as a result of our strength in the low-cost carrier segment, we were able to react and deliver 481 airplanes last year, which was within our guidance.
When you're at the down part to the cycle, sales get much more difficult. Now is the time to work harder. Now is the time to reach out to your customers to see how you can help. In a business-to-business-type operation, we deal with a relatively small number of customers. The numbers of customers we work with are in the hundreds, not the thousands or the millions.
BtoB: As a marketer, how do you cope with the long sales lead time for your airplanes?
Tinseth: We're selling assets with a very long life, airplanes that will be around for a long, long time. They cost billions of dollars. When you're making these airplanes, you're not only in touch with your customers, you also have to be in touch with the financiers, the bankers, so that they understand the value of the product you're selling. They have to have confidence to invest in the product. You have to spend time talking about the long-term prospects of the market. You have to show that even in these difficult times, we're part of a market that will come back. It is a bit of a challenge, when you're trying to sell airplanes for 2013, or 2014 or 2015, to help fill the production lines. You have to demonstrate that your product is not only going to stand up to the competitors of today but also the competitors of the future.
BtoB: How did your department respond to the delay in the flight test of the 787 Dreamliner?
Tinseth: I had to go out and talk to a lot of media, and the first thing I had to do was acknowledge we disappointed our customers. You really had to acknowledge that. And you had to acknowledge that you disappointed yourself, because Boeing had a tradition of delivering programs on time. This certainly was an anomaly, but we had a lot of problems to work through, and you had to acknowledge that you have those problems. You have to be a little more humble as you work through these challenges. You have to recognize that you don't restore your credibility overnight. In order to restore credibility, you have to walk before you can run. You have to work day by day, week by week, month by month and year by year to restore that credibility. I had a chance to have this discussion with customers, but most of that came from the sales and marketing teams assigned to work with them [individual customers] on a daily basis. I tell you, it hasn't been easy. When you think of the delay, it means so many different things for different airlines. It means something different for an airline that wants delivery two years from now as opposed to one that wants delivery five years from now.
BtoB: How important is an environmentally-concerned marketing message to Boeing?
Tinseth: We're part of an industry that contributes about 2% to 3% to the world's carbon dioxide emissions. Even though the aviation industry is a small part of that, it's a very visible part. We as a company have to help the airlines be more sustainable as an industry, to find a way within the next few years to become carbon neutral.
What we're doing is three things: First, we're building fuel-efficient airplanes. Second, we advocate upgrading the air-traffic control system to address congestion in the air. Today, the United States is using the latest technology of the 1950s. There's too much congestion around airports, and it wastes fuel. Finally, and this is outside of what Boeing does, but we support biofuels. I'm not talking about any fuels made from corn or anything that comes from the food supply. I'm talking about fuels that potentially could come from plants such as algae. M