Monday, August 14, 2017

Why is Customer Relationship Management Important?

Customer Relationship Management (CRM) and the various
software systems designed to assist in its implementation have been hot topics historically across distributor-land.  The truth is, many companies made the purchase, launched their efforts with the greatest intentions and then stumbled on the execution of such systems.

Lack of performance has many root causes.  Some of the early CRM packages lacked important features, such as the ability to sync data with Outlook (which is commonly used by salespeople to manage calendars, contacts and daily activities.)  Other times, the distributor failed to understand how CRM systems interacted with their business, making the whole thing an exercise in dead-end data entry.  A few times, technical issues like the ability to quickly enter and access data from remote locations, made the process unmanageable.  In my opinion, however, will power could be characterized as the biggest driver of less than stellar results. 

Since most technical issues are solved, most distributors are rethinking and relaunching the CRM effort and now we are squarely facing the “will power” part of the question.  For some reason, salespeople fear and loathe CRM systems.

Below I have characterized the major reasons:

1) Time, Time, Time – CRM takes time.  I work hard.  I already put in extra hours and CRM is just another device which sucks away from my personal (and off hours) time.





2) What’s in it for me? – I can see why management wants the information, but see little value for me as a salesperson.

3) Others can mess with my accounts – If information is available for the team, there is an opportunity for someone else in our organization to inadvertently open some terrible commercial can of worms.
  

4) The Big Brother Syndrome – CRM allows management to look over my shoulder and I don’t need that distraction in my life.

5) Job security – Tied to the Big Brother thing, many salespeople view their unique knowledge and relationships with customers as their personal bit of job security.  Some even have the fantasy of taking their customers to some new employer who will pay them handsomely for delivering their territory to some other grateful employer.   Experience dictates this strategy rarely works.  Further, in many states, the strategy is covered by “trade secret” laws.  

There are compelling reasons to fully engage with CRM
Research and anecdotal reports from dozens of sellers who believe in CRM have demonstrated that it is a prevailing tool for salespeople if they invest the time and effort to apply the concept properly. Some of these are so powerful, they offset some of the fears and contradict all but a couple of the concerns outlined above.


Let’s review those positive results from a seller’s perspective.

Better contact management – Let’s talk about customer contacts. The average distributor salesperson encounters hundreds of buying influences. Keeping track of your main contact at the top 20 accounts is pretty easy. Pushing further, my guess is a person can even handle the next level contacts which puts us near 50 contacts. This is only 10-20 percent of the total and maintaining a relationship with the other 80 percent is critically important.

What about the rest-- the ones who get lost in the shuffle? First, the project managers who are only actively involved with you when they are engaged in work which uses your products and services. Safety managers, production managers, training managers who influence their company’s purchases are out there somewhere too. Most importantly, the financial influencers of your customers are in your system and these are the people who can veto a purchase order headed your way.

How do we track our interactions with these folks? If you review your records, are there people with whom you have not interacted for 6 months? A year? Maybe longer? Salespeople fully intend to review their lists monthly, but schedules and other activities often distract from the task; so it goes undone.

A good CRM package will allow you to review your contacts and scan for activities (often automatically logging email exchanges.) Imagine being served up a weekly list of folks you haven’t talked to for a while. It’s hard to argue with this power.

Team selling empowered – Forgetting the personal computer, fax machine, cell phone and smart devices for a moment, the biggest single change in our industry over the past three decades has been distribution’s adoption of team selling approaches. Good CRM practices enhance the value of the team. What’s more, they help the salesperson sell more and ultimately make more money. Let me explain.

Inside salespeople are constantly dealing with your customers. Mostly, the same individuals call in orders, ask a
few questions or get price/delivery information, but occasionally they get questions which could lead to bigger opportunities. They communicate with new people and some of those customer contacts with whom you don’t often interact. If the inside salesperson has access to your customer list via CRM, they can add new names and identify those peripheral contacts not in your regular call routine. Pushing this concept further, with the proper flagging, the salesperson is then quickly allowed to ring up that seldom contacted individual to determine if immediate attention is required; thinking especially toward project managers or financial guys.

Similarly, specialists and technical support people are able to identify and enter the names of technical people at the customer, many of whom are hidden deep in the bowels of the customer organization. These are the kind of contacts who can give you the inside scoop on what’s happening at your customer from a technology point of view.

Marketing is growing in importance - Just a handful of years ago, the marketing groups at most distributors were basically event coordinators and the keepers of the company golf balls and other trinkets. Today, they are developing plans for generating leads, building interest in new customers and reinforcing the company brand. Much of this requires accurate customer contact information, including the current email address.
Herein lies three major issues:
1) trust and cooperation with marketing (will they send the right information to each customer contact or just irritate them with spam?)
2) can sales provide accurate email addresses?
3) does the company maintain the proper segmentation of customers?

As River Heights Consulting wraps up several major
distributor/customer satisfaction surveys, the “bounce” rate for email address stands in the 30-40 percent range. Here’s what we found: email addresses which were spelled incorrectly, email addresses which were obsolete because the customer changed their name and “url” (for example the “@riverheightsconsulting.com”,) inactive accounts and customer contacts who have been dead since 2009.
It is the salesperson’s responsibility to make sure the emails are accurate and proper. This is part of good CRM practice. Further, it proves, at least to me, that the seller has not been regularly touching some of these contacts; at least by email.

Supplier engagement – While this one might be viewed as more of a benefit for management, there is nothing more powerful than demonstrating just how hard you are working to help a supplier develop their business and grow market share. I have heard countless tales of suppliers complaining about selling activities only to “eat their words” when somebody showed them the number of selling events made on their behalf.

With Special Pricing Agreements (SPAs) growing at exponential levels and giving distributor sellers a near exclusive deal with suppliers, I believe CRM data can make a difference in the win-loss column for salespeople. By sharing sales activity with various key suppliers, I believe seller position themselves for a pricing advantage should intra-channel competitive rivals (other distributors selling the same supplier’s product) rear their ugly head.

Further, sharing similar reports monthly can help harness the power of the supplier’s selling resources, be they individual calls, demos, samples, access to factory engineers or marketing goodies. Imagine a meeting where the distributor and supplier’s salespeople sit down as co-equals, dividing the work and assigning one another focused tasks. The exercise might also include populating the CRM with new contacts and future opportunities discovered by the supplier’s team.

Opportunity tracking – Last month we wrote about opportunity tracking (read it HERE.) In that post, we assumed you were somehow tracking opportunities. However, based on emails and calls over the past few weeks, it turns out a good number of people aren’t tracking opportunities. That’s some “bad juju”, so allow me to review why tracking opportunities as part of your CRM practice is better than a collection of good-luck charms and rabbit’s feet.

Like customer contacts, a seller should discover hundreds of opportunities every year; some large, others small, and varying in time to fruition. The big opportunities coming in the near term are easy to remember, so too might be smaller and immediate potential orders. The ones that make the difference are those coming in six months, a year or perhaps even a couple of years. This phenomenon is pretty evident. Generally, most distributors do poorly with long sales cycle selling. However, a few (typically those distributors selling OEM parts where design and development is part of the product offering) excel in a world where 18-24 month selling is the norm.

The question is: how do they do it? They carefully track each and every opportunity constantly positioning themselves for the final decision. Unfortunately, without a process for tracking each and every opportunity, most distributors fail. They certainly fail when they go up against a competitor with a longer range view. Again, let me urge you to read the opportunity post.

Wrapping all this up…
Forgetting management and the organizational value, we’ve explored five of the advantages of CRM from the seller’s perspective. We could have listed 20 or maybe more, but time and attention spans are in short supply.

I can already hear some of you disagreeing with me so here’s a challenge. Shoot holes in my theory. Send me an email, make a comment or call me up and give me a piece of your mind. If you don’t like CRM systems because of one of the five reasons outlined in the first three paragraphs, just post the number and I will understand.


Those of you who believe in CRM practices, send us a quick note on what convinced you to embrace the practice.  The Grand Prize will be, yep you guessed it, post card from Iowa.

Sunday, July 30, 2017

Competitors – We know they’re out there but what do we need to know about them?

Last week we covered the topic of managing opportunities. I made this comment:
“Strangely, many “experts” advise sellers to ignore the competition. I believe the competition plays a major role in planning your strategy and understanding your situation.”

Some of you took note of this comment and requested more information.

It’s impossible to ignore the competition. Like the forces of market supply, recessions, economic recovery and upticks in energy prices, competitors influence your business environment. Extending further, competition varies from market to market and even territories within the market. While not paying attention to competition sounds high minded, noble and customer-centric, it won’t help you make more money.

Competition is specific and local
Except for Amazon, your competition is manifested in the form of a specific person or team of people. They need not live in your community, but they are assigned to one of your accounts, which makes them local to you. Again, with the exception of Amazon, these folks have names, faces and personal idiosyncrasies. Yet, when I talk to distributor salespeople about their competition, I commonly hear the name of a brand sold by several distributors in the market.





The brand or technologies provided by the distributor have bearing on the sale in instances where:

• The customer has standardized on a specific brand of product. For example, in the automation market there are four or five high market share brands that work diligently to establish customer specifications. If you are a distributor who doesn’t represent these products, you may as well be out of the race before it starts.

• The customer has a national contract with a specific supplier-manufacturer which is served by the combination of the supplier and distributor sales team.

• Your company’s line card lacks the technology desired by the customer. For instance, the customer has a strong preference for Wi-Fi enabled widgets and none of your current suppliers offer a Wi-Fi widget.

The real competition typically comes from another distributor. Even with national chains the behavior of the competitor is probably localized. Our experience points to differences in market strengths, strategies and selling behavior across territories of even smaller distributors with one location. The nationals, in spite of what is broadcast, are just as diverse in their methodology. As a side note, I personally believe this difference in service and approach to the market demonstrates the weak level of process employed in distributor sales groups, but that’s another article.

Competition is personal
It pays to know the competitive distributor salespeople calling on your accounts. They have names. You might even recognize them as the guys you sometimes see in the engineering department. If you know who they are and have access to the guest register, you can find out if they are talking to people you don’t know. Additionally, if you observe and ask a few well thought out questions, you might identify who their allies are within your customer.

Here is a short list of helpful things to discover about these people we call competitors:

• Do they have the habit of leading with price? I know a guy who everyone in his market calls “five percent Pete.” If you are dealing head to head with him, you’ve got to figure out a way to get the customer off the purchase price and onto the long term cost of ownership.

• Do they understand their products or rely on others to provide technical support?

• Do they provide good support on the mundane stuff, like handling paperwork, returns and other bits of business which can irritate customers?

• Where else do they call? Could this competitor have discovered a sleeper account in your territory?

Before we jump from this subject to the next, allow me to throw out a final thought on competitors. Salespeople relocate, change jobs, retire and sadly sometimes they die. Each of these are disruptive events at their accounts. Further, as a group, distributors do a poor job of transitioning when a salesperson goes away. I can think of at least a dozen times that sharp salespeople made significant gains based on competitive retirements alone.

Sometimes competitive behavior is company driven…
Often companies encourage specific behaviors with accounts. Once you understand how they operate it’s easy to take advantage of their habits. For a moment let’s pick on an automation sensor manufacturer who decided going to market direct was a great idea. Instead of seasoned distributor sellers they have an ever churning cadre of freshly graduated engineers. These new “kids” are pressured to quote and close a certain number of orders every month. Sadly the business world doesn’t always work that way. If this rookie direct force quotes something on the 12th of the month and hasn’t received an order by the 25th, they call the customer and start deeply discounting the price. If the customer refuses to issue a purchase order by month end, the discounting goes away.

This phenomenon isn’t limited to manufacturer’s trying their hand at direct sales. There are distributors who are notorious for offering up consigned inventory even if the customer doesn’t want it. Some distributors excel at packaging products from several different manufacturers and only offer pricing bundles. Then there are distributors who use a top down sales process; skipping over the “worker bees” and focusing attention and a financially bent sales pitch on C-level management types.

Parting thoughts on competitors
Looking back at these examples, we can position our efforts to minimize competitive impact and maximize your own advantage. Many times, the actions of competitors are predictable. If you give up the advantage of understanding and counteracting the competitors best moves, you will certainly be less effective than you could have been.

Finally, share your best competitor story and win the River Heights Consulting Grand Prize – A post card from Iowa.

Monday, July 24, 2017

Opportunities – There’s more to it than just tracking…

Progressive distributors have learned the importance of tracking and following opportunities in their sales group. For those of you who aren’t following this practice, here is a quick overview of how it works. When sellers learn of a potential for a sale, they log the following data:
The customer - Besides the actual account, it’s best if you log the customer contact who told him about the opportunity.


The product/technology involved – Sometimes it’s hard to identify the exact catalog number of bill of materials, but understanding approximately what the customer may need is required to call this a real opportunity.
The potential size of the opportunity – How many parts will be purchased, how many dollars will the customer spend or what does the current budget for the project look like are all questions which would allow an order of magnitude estimate of the size. For OEMs, we recommend understanding the size of the opportunity per year. For example, $1,000 per machine and the OEM manufacturer’s 100 machines per year would equate to a $100,000 opportunity.




Where or how the customer will use the product – It’s important to understand how or where the customer plans to use the product in their facility if an end user or in their machines if they are an OEM.

An approximate time frame – Is this a project which will happen in the next six months, in the December of next year or just sometime in the future? The better you know the approximate time of the purchasing decision, the more efficient the application of selling time.

Distributors who track opportunities understand that not all opportunities will turn into orders for their organization. Many sellers make the mistake of only tracking the opportunities which they feel confident of getting the order. In truth, understanding potential opportunities likely to not fall to the “home team” is equally important. Further down the road, a competitor may experience some kind of game changing turbulence which might reshape the odds of success. With these points in mind, here are a couple of other things to track:
Perceived chance of success – What are the current odds of getting the order? I prefer this to be listed as a percentage. Obviously, this is subjective. Further, it’s fairly common for the chance of success to shift over the life of the opportunity. Customer breakthroughs improve the odds, setbacks and new competition might dampen the hopes of victory.

Competitors in play – Strangely, many “experts” advise sellers to ignore the competition. I believe the competition plays a major role in planning your strategy and understanding your situation. Are you going up against a price cutter, technology powerhouse or a company with a long history with your customer? It matters.

You have the opportunity identified, now what?
Salespeople and their teams are more successful when they do more than just identify opportunities. As straightforward as it sounds, many folks fail to scientifically explore ways to strategically improve their position for capturing the business at hand. Let’s spend a few moments looking at things we should think about for moving our chances of success forward.

Do you truly understand the justification for the purchase? No matter how sexy and sophisticated your product offering, very few companies are making the purchase, just because they want to own one of your shiny new special widgets. In our world, there is either an underlying reason for the outlay of cash or the project will hold zero chance of success. For end user customers, justifications center on improved productivity, reduction of waste, lower operating costs, compliance with government regulations or improved worker safety. OEMs look to improve the marketability of their products (add new features, improve speed of operation, etc.,) reduce production costs, match government standards and find ways to drive down the price of the machine. The more you understand about the customer’s purpose and justification, the more closely you can fine-tune your solution.

Do you understand the decision making process? Regardless of what some people will have you believe, there are usually multiple people involved in the decision-making process. For example, have you ever had an engineer tell you your solution looked great, but later said “the project is on hold” or cancelled? This clearly indicates there were others playing a role in the decision and they decided not to buy. Similarly, purchasing/procurement departments will insist they are the final decision maker as a negotiation ploy. Truth is, they are rarely, if ever, more than a small part of the verdict. If you don’t understand how the buying decision will be made, ask. Actually, ask several customer contacts. Compare their stories, ask questions, do some detective work and learn how this will happen.

Have you identified all of the decision makers?
Before you say yes, reread the question above. Do you really know all of those involved in the decision? Typically, there are multiple types of people involved. They all have different outlooks and will be looking for the seller most likely to match their needs. Here is a quick list:

1) The Technical Buyer is usually someone in engineering or maintenance
2) The User is the person who will put the solution to work (think production)
3) The Economic Buyer is the most often ignored buying influence by distributors, which is a mistake since these buyers control the dollars for the project and we all know a sale won’t happen without money changing hands
4) The Coach is typically a person who works for your customer but is not necessarily involved in the buying process. They provide insights and help you navigate through a sea of people.

Are there people who might give insight into the decision making process?
If you recently inherited an account, the previous salesperson or your sales manager might understand how decisions are made. So too, might experience rich supplier sales people. Ex-employees of your customer might assist and as could your Coach contact at the customer.


Have you engaged everyone within your organization? Modern selling is a team sport. Every customer touches up against a number of people in your organization. Often, customer service and technical people are not viewed as a “threat” by customers. They sometimes hear idle chit chat which makes them privy to information that might not come to the surface on sales calls. Do they know things about your opportunity? They might. Extending, if you brief them on things to look for, they might be able to move your position forward.

Do you have the support of your supply-partners?
For distributors this is a critical issue. If you operate in an environment where other distributors sell the same brands as your company, soliciting supply support is not just suggested, it’s mandatory. The supplier needs to understand you have identified the opportunity and are working on their behalf to turn it into an order. Because even mid-sized opportunities can turn competitive these days, Special Pricing Agreements (SPAs) often come into play. Do you have one locked in? Further, many suppliers have special resources to assist in your efforts to convert the business or create a new application.

Please note: this comment isn’t about turning the work over to the supplier, instead think of an alert – their support may be needed on short notice.

Customer situations are fluid, periodic review is needed.
The situations with customers can change. For instance, unexpectedly large orders can impact plans and schedules. Similarly, downturns in order volume, issues with other peripheral equipment and other business dynamics create changes in plans. Salespeople must monitor the situation, all the while working a plan to maximize their chances of success.

I recommend visiting your opportunities on a bi-weekly basis. For each of these, you can determine what current actions might improve your odds of successfully closing the deal. As you work your way through the list, ask yourself what pieces of information might drive your position forward. To assist you in your thought process, here are a few quick points to ponder:
• Do I know all of the decision makers or are there people I should meet?
• Do I understand the decision making process? Could I find a coach who can explain how the account makes decisions like this one?
• Are there support or technical people in my organization who might be listening for clues on the order from their dealings with the customer?
• Update your supply-partners on the situation. Sometimes they discover things on their own, which could be of value to your efforts.




There are at least 100 other things you could do or should do. If you have a situation you would like to chat about, let me invite you to shoot us an email. We’d love to hear from you.

Monday, July 10, 2017

Rep Disconnect: Are you not working with your Local Rep?

It happens with distributors everywhere. For some reason you don’t have a great relationship with one of the manufacturer’s reps assigned to your company. The reasons for this are many. Let’s dig into the big three:

The rep is responsible for lines which are competitive to your company’s key suppliers. Many distributors fear working with reps who are tied to competitive products lines. The reasoning is simple, introduce them to our best customer and the next day, they will return to the customer with a demo of a different brand product. Further, if they know more about “your” customer, proposed solutions become more focused and effective. When the product they sell are an important part of your value proposition, it’s easy for them to offer something similar but better or cheaper or both.

The rep is closely aligned with a competitive distributor. When the rep has close ties to a competitive distributor, it raises a number of trust issues. Will important information be leaked to the guy down the road? Are prices really fair or does the other distributor get some kind of competitive advantage? We recently talked to a distributor who was very certain a rep had shared the dates of their big open house with another distributor, who magically announced their big shindig would happen the week before. While no real evidence supported it, the whole thing wasn’t just a coincidence, they made the decision to not invite the rep to other similar events.





The rep has baggage which precludes you from trusting with your accounts. When Will Rogers said, “I never met a man I didn’t like” he obviously hadn’t met this rep. Unethical behavior can be found anywhere and it sometimes rears its ugly head in our industry. Associating with these kinds of people causes their reputation to rub off on your organization. Misleading statements and lies impact customer service and ultimately create situations where business is damaged.

Reps play an important role in our industry
After surveying distributors across a number of industries, I have discovered a number of breakdowns caused by rep disconnect. The table below things we have discovered:

Issue
Implications to selling
No joint calls
Distributors rank joint calls as the single most important selling tool available from a manufacturer.  These are used to answer detailed technical questions, respond to customer commercial issues and to launch new products.
New literature not available
No literature means proactive sales calls are more difficult and experience tells us that in spite of all the electronic hoopla, customers still want you to place a glossy brochure in their hands when talking about a product. 
New programs poorly discussed
How many times have you learned of a 90 day program a month late?  This means lost opportunity for coordinated market attacks and often translates into lost business.
Special pricing agreements (SPAs) missing
SPAs have become a cornerstone of our business.  As both an offensive and defensive weapon, they can lock in business or lock you out of business.  In candid conversations, manufacturers tell us they judge a distributor’s sales effort by the number of SPA requests submitted. 
No sales leads shared
“Even blind pigs occasionally find an acorn.”  Reps are trained salespeople.  They find business opportunities.  Most likely, they are not sharing with you.  Manufacturers spend millions mining for solid sales leads.  Most intend for them to trickle down to the distributor and you won’t get any.  This costs money.


This whole issue is serious. When the rep is disconnected from your organization for any reason, it costs you money. I believe it’s important to have a company-wide plan.

Rep exclusion needs to be a business decision…
First, I believe the decision to disconnect from a rep is not something to take lightly. With all the negative consequences, it shouldn’t be an emotional decision. Most importantly, it has to be a management decision. Unfortunately, many distributors allow salespeople to make the rep disconnect decision. What’s more, some of these decisions are based purely on personality and emotion. Here are some real world examples.

One salesperson reported, “I wouldn’t work with Joe because he sells the same type of products as my good friend. I trust him and we’ve worked together for something like 20 years. Because of that, I have decided not to include Joe’s company in any of my customers.” Sadly, the company Joe represented was strategic to the sales guy’s company.

Another seller related a story of issues presented by the rep being discussed. Listening to the tale, it would seem this person was not the right kind of business ally. But, I happened to know the company in question and things weren’t adding up. After a few questions, things got interesting. The issues were nearly 15 years old and several of them could potentially be cleared up with a discussion. Still, the distributor salesperson persisted. What’s worse, his particular point of view had spread to others in the organization, who had never had an issue. An important product line flat-lined because the rep had been excluded.

Addressing the issues…
First, allow me to restate, the issues we described in our two examples are common. We are not discounting the need to occasionally make the decision to disconnect. It’s a business decision and as with every business decision their needs to be a plan. Here’s a sample plan:

1. Gather facts. Specifics on the situation are important. Issues with past performance should be tied to dates, customers and how the rep behavior could impact future business.

2. Speak to the owner/principle of the rep agency. Even if the owner/principle is part of the problem, arrange a meeting to share your grievances and outline why you feel that working directly with them creates issues for your business.

3. Explore potential work-arounds. Is there a way the rep could work with your organization which would not impact business? If the issue is with a single salesperson, would it be possible to assign someone new? If the rep agency carries a highly competitive line, could there be at least a few accounts which could be worked? If not, move to the next step.

4. Talk to the manufacturers involved. First, this is a business discussion with the manufacturer’s regional manager or VP of Sales. Avoid personality issues and character assassination because you have no real way of understanding the depth of relationship between the manufacturer and the rep. Ideally, your plan would be to find a way to “work around” the issues of not having a rep. This would involve identifying the right people to call for getting negotiated pricing, sales backup, customer support and a source for sample, demos, literature or other selling tools. An alternative training plan might be needed as well.

5. Build a working plan with the manufacturer. Make certain the manufacturer knows that you still want to build your business with them. Further, make sure they understand the potential financial impact of operating with rep disconnect. Set up a plan for providing the necessary services for your growth and pre-schedule monthly check-ins to keep the plan real.

6. Periodic reviews with manufacturer. Without a rep, you are outside of the normal lines of communications. You miss news on programs, specials and sometimes new products. These are important for distributor and manufacturer alike. Even though some might argue this is backwards (with the distributor being the customer… and all that jazz,) I recommend the distributor take a leadership role to ensure the reviews actually take place.

Is this perfect?
In most instances, operating without a rep is more difficult than with a local rep. When the relationship is strong, the work is properly assigned to the right person (whether they be on the manufacturer or distributor side) and everything is running well, the rep/distributor combination is a thing of beauty. When things are dysfunctional, profitability and business growth for both manufacturer and distributor are stressed. The worst case scenario is to ignore the situation and hope things change.

Finally…
Distributors and their supply partners regularly have this kind of conversation at association meetings, marketing group conferences and conventions; I know because I have been involved in many of them. I’ve seen some discussions become very productive and others take a turn for the worst. Most turned from business to emotions. First and foremost, this is a business discussion; specific details and data are important. Comments like “Joe is a slimy snake” make you look petty and unprofessional.

Just in case the conversation turns in this direction, be prepared with a list of reps you believe do a good job in your territory and be prepared to explain why.

I am further researching and revisiting some of the distributor-rep relationship issues. I would love to hear your thoughts either via comment here, email or by phone. Once again, those sending us emails get the River Heights Grand Prize… A lovely hand addressed postcard from Iowa.

Monday, June 26, 2017

Negative Customer Feedback is the Greatest Gift

My assistant came in today happy as a clam about the steak she had for dinner last night.  Hoping to score some great Iowa beef, I asked where she bought it.  "They were free" she said "because the chicken I had last week was terrible."  She went on to explain that her horrible chicken meal was such because it was stuffed with apples.  She complained to the Meat Manager who offered to give her an upgraded replacement and promised to be more forthcoming with signs and descriptions in the future. 

This got me thinking about a customer focus group I assisted with last week, where I received an "ear full" of nasty news.  During one of the sessions, one of the customers asked for a one-on-one meeting with me concerning my client. I’m not sure if this particular customer woke up on the wrong side of the bed, was having severe heartburn from the Mexican buffet served prior to the session or was just cranky, but he decided to let me have it with both barrels of nastiness. Here’s the scoop:

The customer had played an active role in the focus group. I asked questions on behalf of my client and this customer provided some great suggestions and offered up a couple of unique thoughts for new services. Our one-on-one (actually the sales manager for "the other side" was there,) however, turned out differently. In the words of the sales manager, the customer “turned on me.”

We walked into the conference room and sat down. After a brief warm up, including comments on how great it was that the sales manager’s company wanted to hear from their customers, the guy shifted the focus on his comments to issues faced when dealing with this distributor. The customer went on to say something like this:

“You know we have been buying from you for a long time, and we have gone through a lot of stuff over the years. But, we need for you to get better with providing us the products we need quickly. Your guys are good with the regular day to day products, but when we discover the need for something just slightly out of the ordinary, your service is getting worse instead of better. As a matter of fact, we never seem to get anything in less than a couple of weeks.”

Here’s where things took a surprising turn. Instead of digging deeper into the situation with questions about the nature of the parts or types of deliveries, the sales manager went on the defensive. The sales manager’s response covered a gamut of issues ranging from the size of the distributor’s inventory and the impossibility of stocking everything to how the customer needs to plan better to eliminate this type of issue. For a guy who has been in the industry for twenty plus years, I found the response to be shockingly emotional and poor. Let’s look at what might have been a better approach.

Acknowledging the feedback is critical…
In this particular situation, I would have recommended the following statement from the sales manager:
“Geeze this sounds like something we need to address for you. Let me get this straight, when you need something out of the ordinary, our service is getting worse instead of better. I can see where this could create issues for you. Thanks for sharing this important concern.”

Taking this approach indicates you are concerned for the customer’s welfare and take the feedback seriously. But just being appreciative probably isn’t enough to solve the problem. To really solve issues, you need details.

Get more clarifying details…
It’s difficult to react to a sweeping statement like “your delivery stinks.” In order to improve, make process changes or solve problems in general, having more details simplifies the task. A customer providing painful feedback should appreciate and understand efforts to gather more background information and detail. Going back to our story, the following could have been a follow up question:
“I want to explore this situation further so we can improve. Would you be willing to share a few recent examples of the long delivery you have experienced?”

This question sends a strong message that you are concerned and you are going to explore solutions to the issues you are causing the customer. Experience dictates, customers typically calm down and get into a spirit of mutual cooperation once you start asking intelligent questions about their situation.

Give the customer a preliminary work plan…
Outlining your plan to drill into the issues presented proves you are taking the situation seriously. The customer understands you don’t have all the information. Providing a quick “off the cuff” solution without further study or work might send the message that you are willing to say anything to get through this tough conversation. Here might have been a good answer:
“Give me some time to research what is going on with our customer service group and the suppliers involved in getting the product to you. This will take me a few days and involves calls to some people who are not always at their desks. I will start gathering data right away and give you a status report in a few days.”

Note we didn’t say a solution, instead we offered a status report. It’s the old “under promise and over deliver” thing. Many times problems like this take much longer to resolve than expected; especially when others are involved.

Provide status reports along the way…
Let the customer know this wasn’t a “hear it and forget it situation.” Status reports typically can be handled with a quick phone call or email. Reports basically let the customer know what you are doing and what you have learned so far. Further, status reports should be ongoing if the problem cannot be solved in under a week. Think of it as a weekly reminder to the customer that you are still putting effort into their issues.

If a perfect solution can’t be found offer alternatives…
Let’s face it sometimes it’s impossible to give customers everything they want. Unlimited free deliveries, massively long payment terms, unlimited return privileges or infinite inventory all come to mind. If the problem can’t be addressed head on, I believe the customer should be given choices as to what actions can be made to at least alleviate the issue.

In the case of my sales manager friend, some of the following may have been good alternatives:

  • The sales manager offers alternative products from suppliers with very good delivery mechanisms and creates a list of similar products which might be substituted for those which are difficult to obtain in a timely fashion.
  • The sales manager assigns a person for expediting products coming from suppliers who are not normally part of the distributor’s business.
  • The sales manager offers to work with the customer to develop a plan for better anticipating the unusual items required for a job.


Applying Scientific Theory from Human Sigma: Managing the Employee-Customer Encounter…
Mistakes happen, it is the nature of human encounters. Research outlined in the book point to a couple critical thoughts. First, customers who have problems (and provide negative feedback) which are handled properly are more loyal than a customer who encounters no problems. Secondly, employees (typically outside and inside employees) need to be trained and empowered to handle negative feedback.

Negative feedback is the greatest gift…
When you receive no negative feedback, you should assume something is wrong. Every organization, regardless of its business prowess, makes mistakes. Customers who take the time to tell you about mistakes are giving you the opportunity to save the business and build a better long-lasting relationship. Thinking back to my assistant and her terrible apple chicken.  Had she kept quiet, others may have been just as unpleasantly surprised to receive the same meal.  She provided negative feedback and changes were made for her and future customers.  She will continue to shop at that location.  Customer retention is huge for distributors. Accept the gift and make something good of it…

Monday, June 19, 2017

The First Time Call

Let’s face it, for most salespeople getting into a new prospect
is a tough job.  It takes persistence, requires lots of phone calls and typically puts the seller through an emotional wringer.  Discussions with hundreds if not thousands of distributor salespeople indicate this is one of the most difficult parts of their job.  First, it takes multiple (actually, our research shows seven) phone calls and email messages just to get to the right person.  Sadly, sellers, who are faint of heart, give up before the actual contact is made.  Many would rather put the task off and procrastinate for weeks.  Some, with established territories, simply refuse to make this kind of call until their managers apply massive pressure to open new accounts.

The point is, lining up this kind of call is not on anyone’s top ten list of things to do.  There are dozens of articles on the topic of getting the appointment; my intent is not to provide a tutorial on the topic.  Instead, let’s assume through hard work and “true grit," an appointment is secured.  

Let the selling start?  Not really.  Salespeople who come into the prospective new customer’s office with six guns blazing and a hundred catalogs under their arm are destined for failure.  I recommend a different approach.  

Exploring new accounts is an interview…
As weird as it may sound, you’re not here to sell anything.  Instead, the first time call is an opportunity to find out where we might be able to harness our products and services to provide something of value to the customer.  Just taking this customer-centric approach differentiates you from the dozens of other “drive-by salespeople” who have probably wasted the customer’s time in the past.  





Previous experience has conditioned the customer to politely give you a few fidgety minutes then start looking for an excuse to get you out of their office and back into your car heading down the highway.  You’re going to throw them off by not selling.  I recommend starting the conversation off with this statement: “I promise not to try to sell you anything today.  Instead, I want to learn a bit more about you and your company.”

Come prepared…
Nothing can turn off a potential client more than a seller who has not taken the time to learn about the account.  Back in the old days, this was a pretty hard task.  Today, the internet contains dozens of resources for discovering more about the potential customer.  Things like products, company history and industries served are right there for the taking.  Asking dumb questions labels you as a time waster.  Good questions; however, are still the key to success. 

Why leave success to chance?  Since selling is an emotional sport, nerves often get in the way of great questions “off the top of your head."  Prepare for the call by developing a list of questions you would like to have answered by the customer.  These are both personal and professional in nature.  Here is a short list:

(Not too) Personal questions
Can you give me a quick overview of your career?  Where have you worked?  What kind of education prepared you for the job?
In what are the areas do you work?  What are your responsibilities?  Are there other areas in the company with people doing similar tasks?
What kind of information is important to you?  Are there areas where you might benefit from training?

The Company
Who are your end customers?  What do they like about your company?
What is the company best known for?  
Can you describe the processes used within your organization?  
Are there areas where you are working on improving the process?
What types of engineering issues do you face?
What do you look for in a supplier?

Getting off to the right start… because a lot of folks ask.
Here is a short couple of sentences to jump start your efforts with this kind of a call:
“Thanks for taking time to see me today.  I appreciate and value your time.  I represent a distributor who provides a number of products and services that I suspect may be of interest to you and others in your organization.  I’m not going to try to sell you anything, or for that matter bore you with a long list of the things we do.  Instead, I would like to learn more about you.  This gives me an opportunity to think about your situation and then, if it makes sense, come back with some thoughts and potential recommendations.  I am going to leave you with a single company brochure that shows the many things we have to offer, but that’s not my main purpose today.”

Once you’ve set the stage, get started with the questions you have already prepared.  Try to stay conversational, it’s not an interrogation, instead think interview.  

Some things to think about…
Regardless of how you might be tempted, stick with your no sales pitch promise.  There will be times when you are tortured by this commitment, but the only time to talk products or services is if the customer flat asks you; ie: do you stock left handed widgets.  Otherwise, wait till a later time.

Take notes.  Nothing shows your interest more than taking a
few notes.  Further, I have discovered that customers actually say more when you ask them if they mind if you take a few notes.  It reinforces the importance you place on their answers.

Let them know you want to think about their situation.  Ask if it might be possible for you to pay a short visit in a couple of weeks to talk about a couple of opportunities for your companies to work together.

Before we go…
If you are wondering about other questions to ask, I would be willing to share a chapter from my soon to be released book Customer Based Strategic Planning.  It guides the seller through a lot of questions they might find valuable.  Shoot me an email to receive your copy!

Friday, June 9, 2017

Explaining Sales to the New Executive

An Irishman, a Cowboy and a Salesman walked into a bar…

Remember those jokes from days gone by?  It’s been a long time since salespeople needed to have a couple of good jokes up their sleeves.  And for some reason, I could never remember the punch lines.  Thankfully, the world changed and jokes soon fell out of favor with customers and sellers alike and my career didn’t suffer.  But, sometimes life mimics old jokes.

Recently, I ran into a business executive in a local bar.  During the ensuing conversation, she shared her situation.  After years of climbing the corporate ladder and being groomed for bigger and better things, she finds herself in charge of her company’s sales effort.  Congratulations to her, but there was a problem.  She had no previous sales experience, no real exposure to the selling in any form and was struggling to understand how to make a difference in her new department.  

I quipped that I work with sales groups throughout the country.  Her eyes lit up and she asked me to give her the lowdown on sales.  To sweeten the pot, she bought me a beer.  How could I say no?

In the next four minutes, allow me to share my explanation.

Selling isn’t what you probably expect…
Common wisdom paints selling as a sleazy business where
customers are tricked, cajoled or somehow bribed into making a purchase.  With the possible exception of timeshare tours and used cars, this applies to every form of selling.  This is especially true in B2B sales, which is precisely where she lives.   Instead, selling is about skillsets and orchestrated team play.  For distributors, the team play revolves around specialists, inside salespeople, application engineers and even sales management.

Since selling is about skillsets, we can assume that
salespeople are developed and not, as common wisdom sometimes dictates, born.  During my forty year tenure in sales and sales management, I have seen successful sellers with all kinds of personality types; introverts, extroverts, techno-geeks and many more.  The differentiating fact between the best and average typically boils down to work ethic, skills and process.  Further, as one VP of Sales shared, “In today’s team selling environment, I won’t hire a cowboy superstar.  We have worked hard to develop a team, and there’s no place for prima-donna behavior on our team.”

Since sales skills are important, one would expect sales organizations to constantly reinforce the right skills.  At the same time, real sales skills are rarely taught.  I told her to review the agendas of the last few team sales meetings.  Did sales methods and sales skill refreshers even make the list?  This is an epidemic issue across the entire sales industry.  Sales meeting have digressed to technology reviews, community bulletin boards and product trivia.  Skills need constant refreshers, coaching and review.  

Sales people work without a great deal of oversight.  In most organizations, sales managers rarely make customer calls with their team; with two or three times a year being the norm.  Because there is little time/opportunity to gauge skills in action, there is a need for mid-stream measures of success which look into the progress.  Most sales managers focus on sales totals rather than the actions which drive sales.  This is a mistake.  

Sales is about determining the right customers…
Most sales organizations have more “prospects” than they can handle.  Many invest mass quantities of resources chasing down customers who probably won’t turn out to be profitable customers.   Companies who spend the time to identify the right best potential customer and focusing efforts on these “targets” are 47 percent more likely to meet their sales goals than those who blindly chase every lead possible.  

Many times the right customers are already doing some business with your company.  Sales experts, armed with research data, indicate it is five times easier to sell more to an existing customer than to pursue and open a new account.  The point is to evaluate existing customers for new opportunities and missed sales.  In the world of distribution, this is called a gap analysis.  (I have an example, I would share for the asking.)

Sale is ultimately about driving profitable sales…
Don’t confuse gross margin or sales volume with profitability.  Based on analysis of most organizations’ sales, the cost to service many of your accounts is higher than the gross margin generated by the account.  This takes into consideration things like technical support, order size, amount of handling and the overall hassle factors associated with dealing with the customer.  

By the way, this topic is heresy within most sales organizations.  The prevailing attitude is every sale is a good sale and every customer an important cog in the wheel.  While this model may work for establishments like Amazon where there are no sales professionals, for the majority of selling organizations, the need to understand this profitability thing is high.  

The more you understand your sales cycle, the better…
I have seen company presidents hire new salespeople and begin budgeting for increased numbers within months of the new salesperson’s arrival.  For the most part, everybody is disappointed and here’s why.  It’s called the sales cycle.  

The sales cycle is the time line from the introduction to the purchase of a product.  In many instances, the sales cycle is longer than most believe.  For example, if you are selling components which will be incorporated into an original equipment maker’s (OEM) product, the sales cycle includes OEM’s design and engineering time.  There may be testing, trials and other aspects in the evaluation.  Further, many OEMs only change their designs every few years.  The sales cycle is long.  For End Users of products the sales cycle can be shorter.  Keeping this in mind, let’s look at the error made by the previously mentioned company president.

Even with end users, the time required to determine the right person to call, build a relationship, earn trust and suggest new product alternatives takes months.  Only a small number of these relationships can be worked on during the early months.  With typical sellers (in distribution) averaging something just shy of 15 sales calls per week, this means that a maximum of only 60 accounts might be explored during the first month of the salesperson’s service.  Unfortunately, it doesn’t work this way, as the first call is mostly introductory and it generally takes at least four to six calls to develop even a modicum of trust.    

Without knowledge of the sales cycle, it’s tough to forecast sales growth or even budget for new sellers.  Minimize the cycle and success comes more rapidly.  Most companies, regrettably, don’t take the time to explore even this one principle area for improving performance.

Why a sales process is important… 
Without a process you can never focus on the right area for improvement.  No activity/task is completed the same way, so it’s impossible to understand what went right or wrong with each customer.  Improvement is difficult and continuous improvement is impossible.  A couple of years ago, we surveyed nearly 100 sales managers on their use of sales process.  The most common “process” listed by these managers was “informal.”    The problem is “informal” doesn’t really match the description of process.

What is a process?  The definition requires documentation, training, metrics and coaching/management points throughout.  There has to be a measures for intermediate steps in the sales activities.  Rather than focus entirely on whether sales are up, down or flat, the process allows for understanding opportunities as they work their way through the sales cycle described above.  

A process has a common vocabulary; it speeds the accuracy and efficiency of communications.  For example, what is your definition of a “prospective customer?”  For some, it means anyone possessing enough money to make a purchase whether they have been identified, researched or contacted.  For others, a prospect is a customer who has been identified and qualified in some material way.  The same applies to terms like “target account” and “key account.”  Without company-wide classifications, it’s impossible to discuss the landscape.  

River Heights Consulting has developed some definitions.  We use them to clarify conversations with our clients.  However, you may have definitions of your own.  For instance, Miller-Heiman has developed the following terms to describe people within an account:
The Economic Buying Influence – The guy with the budget.
The User Buying Influence – The person who will be actually using your product.
The Technical Buyer – This is the engineer or expert determining if your product meets the specification.
The Coach – A person within the account who wants you to get the business.  They are a guide.

Getting back to my new friend…
By the time we finished our conversation, I could tell she was in information overload.  And, since my beer was pretty close to dry, I left here with this thought:

Since you have managed manufacturing operations in your company, you probably already know it’s important to understand some of the operational details of the group.  You probably asked, what is our maximum capacity, how much time is lost to downtime, what is our reject rate, where are our bottlenecks and a dozen other questions.  In a good sales operation you need to ask a similar set of questions.  Here are my top six:
  1. In as much specific detail as possible, how would you describe your ideal customer? 
  2. How many of these customers currently counted in your selling efforts?
  3. How many “ideal customers” do you lose every year?
  4. How many “ideal customers” have you identified and begun building relationships?
  5. Do you know of potential “sales opportunities” which could materialize in the next year and what is the probability of them buying from you?
  6. If you don’t know the answer, why not?  

Finally…
I am interested in the things you would have had her explore.  Email me your suggestion and I will send you a postcard from Iowa…. 

For those who jumped ahead to read the punchline of the previously mentioned joke, here it goes:
An Irishman, a Cowboy and a Salesman walked into a bar and the Irishman ordered them all a whiskey.
When the bartender delivered the drink, the salesman asked, "Where is everybody?" The bartender replied, "They've gone to the hanging." "Hanging? Who are they hanging?" "Brown Paper Pete," the bartender replied.
"What kind of a name is that?" the cowboy asked. "Well," said the bartender, "he wears a brown paper hat, brown paper shirt, brown paper trousers and brown paper shoes."
"Weird guy," said the salesman. "What are they hanging him for?"

"Rustling," said the bartender.