Friday, March 30, 2012

Targeting: Science or Passing Thought?


Skill Three Targeting


One of the issues that I faced as a young sales person revolved around this simple statement.  All customers are not created equal.  As a guy who grew up believing in fairness, equality and all the rest of the American Creed, this was hard.  I wanted to treat every single person who ever purchased one of my products with the same level of support and the same level of attention.   The little guys loved me and I developed a loyal following – but my sales didn’t grow. 


It was only after I came to realize not everyone had the ability, the volume and the potential to help me reach my own goals that I started to progress professionally.  My first efforts revolved around size of account, and this was a good start.  However, it’s more complex than just size.  When we match our products and services to the customer most likely gain high value from what we do, we begin the trek to sales success.  When we add in the dynamic of appreciation of our value – we move even farther forward.  I call this targeting.


Later on I discovered research indicating world class “targeters” are 47% more effective in reaching their financial goals than their peers.  Unfortunately, this thought is lost on many in distributor-land.  In sales meeting after sales meeting, strategy is discussed and “targets” proposed but no precise companywide process for targeting exists.  During down turns in economy those with well thought out targeting processes will prevail.


Let’s establish touch points for measuring targeting skills.  Again, I defer to my favorite 1-10 based scale.  Here are the measures I recommend:

1 – You have thought about how you sell and recognize some customers can buy more.

3 - There is little difference between a target and key account.  Typically you use the same three or four large accounts as your target for every product.

5 – You have applied some segmentation to your targeting process.  You have targets broken down based on account size and account type (OEM, User, and Contractor).

7 – You are looking at what customers might most easily be approached within your segmentation.

10 – Targeting is a science.  You have long term targets identified for strategic programs or processes and short term targets identified to kick-start the sale of new products.  Those around you understand your process and have a common vocabulary (ex. product level target, salesperson level target).



Remember the story of the hare and the tortoise?  Remember how the old rabbit gave the turtle dude a little head start?  Well, I don’t think a 47% head start can be ignored – it’s just too big a number. 

As I write this, I am concluding a two year research into the targeting methods used in some of the most successful organizations.  A book is just a short time away.  Drop me a line and I will share the introduction with you.

Friday, March 23, 2012

HARDI Distributors Announce 6.2% growth in January


The wholesalers over at HARDI have found themselves located at the corner of Recession and Housing Market Collapse.  These are the folks who sell heating and air conditioning equipment into the residential and commercial markets.  Some of these folks saw the market they serve shrivel to just over half of its former size during the recessionary days of 2008-2009. 




Those who comfortably rode out the storm (and there were a few who did), had strong processes around inventory levels and pricing policy.  Based on the work we have done with David Bauders and his Strategic Pricing Associates, we know a few actually improved their margins during those tough times.



In a time when some distributors are experiencing “growth sputter” we can only hope this sector of the distributor trade continues.


Here is the complete listing from Snips Magazine….


After a largely disappointing 2011, January was a good month for many members of the Heating, Airconditioning and Refrigeration Distributors International.

Average sales were up 6.2 percent overall, according to the group’s monthly “Targeted and Regional Economic News for Distribution Strategies” report. Six of the association's seven U.S. regions showed gains — three reaching into double digits. Canadian distributors saw a small drop, but its annual growth rate still improved. U.S.-only distributors saw a 6.3 percent sales increase.

Inventory for all regions were higher than year-ago levels.

Andrew Duguay, HARDI economist, warned members to not get overly excited.

“Distributor sales recovered moderately in January,” he said. “On average, sales improved 6.2 percent from last January, but the actual results were quite varied, with just over one third of distributors showing a negative January comparison to last year.”

HARDI Executive Vice President and COO Talbot Gee said regulatory issues concerning R-22 refrigerant could still slow business for many members.

“We just completed a very optimistic 2012 HVACR market forecast, but I fear uncertainties caused by refrigerant and equipment regulation are stymieing our growth potential,” Gee said. “Any questions on what you can buy, stock, and sell will obviously slow sales and marketing efforts, and make business owners lock down when they usually would be expanding and being aggressive.”

But some industry sectors are doing very well, he added.

“Interestingly, we continue to see extremely strong ductless unit sales despite some of these winter headwinds, and continued movement away from mid-level efficiencies to either 13 SEER (seasonal energy-efficiency rating) or 16 SEER,” Gee said.    

Tuesday, March 20, 2012

A Method to Your Madness



Don't let the idea of a sales
process drive you mad!
Skill Two: Process

In an earlier posting, I noted I felt planning was the single most critical skill for sales people.  Think about this: the power to anticipate and prepare for the future is a major differentiator of mankind.  One of the first measures of civilization comes in the form of the calendar.  The Egyptians, Mayans, Phoenicians, Aztecs, and the hillbillies from which the Hurtte clan emerged, all had calendars.  They developed plans, but that’s not enough. 

Carrying out a plan in a systematic method is process.  And to really be a process they must contain three ingredients:

·         Documentation – Without some written record of how we handle thing,s it’s far too easy to stray from the plan.

·         Measurements and Metrics – These assist in understanding changes in our performance over a longer period of time.

·         Coaching Points – Even superstar athletes have coaches.  If you don’t have a method for getting an outside perspective, you may be missing an important ingredient of success.

Let’s switch gears and look at process in a completely different field.  McDonald’s has a process for cooking fries.  They carefully define their procedure; they measure against the procedure and constantly look for ways to improve.  Arguably, it isn’t the quality of their food that keeps people coming back, it is the consistency.  They, like many businesses, realize their customers have an appreciation for consistency.  A process keeps you consistent and guides your improvement.


A process for those of us in sales can be everything from how consistently we return phone calls to how well we capture customer information to how well we hand off information to our inside sales team.

Here is a guide to process scale.  Again, it works on a scale of 1 to 10, with 1 being the lowest score and 10 being near perfection.  Select the number which most closely ties to your own work.
 

1 – You always have a notebook with you when you go out on a call.

3 – You capture all incoming phone messages and return the calls within a consistent time frame.  This includes continuing to call back until you have made contact with the person calling.

5 – You measure the number of sales calls you make each week.

7 – You measure the value of active quotations, new quotes and other important information.

10 – Other members of your team know exactly how you will provide them information in order to better serve your customers

The very best sales people involve others in their process.  Like the coach of a sports team, they outline expectations, measure outcomes, and often gently coach their support people along the way to improve customer interactions.

Many salespeople question the value of written documentation for their process.  To this end, your process need not be laid out in perfect form.  A simple flow chart, a few bullet points, a notebook with your current actions will be sufficient as a starter.  If you don’t have something on paper (or electronic device), straying from your ideal plan is easy to justify.  We suggest you take just a few minutes to think about these points.  What is your process for the following:

·         Introducing your company to a new customer?

·         Following up on leads provided by a vendor?

·         Locating new contacts at an existing customer?

·         Handling quotations?

·         Gathering information on a customer?

·         Introducing support people to your customer?

·         Returning phone calls?

·         Measuring the potential of a new customer?

·         Identifying competitors within your customers?


We would love to hear more about your own process.

Thursday, March 15, 2012

Point of Use Vending Machines


Electrical Wholesaling Giant Graybar has just announced a partnership with Vending Machine Maker SupplyPro of San Diego. First, we automated the manufacturing process, now we are automating the services behind the manufacturing process. The concept is simple – instead of paying a person to dispense consumable products why not use a “high tech candy machine”. The customer inserts a card to tell the machine which department needs the part and out it pops. No fuss, no muss…. Well at least in ideal conditions.

Tuesday, March 13, 2012

In the Hiring Mood


 Joint Survey Finds Distribution Firms in Hiring Mood,
But Having Trouble Finding the Right People
Chicago, Ill.—March 12, 2012—A recent survey by the NAW Institute for Distribution Excellence on behalf of the Industrial Careers Pathway® (ICP®) found that 91 percent of distribution firms surveyed plan to hire new employees within the next five years. Firms in this mature industry are facing an unprecedented demographic with three to four out of every 10 workers planning to retire within five years[1]. That leaves not only a labor gap, but a brain drain, for an industry where product application and process knowledge and relationships with customers drive profitability. 

Terry Knight is a top executive charged with the responsibility for strategic sales and business development with SKF USA, Inc., a global manufacturer and supplier of industrial products and services, supported by some 7,000 distribution firms and dealers worldwide. Knight, who also serves as the volunteer chair of the ICP Steering Committee, a cross-industry alliance of industrial distribution associations, said, "The importance of a strong distribution network cannot be underestimated. Manufacturers are dependent upon this network to reach all aspects of the marketplace, provide feedback and be an important link in the supply chain. The NAW Institute survey reinforces that our industries need to reach new potential employees right now...and this is one of the critical goals ICP is working on.”

The distribution industry, made up of thousands of businesses in a wide range of sizes across North America, has faced stiff competition for workers from sectors such as information technology, healthcare and consumer goods. One survey respondent said, "We are having real problems getting connected to the right kind of people (to fill jobs)." Another added, "The distribution industry is, by and large, not considered to be an ‘in’ industry anymore. We have to generate a passion for our industry to attract recruits."

Survey respondents included companies spanning the spectrum of sizes—from under $20 million in sales (30 percent of respondents) to those in the $20 - $99 million range (28 percent) to companies over $1 billion in sales (15 percent). The majority of survey respondents were chief executive officers or high level executives within the companies who responded to the survey.

The jobs to be filled include outside/field sales jobs, inside/counter sales and customer service jobs and technical or product specialist type jobs. Of those surveyed, only 10 percent require education above an associate’s degree for inside sales positions and 25 percent require an associate’s degree or higher for outside sales jobs. Fully 59 percent of respondents said that new employees did not have a solid understanding of the industrial distribution industry, while 52.8 percent said new hires did not understand their role to the success of the organization.

The industry is searching for candidates who can write, think critically and solve complicated problems in applying basic technology for industry. The Industrial Careers Pathway is committed to meeting the need for a skilled industrial distribution workforce for today and tomorrow by building awareness of career opportunities among the future workforce.  Learn more at www.industrialcareerspathway.org. 

About NAW Institute for Distribution Excellence
NAW Institute for Distribution Excellence conducts research into strategic management issues affecting the wholesale distribution industry. The organization’s research is conducted with best practice wholesaler-distributors, and publishes leading-edge research studies with practical application for wholesale distribution firms of all sizes and across all lines of trade.

About Industrial Careers Pathway®

Industrial Careers Pathway is a multifaceted North American workforce initiative supported by an alliance of industry associations that addresses the need for a skilled industrial distribution and manufacturing sales and customer service workforce today and tomorrow. ICP links students and job seekers to career paths in industrial distribution and manufacturing through partnerships with local educators and employers.   For more information about efforts being made by ICP to address the need for a skilled industrial distribution workforce, visit www.industrialcareerspathway.org or contact ICP at info@industrialcareerspathway.org or +1.312.516.2100.     



[1] More than half of survey respondents indicated between 33 percent and 39 percent of their workforce would be eligible for retirement within five years, with 16-20 percent indicating 13 percent of their employees would retire within five years.

Friday, March 9, 2012

Planning Skills for the Industrial Distributor



Often how we see ourselves and reality
are two different things.
I place planning at the top of my list for the effective salesperson.  No matter how talented you may be – it’s impossible to reach your peak performance level.  This is especially true in the new world of team selling.  Distributor Specialists, applications support people, customer service representatives and supply partner sales teams must be coordinated.  Whether you think of the salesperson as the “leader of the pack”, “conductor of the orchestra”, or just a person trying to maximize their sales revenue, strong planning is more critical than ever.  But for some reason, it often falls through the cracks of skills measurement.  

I have been on joint sales calls where the salesperson had not planned.  He had no demo, no literature, and no real purpose for the call.  When I asked what we were going to talk to the customer about, he rifled through his trunk to find a bruised and bent piece of product literature.   Another time, I arrived at a distributor location for a day of calls.  I arrived early.  And as I sat in the conference room returning a few of my own calls, I could hear the sales person frantically calling some of his accounts.  My surprise was he was trying to find an audience for the morning’s calls.  Our appointment had been set weeks ahead.  He had over a month to plan out the day – yet nothing had been scheduled.  He had planned to schedule. 

A few of you are thinking; I set appointments, I bring demos and I generally follow up with my accounts on known problems and open projects.  I have a plan.  Let me push the envelope just a bit further.

Think about your best account – the one you most likely call on or touch on a regular basis.  What is the plan for your next call?  If you are a planner, you most likely have that nailed.  Now project yourself into the future.  What is your plan for the coming six months?  What steps will allow you to gage your success?  The best sales people have a plan that extends into next year (even when the calendar isn’t tilted toward December 15th).

As I indicated earlier, just like the judges at the Olympic Diving Contest, I score on a scale of 1-to-10.  Here is a template to score your own skills.  Give yourself a number closest to the point described below.

The scale:

1 – You plan is dropping by a few accounts tomorrow to see who is available.

3 – Someone is expecting you tomorrow morning and you are thinking about what to talk about.

5 – Multiple appointments set for the rest of the week

7 – Your calendar is filled with appointments for you as well as appointments you have set for others on your team (Specialists, Management, important suppliers).

10 – You have a multi-step strategy with time milestones set for all of your key accounts and products.


We would love to hear how you score yourself.  Drop us an email and we will share a couple more thoughts on planning with you.

Truth in Numbers

It seems we work in a world obsessed with numbers: measurements on schematics, gross margin percentages, sales quotas, minutes on our phones, days until vacation, etc. I admit it, I love them too! After all, numbers give us concrete evidence of where we are thriving. They also let us know when improvements are necessary. So often we think we’re producing at one level, but when we see it on paper, reality sets in. The same holds true when it comes to evaluating our business relationships. Whether you’re trying to put value on an employee, a distributor, or a manufacturer, it’s important to have a definitive, universal scale for each category. Over the next few months, I’ll be posting articles each week with this in mind. The series will start with self-evaluation. It’s hard to grade anyone else, if you can’t be honest about your own performance! I look forward to reading your thoughts and how you use evaluations in your own organization!