Wednesday, June 26, 2013

The New Salesman: Square Peg, Round Hole


My assistant came back to the office today with a distinct look of disgust.  Apparently she did some last minute dress shopping over lunch.  She went on to explain how infuriating it is when a salesperson tries to cram a “hideous mess of a dress” on to anyone willing to buy.  She further explained how she had met this salesperson before and was given a song and dance about how great an outfit looked, when clearly it was just meant for a mannequin.  This trip, she tried to avoid this salesperson and with good reason.  While I laughed at her fitting room trials, I couldn’t help but think about how it’s not just mall employees who push their way in for a buck.

Tips for the New Guy – Don’t sell a square peg for a round hole
Want to ruin your career?  Just establish a reputation as a guy who “force fits” the wrong product into customer applications. Customers will never forget or forgive you for it. 

I call the practice selling square pegs for round holes. Allow me to share a war story.  Join me as we hop into Mr. Peabody’s WayBack Time Machine.  We’ll set the dials to the 1980s. 

One of my friends was working for an automation company.
  The company had just launched a brand-new product – but it was a dog.  The technology was too little and too late for the market.  Nearly everyone-- customers, competition and salespeople, recognized the issues.  But the upper management of the company insisted the product could be sold.  When it didn’t sell, they instituted a large ($1,000 back when this was a lot of money) bonus for anyone making a sale.

My friend leveraged all the trust one of his customers put in him to force the product into their operation.  He collected the bonus check, and prepared to live happily ever after.   But problems soon showed their ugly face.    

The product didn’t work in the application.  The customer (and my friend) worked weeks trying to get some level of suitable operation.  But again, it was the wrong product.  And, even though networking wasn’t the same back then as it is today (no internet, no users groups, no on-line forums), the customer soon came to realize others knew about the problem well before their purchase.

They felt burned, ripped off and abused.  And, my friend was caught in a terrible position.  He had sacrificed the customer’s trust for a hand full of bucks.  He sold a square peg for a round hole.  Branded: My friend was permanently branded as a guy not to be trusted. 

Here are three rules to follow in avoiding the label
Rule One - If your company doesn’t provide the right solution to the customer’s problem, don’t try to force fit a product into the wrong application.

If your product doesn’t work well in a hot environment, explain to the customer why you think this time you need to NOT make the sale.  Doing this demonstrates your integrity and adds to your reputation as a trusted adviser. 

If you know a competitor has the right product, offer to assist the customer in selecting the correct solution.  If multiple competitors offer an appropriate solution, I recommend directing the customer to the competitor with the lowest overall competitive threat.  Online sellers fit this bill, because they rarely push for other business.  Mostly, they simply process the order.  Some sellers have even offered to purchase the product
and pass it along to their customer at cost.  Either way, you send a strong message to your customer – you are a guy who can be trusted.
Rule Two – If no real solution exists, explain the risks of using your product.

Sometimes, no real solution exists.  Every now and then we run across an application where no real solution exists.  This is a rare occurrence but it does happen. 

Your solution may work, but may not last very long.  The product in your catalog may need to be modified to work.  There are probably risks.  Make certain the customer understand what might happen and that you are only making the suggestion because you can think of no other solutions.  The customer wins and you might still make a sale.

Rule Three – Your solution doesn’t have to be the best on the planet, if it works for the customer.

This whole “square peg -- round hole” issue confuses many new sellers.  They wonder if their products and solutions must be the absolute best on the planet.  The answer is no.  If your product works for the customer and solves their problem, it works. 

There may be other products that run faster, cost a little less, and have a sexier connection, but solving problems is your stock in trade.  The competitor’s product may run for a million operations, but if the application calls for 10,000 cycles and yours will work.  You have done the job.


A final word…
There are a few sales managers out there who are looking for salespeople to “force fit” their company’s offering everywhere.  Most times, it comes as a lapse in judgment.  On rare occasions, it’s a deeply seated case of machismo taken to extreme.

My friend’s management team tried to slam products.  They offered outrageous rewards.  My friend bought into the program.  He got his bonus but lost a more valuable thing – customer trust.


When your manager insists you sell the wrong product, get clarification.  Are you missing something?  Is your manager missing something?  If it’s the macho “I can sell anything to anybody” issue, we need to talk.  Give us a call.

Are you a believer in the advantages of having Distributor Specialists?  See why your bottom line should be a big believer at Amazon.com.

Monday, June 17, 2013

InTech Magazine: People are the Right Stuff




This month the fine folks at InTech Magazine were kind enough to ask me to write an editorial on the automation market.  My guess is they really wanted someone who was “long in the tooth” to comment on the cavalcade of changes in product technology – "a back in my day the PLCs ran on kerosene" sort of piece.  

Being a distribution guy, I penned “Selecting an Automation Distributor?  It’s about finding the right stuff”.  In the automation world, over 89% of the customers buy from distributors.  Yet many
are tossing dimes down the drain because they aren’t tapping into the right distributor services. 
Catch us on Lulu.com

In the article I charged customers with asking their distributors these questions:
·         What can your organization do to improve the uptime of my facility?
·         Do you have a plan to help us drive down our cost of doing business?
·         Do you offer one-on-one training for our engineers, technicians, and electricians?
·         How will my support calls be handled? What are the hours of operation?

I went on to say…
The “distribution” of product has not been prominently mentioned anywhere. In today’s world, we have plenty of really good products, quality is a given, and logistics channels move them from one corner of the continent to another in hours. Today, people are the right stuff. If distributors are not actively involved in enabling your people, they are not doing their job.


The whole article is posted here:

Wednesday, June 12, 2013

The New Salesman and the Shiny New Catalog


In the age of Star Wars for Distributor Sales, it’s still the Sticker Wars


Don't let this be the last impression you
left on your customer
As strange as it may seem, in the age of the internet, iPads, smartphones, and  digital catalogs, best practices in distributor sales still rely on some very “old school” selling methods.  Those of you who have been with us a while may find this contrary to our article on Technology Killing the Dinosaurs, so before you write me off as suffering from premature dementia, let me explain. 


In sales, it’s not about the seller.  You can be tech savvy and proud of it, but customer comfort is king.  For new salespeople, this is perplexing.  You maneuver through the e-catalogs of at Amazon.com.  You carry your life on a tablet – calendar, catalogs, contacts, kid’s pictures the whole shooting match.  Regardless of your electronic life, you have to understand many of our customers are still using comfortable old methods while making buying decisions.

These customers have access to the internet.  They may have dozens of electronic brochures loaded on their computers.  However, when purchases are made they return to tried and true ways of getting things done.  And this brings us to the paper catalog.


Every engineering department, maintenance group or contractor on the planet still maintains a library of product catalogs.  Even though a good many turn to the internet for some level of product selection, they ultimately end up with a hard catalog for the final stages of their decision making.  We’ll explore.

I once made the mistake of replacing the beat up and grease covered catalog of a well-respected plant maintenance engineer.  I mean this thing was a health hazard.   It was several years out of date, the pages were dirty.  Many showed the marks of coffee spills and cutting fluid drippings garnered from repeated trips through the plant.  I replaced it with a shiny new version. Later, after receiving a world class butt chewing, I learned the old catalog had notes and references to the machines where the parts where used.  In addition, the engineer had taken the time to mark which parts were kept in stock by my own company.  One other thing, the old catalog had a sticker with our phone number, after hour’s line and the name of his favorite inside person.  Ouch.
Most important to my income was the sticker.  I had neglected to add this because I thought it smacked of crass commercialism.  The truth is customers are likely to look at the catalog as a tool for directing to the local product source. 
Unless your company happens to be one of the very few that invests heavily in internet presence and search engine optimization, there is a very good likelihood a Google search will not direct the customer to you.  Without a sticker identifying your organization the provider of information, solutions and spare parts, you could find yourself out of luck.

We instruct new salespeople to add a company (or maybe even personal sticker resembling a business card) to the front page of all catalogs and brochures handed to customers.  This allows the customer to follow the product back to you. 

A hard copy catalog allows you to customize your presentation by things like marking (in the catalog) which products you keep in stock and which products need additional lead time.  It also gives you an opportunity to demonstrate your devotion to customer service.  Whether you are working with maintenance departments, OEM engineering groups, dealers or anyone else, a catalog with a prominent sticker is appropriate.

Best Practices with Stickers

Every new piece of literature handed to the customer should bear your sticker.  
This does not address catalogs which the customer has had on the shelf for some time.  I believe that it makes sound business sense to offer to review catalogs for the customer on a periodic basis.  This allows you to ensure that your customer has the latest and greatest version of the hard copied catalog.  BTW, don’t make the mistake I did and throw away the customers favorite catalog.

If competitive distributors (those who sell the same product line as you) have dropped off catalogs bearing their stickers, the catalog review allows you to replace their sticker with your own when appropriate.  (Some savvy marketing managers at aggressive distributors have found that oversized stickers allow for easy replacement of the competitors’ sticker.) 

You should put a date on the sticker.  This allows the customer to know the last time you reviewed the catalogs.  If you’re doing your job, this allows you to further outshine the competition.
Before we go:

I know some of you are scratching your heads in disbelief.  In this age of electronic everything, this whole sticker thing seems a bit antiquated and perhaps a bit bizarre.  Let me assure you that even in the 21st century that paper catalogs and their kissing cousins, the sticker, are alive and well.  Ignore this at your own peril.



Friday, June 7, 2013

More Channel Killing Blunders: Direct Sales Policies


Poorly Planned
Direct Sales Policies

First let me start off with a statement:  I’m not a negative guy.  Just the opposite, I typically walk around with a smile on my face and fill the silent void with sonic sweetness – whistling my own renditions of rock classics.  I am a distributor guy with a special spot in my heart for manufacturers who recognize the power of a well-developed channel.  You can call me Mr. Nice.
The problem is my cerebral serenity is torn, stapled and otherwise mutilated by irate calls from distributors looking to load their emotional baggage on to the consultant guy from Iowa.  Here’s the scoop.  In the Saturday afternoon matinee Westerns of my misspent youth, the hero took a shot of whisky, put a bullet between their teeth and growled “yank it on out”.    In this case the flaming arrow is lodged in the muscular torso of our hero Trust and his faithful companion Cooperation.  

The Poorly Planned Direct Sales Model

In this case, the manufacturer felt they were losing opportunities in the mid-sized OEM market.  To stimulate activities within their own sales team, they offered a major bonus ($10,000) to reps who signed up OEMs who did over $50,000 a year in business.  The plan sounds good on paper.

Unfortunately, the manufacture didn’t clearly define the rules around OEM selection.  OEMs doing business through the distributor channel weren’t clearly identified.  In this case, the manufacturer didn’t have solid Point of Sale data.  (And in retrospect will probably never get POS data anytime soon based on their newly created reputation as a company willing to steal business from their channel partners.) 

Common sense would dictate that salespeople would be instructed to stay away from distributor accounts.  Without challenging the honesty, professionalism or birthright of the reps in play, the manufacturer’s salespeople couldn’t resist the temptation of fast bucks and big bonuses.  There was a mad rush to convert distributor OEMs to direct OEMs, pass go and collect $10,000. 

Any communication with this once valued supplier was shut down immediately.  Any new opportunity was quickly passed to a safer supplier.  Distributor inventories were depleted.  Service levels to customers diminished.  In one instance, the local rep responsible for converting the business was barred from the distributor’s building.


The rest of the story goes like this.  The OEM accounts which had netted the $10,000 bonus were targeted for conversion by the distributor.  In a couple of instances, angry distributor managers paid double commissions to convert the customer to a new brand.  Competitive manufacturers, smelling blood in the water, offered up special pricing and other incentives to assist in the conversions.


In less than two years the manufacturer found themselves staring down a 35% decrease in business.  What’s worse, their distributor channel was in shambles.  Any hope for assistance in fixing the business by way of distributor launches lie in shambles. 

How could this unfortunate situation have been avoided?


First, let’s set the record straight:  regardless of distributor grumbling, there is a place for manufacturer direct business.  However, the rules of engagement must be defined ahead of time.  Any changes to the game plan must be discussed and agreed to well ahead of the plan. 

Best practices in direct business are as follows:

·         There must be some real reason for going direct.  These may be industry dynamics, type of relationship or product mix.

·         If some bit of preexisting business falls outside of the “reason for going direct” there should be a plan for moving the business over to the distributor.

·         If the opportunity grows and/or pricing levels shrink the available margin for compensating the channel, the distributor should be given the opportunity to handle the order at a lower margin level or through a finder’s fee type of commission.

·         The manufacturer’s sales team must be compensated for distributor sales in a way that does not encourage direct business.  This is critically important as best laid plans are often ruined by rogue salespeople working to maximize their commission checks.


A few random thoughts about direct business:

·       Customers have been conditioned to expect lower prices from manufacturers.  Purchasing departments will toss out all kinds of smoke signals about lack of distributor performance, the need for a direct relationship and other bantering about direct relationships.  Once they learn the price is actually more for going direct, these points will disappear.  If you have a performance issue with your distributor deal with it directly, but not by discounting to potential customers.

·        If the vast majority of your business is through distribution, share this information with your channel.  Distributors are impressed if you say, “90% of our business is through authorized distributors.”

·       If you have rogue sales types who has a habit of taking business direct, deal with them quickly.  These people impact the reputation of your company. 

Distribution is a business model not a way of life:


I’m not from the "distribution is a way of life" school of thought.  In spite of tales of mom’s apple pie, the girl next door and all things pure, I don’t believe distributors should be supported for the good of mankind.  Distributors aren’t shady middlemen, hands outstretched, extorting a ransom for doing business in their territory.  Distributors provide a valuable service for their manufacturing partners. 

Wholesale distributors extend credit, build relationships, service existing business and find new applications for their suppliers’ products.  It is cheaper and more effective for manufacturer’s to do business through distributors than to service hundreds of customers. 

Manufacturers cannot assume their sales teams understand these principles.  They need to invest a bit of time and training to assisting their channel facing sales teams in the nuances of the wholesale industry.  It is good for everyone.




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