Tuesday, December 23, 2014

Knowledge-based Distributors Save Santa

As we start our tale, we find ourselves in the 130 year old cottage which serves as the office of River Heights Consulting.  Frank Hurtte, the organization’s founder, seems totally absorbed in his work.  Glancing around the office, we see several mementos of Hurtte’s long association with Kris Kringle and the Santa Organization.  There’s a picture of Kringle carrying his legendary bag.  The likeness of Kris keeling in front of an ancient manger is prominently displayed near a time worn photo of a much younger Frank seated on Kris’ lap. 

The phone rings; the answer is a seasonal combination of Christmas Cheer and morning routine.  But in a flash, we see Hurtte spew some of his coffee and snap to attention.  The conversation goes like this:

FH:  River Heights Consulting, Frank Hurtte speaking.

Elf:  Frank, this is Elf Alabaster Snowball.  You don’t know me, but I know all about you, including that pouting incident back in 1962.  Kris Kringle and Santa have brought you lots of goodies over the years, like that Red Rider BB Gun way back when you were only 10.  And now we need your help.

FH:  Me?  I’m just a distributor guy.  How can I possibly help Santa and all my friends at the North Pole?

Elf:  It’s a long story, but Santa Enterprises needs some of that special Knowledge-based Distributor magic you are so fond of sharing with others.  Do you think distributors can help save Christmas?

For the next few moments, Elf Alabaster outlined the issues faced with parts shortages, machine down situations and the problems Santa’s kitchen faced with their spinach flavored sugar plums.  As a note taker, Frank listened, occasionally nodded in agreement and took copious notes.  Finally, Elf Alabaster Snowball asked, “Well, with all these issues, do you think distributors can save Christmas?”

Ever the consultant, Hurtte asked a few more poignant questions.  Logistics, delivery times and calculations rolled off his tongue like “On Comet, On Cupid, On Blitzen” out of Kris Kringle while driving the sleigh.  Working through a few issues on getting the right guys to Santa’s North Pole Headquarters and a couple thoughts on working special arrangements on territorial allowances, a plan was set.

River Heights Consulting and Santa Enterprises handpicked the top knowledge-based distributors in all the land.  Selecting on a basis of product knowledge, technical support, maintaining the right inventory, dedication to customer service and status on the naughty or nice list, an even dozen folks were plucked from a wide arrangement variety of wholesale lines of trade.  There were Salespeople, a couple of Product Specialists, a Customer Service Representative and Kris Kringle’s old pal Jimmy from the warehouse.

Because the North Pole is hard to get to by car, Santa Enterprises dispatched a team of reindeer to quickly shuttle each of these folks to the North Pole.  Time was of the essence.  The pressure was high, but this group has handled many a customer emergency.  Downtime, troubleshooting, part shortages, factory “work-arounds” and “making things happen” are part of the distributor skillset.  And while each member of this group could list hundreds of instances where they “saved the day.” none had ever saved such an important day.

Once at the North Pole, they met briefly with Kris and his team.  Everyone provided helpful information to describe their Elfian Department’s issues.  Well, almost everyone.  Elf Pricedrop was conspicuously absent from the meeting.  None of the other Elves said anything, instead they quickly shuttled the distributor team to the problem spots.

Quick as a wink, the group was making phone calls,
adjusting dials and pulling up drawings for alternative products on their iPads.  The hustle and bustle created by the distributor folks made the tap, tap, tap of elfin hammers in the toy shop seem like silence.  Suggestions were made, improvements set and emergency shipments lined up back in distributor warehouses around the country. 

To speed up the process, Santa put their fabled magic delivery team to work; this time bringing parts and pieces from distributors to the North Pole.  And, things started to happen.  Quickly.

With less than a day to go before Christmas, it was looking like Santa Enterprise’s reputation would be saved.  Christmas would go on.  Kris Kringle was once again jolly and joking. 

Because time was so short, Kris Kringle decided to write a very short letter to all the good folks in Distributor Land. 

“Santa can’t say or do enough to express the feeling of gratitude we have for the nice folks at the distributors who helped us save Christmas.  None of you want recognition.  All asked that their names not be shared when I appear on TV.  I and the whole Santa Organization will honor your request.  However, I want you to tell your children and grandchildren that Kris Kringle owes you a debt of gratitude.  And, if they don’t believe the story, just ask them to watch what happens next year when you bring them to see me in the big parade or at the mall.  If they watch closely, they will see me give you a knowing wink and hear me say, Ho, Ho, Ho.” 

Signed Kris Kringle – CEO Santa Enterprises North Pole

Oh because a few of you will ask, here’s the back side on Elf Pricedrop. 

Kris Kringle had one of his “special talks” with Pricedrop.  We think the formerly well-dressed Elf from procurement is starting to learn his lesson about price versus value.  No one is sure if he has changed but everyone likes seeing him work the shovel down at the reindeer barn.

Friday, December 12, 2014

Kris Kringle’s Executive Meeting

Kris called a meeting with his top elves. These were the folks, assuming elves count as folks, who have had centuries of experience filling Santa Enterprises’ magic bags to the brim for all the nice girls and boys. And, as Kris thought back, this team had never missed a single Christmas. Through massive snow storms, candy cane shortages and even the great reindeer food shortage of 1954, they always came through; never, ever missing a single good little boy or girl.

Even though he was madder than a wet reindeer, Kris sent a politely worded invitation to the new elfin expert down in procurement, a certain Elf Pricedrop.

Please be aware Santa Enterprises hadn’t held a meeting in December for eons. Kris believed in Santa. Under his magically jolly leadership style, the top elf in every workshop was empowered to make their own decisions. These elves believed in Santa too. This is the busiest of seasons, so no one was taking this gathering of top elves lightly.

The meeting was scheduled for 8:15 North Pole Time. And as the various elf types started entering the big conference room, the mood was different than normal. And, while the room was dressed in tinsel, garland and glistening lights, the atmosphere seemed a lot less than cheery and bright. Even Elf Buddy, the jokester of the group, wore a solemn look. The ever present plate of warm cookies, milk and hot cocoa sat on a side table, but not even Elf Mary, who leads up Mrs. Kringle’s kitchen, nibbled on one.

At promptly 8:14, Kris Kringle and his faithful companion Rudolf entered the room. Even Kris’ entrance seemed off the norm. Generally, Kris arrived at the meetings early. The Kringle approach called for elfin small talk, sharing a hot cup of cocoa and the bright light of Christmas time anticipation. One elf was fond of saying, Kris’ magical presence filled the room like a barrel full of Ho, Ho, Hos. But not this time.

As the big old-time grandfather clock struck 8:15, Kris stood up and began to address the group. He said, “After nearly two thousand years of operation, we face the biggest crisis ever faced by Santa Enterprises. We are critically short on parts, a couple of our toy making machines are completely broken, and we are less than two weeks from Christmas Eve. We stand to single-handedly ruin Christmas for tens of thousands of good girls and boys.”

Instead of punctuating each sentence with a “Ho, Ho, Ho,” all the elves could detect a strange crack and a touch of a tear forming just above Kris’s big bushy white beard. But, Kris continued onward, “Our list of the Nice Boys and Girls is 
massive. These kids have been on their very best behavior and all of them expect Santa to deliver their packages on time. You are my most trusted elves. Together we have solved some mighty big problems. We can’t let this Christmas Season go down as the year Santa didn’t show up. I am opening the floor for suggestions. What can we do?”

Almost immediately, the new elf from procurement, we’ll call him Elf Pricedrop jumped from his chair, stood up, primped his fancy tie and adjusted his finely tailored jacket. “We’ve made a lot of major improvements in the way we do things. We are doing business with some of the top suppliers on the planet. The work my team has streamlined the way we handle our orders. We’ve saved Santa a bundle. Why, aren’t the rest of you holding up your end of the bargain?” he complained.

Based on the look of the rest of the top elves, Elf Pricedrop’s words were going over like a North Pole snowball to the face. Kris Kringle asked for more feedback.

Elf Evergreen, whose record at the Major Toy Shop was legendary said, “Our toy train machine has been broken or running at half speed since the end of October. We’ve called our new supplier a dozen times and the best they can do is email us an updated user’s manual. The shipment of wheels for the toy cars was supposed to be here two weeks ago. The vendor says they are working on getting us some, but not until two days after Christmas. And the new internet-based guy you procurement types have sending us red paint for the fire trucks isn’t answering emails or the phone.”

Elf Mary Sugardrop from Mrs. Kringle’s kitchen joined the discussion, “The candy making has ground to a halt because the sugar plums that give everything a unique Christmas-time flavor has a strong hint of spinach. We wouldn’t even send this stuff out to the naughty list.”

Elf Pricedrop stiffened in his chair as one by one the elves doing the real work listed issues with his new crop of low cost and efficient suppliers. Finally, he said, “Every new system has a few bugs to work out. We have saved so much money on this we can afford experts to fix things and life will be good…” But before he could finish, Kris waived his magical hand. Silence. Then the big guy spoke:

“We don’t have time to fix things. We can’t postpone Christmas. When Christmas Eve rolls around, it will be now or never. And, we’re not going to disappoint anyone. Not while I still have a single ounce of life left in this formerly jolly body. Failure is not an option. Anybody else got an idea?”

The only elf yet to talk was Elf Alabaster Snowball. Unlike the other elves present, his work didn’t revolve around making toys. His department maintained the famous Naughty and Nice list. He was both the most stern and jolliest of all the elves. Good girls and boys brought out the jolly side. And, well let’s just say, the naughty list put him in a pretty nasty state of mind. When he spoke, the other elves listened. Here’s what he said:

“I’ve been reading a lot about knowledge-based distributors. I kind of stumbled onto them because I like to keep an eye on that Frank Hurtte guy. You know, according to our records, he has been on the good side of the naughty and nice list for over 50 years. And, if you skip over that little pouting spree back in 1962, he would have an almost perfect record. According to him, solution based distributors have some magic of their own.”

Elf Pricedrop protested, “I believe in the old motto, eliminate the middleman and save. We’ve worked hard…” Once more Kris Kringle stopped him dead in his tracks and said. “I believe in Santa. You can stuff those old B-school sayings in a sock full of lumpy coal. We’ve got to save Christmas, how do we get these guys to help? Get Frank Hurtte on the line…”

A note from the author: I told you I always turned out to be the hero of the story. I can imagine some of you were shocked to learn that I have been on the nice list for a half century. What can I say, Santa and I go way back. Join us next week when we introduce the real heroes of the story – Distributors just like you! Maybe Santa Enterprises will bring you something nice; regardless of your behavior.

Friday, December 5, 2014

Purchasing Problems at the Pole

'Tis the season. When my daughter was young, I loved telling her stories. After a while, I got tired of the classic princes kisses frog and lives happily ever after kind of tale. If I had to make them up, why not make the sales guy the hero. For the next several years, my daughter heard a collection of tales where bad guys in business suits were fed to hungry dragons and purchasing types turned into frogs. This year we are determined to spin such a tale. Trust me, there will be a happy ending.

Talk about seasonal surges, Santa’s North Pole Enterprises experiences the largest single seasonal surge in any venture, anywhere. It calls for dedication, it demands expertise and it demands for some really fancy footwork during the last days of December. As President and CEO, Kris Kringle has seen some changes. Quoting him directly: “Back in the old days, most of the goodies we delivered to the good boys and girls were made of wood. We simply chopped down a few trees, brought in the elves and got busy. Our only problem came with dull knives and handling all the wood chips.” But things have changed.

The assortment of requests from today’s children runs the gamut of modern manufacturing technology. Christmas requests include everything from cute little dolls and toy soldiers, which are mostly hand crafted, to elaborate plastic works and electronics. The parts and pieces to make all of these grand presents come from literally all over the world. Kris and his Santa Enterprise team learned the value of working with distributors back when grandma and grandpa were kids. For decades, Santa Enterprises would select the very best distributor salespeople and magically pull them to the North Pole Headquarters to work on plans for making the big day go smoothly. That is until last year.

Allow us to relate the story.

Kris and Ms. Kringle were taking a few days off in January. To protect his privacy, we won’t disclose the exact location. Instead let’s just say, there are warm beaches and the natives often ask, “Would you like another taco Senor Santa?” Anyway, Kris and misses are out on the beach and when a slick talking guy with a shark skin suit and a B-School background approaches. After a few minutes, Kris is hearing the power of aggressive purchasing and getting an earful of cost savings data.

Quick as a wink, and without looking into a couple of decades old naughty and nice lists, Kris decides to bring in a new style of vendor management. Once onboard at the North Pole, the new Elf in charge of purchasing launches into massive cost analysis and sets up a new plan for buying supplies. Using a moto called “Hey, we’re helping Santa,” the North Pole goes on a cost cutting spree. Reverse auctions uncover a whole new rash of untested suppliers with low price and flimsy service. Banners wave at every North Pole workshop, each one carrying a bigger savings claim. But, the workers were noticing a change.

The elves at the woodshop got wood that wouldn’t carve. The doll shop reported cute little dollies with no eyes and two left hands. They held meetings, the big shot elf in purchasing spouted larger savings and the new suppliers promised they would get better. For a while even Kris was nodding along with all the propaganda.

Then the cold winds of winter started whipping through the North Pole. The countdown to Christmas Eve had hit twenty days. Santa Enterprises was in a pinch. The shipments from the new batch of suppliers were running a “little late.” Looking over the situation, Kris realized a little late would have him delivering toys sometime in mid-January. Christmas Eve really could turn into a “Silent Night.” The Santa reputation for delivering the goodies to nice girls and boys would be gone, gone, gone; price savings or not.

Kris was hot. And, when a jolly guy like him is upset, people pay close attention.

Stay tuned…

Wednesday, December 3, 2014

The Distributor’s Book of Gratitude

Okay, so I’m not the kind of person who generally talks a lot about the soft and mushy side of life.  But, I assure you a couple of micros below this battle-hardened exterior of kryptonite lays a mushy
guy who is touched by the tearjerker movies on the Hallmark Channel.

And even though we celebrated Thanksgiving last week, we continue to be in a season of giving thanks.  We’re supposed to stop our daily chores and thank our Creator for all that is good in our world.  I have an endless list of blessings; health, home, family, friends, and so much more.  But I wanted to give you just a quick list of four things we distributors should also be thankful for today:

Only a Knowledge-based Distributor can provide proactive recommendations to our customers.
Not Amazon.  Not the internet.

Only a Knowledge-based Distributor can gather information from multiple sources within the customer and develop conclusion that extend in to the future.

Only a Knowledge-based Distributor can provide individualized training based on the customer situation.

Only a Knowledge-based Distributor identifies and brings new technology to customers who are too engaged to do their own research.

And back to the mushy stuff, know that I am grateful for you, my readers, who challenge me, encourage me, and often inspire me.

Friday, November 14, 2014

Strategic Account Planning Part 9

Partners, Allies, Friends and Money

No man is an island, it takes a village; heck even the Lone Ranger had Tonto, Bevis has Butt-head and, stretching things to the limit of reason, Ren, the insanely psychotic Chihuahua plays off a dimwitted cat sidekick named “Stimpy” (Stimpson J. Cat). There is power in teams.

We’ve discovered in today’s selling environment most salespeople work as part of a team. While the structure of the team varies based on the industry, organization and technologies sold, the basic framework is almost always the same. The salesperson acts as the leader orchestrating longer term strategy and individual tactical moves. When it works, the beauty of the concept brings a tear to my eyes. On the flip side, a dysfunctional team is a train wreck looking for a place to happen.

We are going to break this subject into two sections:
• Other employees from within your own organization
• Supply-partners and various vendors

While each category is part of the salesperson’s team, the groups rarely behave the same and often need a different bit of thought to engage them into an account-centric strategic plan.

Allow me to quickly digress and remind you, we are engaged in strategic planning for individual accounts. For the sake of brevity, we’ll skip over the warm and fuzzy rich personal reward of developing a team, fast forward past the psycho-babble of humans being tribal beings and get straight to how we can grow specific accounts by focusing a group of people toward achieving results.

Others from within your organization

This diverse group can consist of inside sales people, crib specialists, customer service reps, product specialists and delivery drivers, all the way to managers and owners. They all have defined roles in your company, they are probably pretty busy. But in building a strategic plan you determine how they might be leveraged to bolster your position.

Let’s remember: they are already busy, you are busy. We can’t do this for every account; time just doesn’t allow it. Instead (going back to Strategic Planning: Part Four), we must determine a select few accounts where our efforts can make the greatest difference. We are targeting and sharply focusing efforts. Pick too many and the focus is lost. Selecting the targets is entirely your responsibility.

Share the accounts covered by a strategic plan with your co-workers. Connecting your team to your plans for the future achieves three things. First, it allows them to provide feedback from a different point of view. The team may recognize an important point that you missed. Secondly, they can often provide a second (third, fourth…) set of eyes. They may see opportunities, hear about competitive activity or learn of new technology shifts during their normal course of business. Lastly, they may be a key ingredient in moving the opportunity forward. And, you want them to understand the nature and steps of your account-centric strategic plan.

Of special note is the need for management buy in. If you work for a progressive company, there is a good chance management will be all over the concept of driving individualized strategic plans at critical top target account. If not, you may need to carefully lay out your plan including the need for the use of occasional special resources from the rest of your team. We feel this is so important that we will devote a future chapter to the topic. For now, make sure you have this important base covered.

Set up regular updates on the progress of your plan. The plan belongs to you. Because, you think about it regularly, it’s top of mind. You review progress, fine tune activities and heed changes in customer direction. This is most likely not the case for your team. And, it’s your job as the plan’s owner and champion to regularly review progress, special events and needs for timely support by the team.

We like plans which detail activities with descriptions of the outcome and time lines. Sharing a mutual calendar for the account allows all those involved to fit required actions into their own schedule. If you have the ability to share a flow chart of the actions that’s all the better.
A best practice of working with a team comes via the some
sort of “huddle session” where everyone gathers to talk about the plan. Typically, these can be done in a few minutes before normal sales meetings. These meetings need not be long or complicated but a quick agenda and notes shared by the salesperson typically pay off by reinforcing the difference between this meeting and the typical account banter which generally takes place. Experience dictates a little formality pulls people further into the process.

Supply Partners and Vendors
For our distributor readers this part is intuitive. For others let me explain. Sometimes your products and services are not developed, manufactured or delivered 100% by your own company. These folks don’t work for your organization, but they have a vested interest in the outcome. Your success becomes their success, maybe. It depends on how you handle the situation.

A note from the author: Throughout this section I will refer to Supply-partners and Vendors as if they were synonyms. I believe there is a difference. Supply-partners see your success as an extension of their own and are more likely to take part in these plans. Vendors on the other hand just allow you to resell their products and services. Think about the difference but test the Vendors; some of them may be willing to take part in your plan.

For the next few moments let’s frame the situation. The Supply-partner gains if you bring them new business. Moving business from one channel, group or department to another creates little, if any, value. Similarly, unauthorized sales of products brought in from another territory will not bring warmth to the local Vendor sale guy’s heart.

However, the new business snatched from the grasp of a hated competitor is an all-around good deal. Create a new application for their product and they will love you. Solve a problem that locks the Supply-partner into the customer forever and you will be a long time hero.

The important point is this: you have to add some value to the Vendor’s effort to pull them into your plan. With these points well understood, we can stroll through pulling these people into our strategic plan.

Unlike members of your team that work for your organization, these folks often must be sold on the value you can provide. This is especially true if your organization is not their favorite partner in the market place.

Information sharing is critical to gaining buy in from this group. Unlike your own team where there is no need to outline “what’s in it for them”, this group needs to understand how developing the account can create value for their organization.

Topics to explore might be:
• The strategic importance of the customer to the market served.
• The upside growth for their products if the account can be properly controlled.
• The potential future projects or applications available for their products.
• Competitors currently positioned and the opportunity to replace them.
• Needs for pricing support to push out a competitor.

In a world where we often find multiple channels to market for larger manufacturers, bringing the Vendor into your plan actually blocks interference from competing distributors or channels to market. Make sure you cover one important fact, you are about to create value for the Supplier and you need to be paid for your efforts. Protecting your selling work is critically important.

Once the Vendor has shown support for your plan (and not until) outline your longer range strategic plan. Ask how the Supplier could assist you. Often, your plan can become part of their own plan. Whenever possible, list specific activities on behalf of the Vendor along with completion dates.

When the Suppler (especially the case of those with close relationship to you and your company) demonstrates an interest in being part of the total picture, it may make sense to include them in discussions with your own internal team.

Leading, Directing, Orchestrating and Managing the Activities of Others (both groups)
Long ago I had a mentor who often stated:
“As the salesperson you own the customer. Everybody else has responsibilities that touch up against the customer. They can make a positive impression or they can destroy the customer’s potential to buy. When others screw up at your customer, they get chastised. But if the customer is lost, you get 100% of the blame. And because of that, you need to coach, handle, supervise and direct all of the others touching your account. And, sometimes doing such is a contact sport.”

Let me confess, these were scary words for a 29 year old guy with a wife, freshly minted mortgage and baby on the way. The list of people touching my customer-base was huge. None of them worked for me. And, most of them had more industry experience than I possessed at the time. All that, and I saw that a couple of miss communications could cost me commission dollars, future promotions and maybe even my career if things really crashed. Failure was not an option.

Taking these words to heart, I noticed a few things that worked. Here is my short list:
• The team needs to understand why success is likely. You have already spent a great deal of time understanding the account, gathering data, building alliances with contacts within the account. You are definitely not bringing them into something half-baked and iffy. Your plan is the “real deal” and they are joining a winning team.
• Everyone touching the account needs to know a bit of the “back story”, things like customer politics, our current competitive situation and how the opportunity had come into view.
• Any activity assigned to a group of people rarely gets done without some personal intervention. It is always better to ask for one person to complete the task.
• Activities assigned to others need to have dates for completion attached.
• Over communicate. A number of short huddle sessions keeps your team engaged in your plan.
• Avoid long periods without an account update. Sometimes carrying out a real strategic plan takes 10-12 months. Even if there are no milestones met or signs of success, let the team know the plan is still pushing forward.
• Sometimes, members of your team need to be held accountable for poor performance or lack of follow through. Don’t be afraid to speak forcibly and directly. Make them understand how their work impacts the whole plan.
• Share success with the group. Make everyone feel like their efforts were critical to the total success.

Wrapping all this up…
Building a team accelerates your success. Time is a resource; one that cannot be replenished. Pulling others into your plan multiplies your time. Further, teams built for one account can quickly be morphed to address others. Salespeople who pull this off once are seen as the proverbial rain maker. And you are set to share the gains.

Finally, we feel so strongly on the need to actively engage management, that we are devoting a whole section to the top. Stay tuned for our discussion.

Thursday, October 30, 2014

Strategic Account Planning Part 8

Follow the Money

In an earlier edition, we talked about understanding the opportunity presented by an account. Let’s push this thought further. Way back in the late 70s, there was a movie called All the President’s Men that popularized the catch-phrase, “follow the money.” And while the movie put a negative stench on the phrase, for sales types, it comes with a great connotation; almost like a new car smell. So with this thought, hop in and join me as we… follow the money.

The truth is most sales people follow technology, applications, customer needs and pursue friendly contacts. Salespeople rarely follow the funds. I can’t help but wonder if a lot of guys actually feel like their work is cheapened by the exchanging of money. Just think back about how many times you have heard a salesperson lament:
“The proposal was perfect. The product was everything the customer wanted. We were the best supplier on the planet. But, the customer didn’t have any funding.”

Think about this for a moment. Selling time, pre-sale research, product specialists, engineering resources and a ton of money spins down the proverbial drain. And, it all could have been avoided by asking a couple of well selected questions/phrases.
Here are six easy examples:
1. How does your company justify projects like this one?
2. Does the whole thing go through a process or committee?
3. What kind of budget do you have for something like this? I want to make sure you get the best deal for your money and understanding the budget helps me focus our work.
4. What are the financial issue driving this decision? I want to better understand how the need for improvements are discovered.
5. What kind of payback are you looking for to make this project work?
6. Who holds the purse strings for a project like this in your company?

In an earlier article on the whole topic of Strategic Planning for Accounts, we spoke about the need to understand the value you provide to the customer. Following the money is partially a financial play. You focus your attention away from the “stuff” in your catalog and onto the workings of the customer.

An aside from Frank:
This is for those of you who were forced to study Shakespeare as a teenager. Ms. Miller, my 8th grade English teacher, called these a soliloquy. I don’t write many but here goes…
I know your products are spectacularly interesting; they probably have the latest “double-dip-thong” technical wizardry. My guess is your company has a really creative Vision Statement and a trip through your warehouse is like a visit to the top secret NASA Space Lab. But, all of this is only mildly amusing to your customer contact. If the contact happens to be a financial guy (Plant Manager, VP of Operations, Production Manager or somebody else), your product selling scoop bores them to tears. They only want to talk about their company and money. Period! Now back to the article already in progress….

Understanding where the money comes from is important to your credibility but it gives you some old fashion selling advantages as well.

Anticipating the money
We have discovered salespeople who know where the money comes from are able to anticipate its arrival. Knowing about a potential project early is a powerful advantage. The salesperson who knows about the coming “money” can build credibility with people they may have missed in normal calls to the customer. They can research new product advantages. Gain new insights to drive the proposal forward and jockey for better competitive position.

Distributors with non-exclusive supplier lists can use the extra time to lock in on special pricing agreements, strengthen relationships with the supplier and leverage the suppliers for competitive advantage.

Signing off for now…
There are a half dozen other advantages to following the money. Many of these involve nuances in managing your business; things like inventory and staffing. But from a purely selfish selling standpoint, imagine the time advantage of knowing the difference between funded spending and a pie in the sky chase down a rabbit hole. Time is the world’s first unrenewable commodity. There will be times when something has to be pushed aside. Why not put off the unfunded sale?

Monday, October 20, 2014

Strategic Account Planning Part 7

How to Think About Opportunities

At the mere mention of the word opportunity, most sales guys’ nostrils flare, blood pressures spike and pupils dilate. Perhaps left over from some prehistoric caveman fight or flight gene, they seem to check their cognitive skills at the door and wildly rush ahead. Make no mistake, I like aggressive sellers. But, it’s important to take just a moment to fully understand the full story at an account before investing time, effort and company resources.

The full story comes at the crossroads of three very important variables:

1. Real dollars/gross margin potential
2. Estimated time to achieve business success
3. Level of effort involved with getting the business

Dollar/Gross Margin Potential
Many experienced salespeople miss the dollar/gross margin potential of their accounts for number of good reasons. Often, it’s hard to get accurate estimates of the potential in the early stages. This is one of the reasons why we believe that a certain amount of information gathering is important early in the stages of our work in the strategic plan. Generally speaking, as time goes by, the salesperson’s understanding of the precise opportunity involved should improve. Furthermore, most salespeople tend to be wrong in most of their estimates regarding accounts. This has to do with lack of training and oftentimes the level of thought put in to actually forecasting and thinking of the opportunity. I believe that this is an important skill for salespeople in the future. In many instances, we have recommended that sales managers constantly/continually work with their teams to develop forecasting skills. This, of course, plays well into the team’s ability to measure future potential not only in critical/key accounts (where a strategic plan is developed,) but in all accounts under their charge.

A number of ways to gather information around the real customer potential exist. As I like “good examples of bad examples," one of the worst methodologies is via contact with purchasing groups. Our experience dictates purchasing groups are trained to overestimate their purchases in order to improve their negotiating positions for lower unit prices. Some of your customers may have developed a level of partnership where accurate purchasing information is provided, I believe it is wise to approach the information with a degree of skepticism.

One of the best ways to check buying potential is via contrast and comparison against other similar accounts with verified data. This might be a customer of similar size in a similar business. Or, the estimates might come through ratios and similar breakdowns derived from complementary product. It is not uncommon to see rules of thumb which give an overall better understanding of potential.

Let’s think about this rule of thumb idea. Imagine we were selling office supplies. In a time when most companies are using electronic formatting and digital printing, a relationship between paper sold and toner used certainly exists. Similarly, we find relationships between classes of automation devices such as programmable controllers (automation computers) and field sensors (devices to measure variables which are connected to the programmable controller.)

Establishing a best estimate on a product by product basis gives you understanding, not only of your market share within the customer, but also provides a picture of products the customer is not buying from your organization. For many years, I have suggested our clients use a FOCUS (Fraction of Catalog USed) analysis to contrast product groups sold to the customer against one another using the types of relationships explained above.

Timeline to Success
Let’s break away from the money discussion and move on to another important factor; the length of time required to reach personal growth goals. While it might feel good to say that someday we are going to turn this account in to a million dollar deal, some day does not really allow us to do much towards establishing a real strategic plan. Therefore, if we are like many salespeople, judged by our ability to reach certain growth goals in a timely manner, establishing a timeline is important.

Breaking down our progress at specific accounts into easy to manage and measure steps is both strategically and tactically important. In a previous installment of this series, we talked about the importance of gathering customer particular data. This includes information regarding the customer’s own business model, plans for growth, and operation parameters within the business. Certainly, one of our milestone goals might be to complete the gathering of a subset of this information.

Because a portion of the overall strategy at each strategic account is to increase our importance and therefore attract more business, removal and replacement of small competitors might be a reasonable timeline goal. To redefine our goal we might state the plan calls for a tactic of eliminating short line suppliers selling only one or two SKUs to the account. It might single out companies selling via the internet.

Keep in mind the customer’s cost for administering and dealing with a small supplier is quite high; especially in an MRO environment. If you know an approximate cost of managing a purchase order at your customer, this data could be used to justify paying a little more for the same product purchased from you.

Another timeline goal might be the insertion of your company in to the internal processes of the customer. These include activities such as inventory and crib management, parts kitting, building sub-assemblies, or anything else that puts you in a place where you directly mesh with the customer. Instances where your team actually replaces or enhances the customer’s staff strengthens your position and moves you closer to your longer term strategic goal.

Bringing the strength of other member of your own team to the account might also be one of your time-centric milestones. If your company is one of the many using product managers, specialists, or other support people, why not add dates for their introduction and interaction with the customer. Any activity which creates a new connection between your company’s management team and the customer’s top brass is extremely valuable. Hence, date specific milestones should most definitely include connection of your management team.

Remember, this information must be managed with timelines and dates. What we’re looking for is something which allows us to say something like, “By December of next year, we will have accomplished steps one, two and three. Step four will happen by March first.” Each specific and measurable activity moves us closer to the strategically dominant position at the customer.

How Much Effort Will be Required?
One of the questions I like to ask salespeople is how easy or difficult will it be to get this work accomplished? Let’s just think about it for a moment. Some accounts require massive hand holding, others require lots of technical resources and still more are slow to adopt change.

An example which springs to mind is the difference between OEMs and End User Accounts. Many companies select the OEM sector in order to maximize the revenue in early stages without clogging administrative flow with small one piece orders. By focusing their efforts on the early stages of their growth, they build volume without need for extensive infrastructure.

The difference in account types is not just centered on the OEM/End User example. Some organizations have discovered customer segments which best match their own internal organization. It’s definitely worth exploring. Ask yourself, does our company think about different types of customers and the stress and strain put on our organization in the form of shipping, warehousing, logistical, and other value-add types of labor requirements? Why have these targets been established? Generally, going outside of the boundaries of your company’s sweet spot means extra work.

Further, some accounts are noted for poor or at least unmatched business behaviors. It might be safe to say that if your customer is operating with an unstable financial condition, there could be extra work generated in clearing orders through your credit department and/or collecting payment for your efforts.

On a similar note, if a customer has a known propensity for being very price driven, you may discover that it’s really not worth your efforts to constantly be spending time tracking down prices and doing the additional value engineering.

In many ways, what we want to look for is opportunities for which we have a large chance of success with a minimum of extra effort.
Thinking about the balance of effort, time and potential
On first glance, the thought of strategically identifying the properties of an account based on these three categories is daunting. However, failure to recognize their interaction can send a salesperson’s efforts whirling down the drain.

In many instances, the really huge potential available at an account might outweigh the lower scores in the time and effort categories. The truth is most sales guys are charged with a portfolio of accounts. Some possess lower potential but are otherwise easy to convert; the legendary “low hanging fruit” of sales. Others offer massive gains but require a great deal of time to convert or fall out of your organizations sweet spot.

There is no magic bullet one size fits all approach. Suffice it to say, nothing outweighs good judgment. Build a team, bring your company’s leadership team or other experienced sellers into the discussion.

But remember, skipping this step because it is difficult will only hamper your progress.

Friday, October 10, 2014

Strategic Account Planning Part 6

Sometimes, it’s not just what you know, but who you know

...and how you treat them.

I’m sure you’ve heard the saying, “Sometimes, it’s not what you know, but who you know that counts.” Perhaps you’ve been on the wrong end of this old axiom. You did your homework, researched the products, built a killer presentation and followed up with amazing vigor; only to lose an opportunity to someone who already had a relationship with the customer’s top guy. These things happen and sometimes there is really nothing you can do about it. As salespeople, we can either shrug our shoulders and go on about our day, or do something about the situation.

Most salespeople focus on the technical users of their products. For automation sellers, it’s the engineering department. Industrial supply salespeople hit on maintenance. Janitorial and paper product distributor sales folks go to the head of facilities. I could elaborate on the list to nauseating length, but the point is, most frontline sellers focus on a narrow group of contacts at their customer. Strategically, this is a mistake.

Let’s fast forward, your efforts at an account are successful. Your company starts landing some meaningful orders. You find yourself harvesting some big dollars from the account. All of your contacts appreciate the service you provide. Somebody, somewhere is writing some big checks to your organization. Doesn’t it seem strange that you don’t know them?

But then something happens.

A new supplier does an end around and goes straight to the money guys, by-passing all the product knowledge, expert services and other goodies you provide, they deliver a compelling pitch on how they can save your customer money. Suddenly, you’re on the defensive.

Wait, you don’t believe this can happen? Let me reference you to Chapter 5 of The Challenger Sale, where authors Dixon and Adamson go step by step through the selling model W.W. Grainger unleashed on the Industrial sector. Basically, Grainger did an end around and created a new model for MRO purchasing which sent many incumbent salespeople scurrying to save their hard earned business.

Here’s my point, it is impossible to have a solid strategic plan at your account without covering the financial side of the customer.

Every account has a person who is compensated by bottom line profitability. It could be the profitability of the company, a single plant or (as is sometimes the case) a single production line or product category; but somewhere there is a person responsible for money. For the sake of our argument, let’s call this group of people Top Management. Ignoring this potential relationship with the upper level folks borders somewhere between stupidity and travesty in the making.

Here are three things to ponder on dealing with this type of customer contact:

• They are extremely busy. Be prepared to impress with the few minutes they give you.

• Financial folks really don’t understand your product. And, they don’t really care for a tutorial. Instead, they want to understand the financial impact of the ideas, solutions and services you bring to their organizations.

• Most of these people complain their technical people don’t truly understand all of the financial ramifications of their actions. So if you’ve been counting on others to share your high end value story, it probably is not working.

We need to establish a relationship with management. There are a number of strategies for setting up meetings with this type of person. We won’t go into all of them, but here are a couple of my favorites.

Set up an introductory interview
Note the word interview, as opposed to a sales call. In this meeting we quickly introduce ourselves as a supplier of critical goods and services to their organization. Then, launch into a few well selected questions on market conditions affecting their company, difficulty finding technically qualified new people, issues impacting their bottom line and their view of the future. That’s it. No selling, no elaborate product demos, no elaborate mission statement presentations.  

Set up customer satisfaction review

In this instance, you essentially thank the management guy for previous business. Let them know you are working to assist in getting the most bang for their buck and ask for feedback on how the whole thing might have worked better. Again, no selling.

But this is not a "one and done" process.

After these first meetings, find an excuse to arrange a similar type of meeting every few months. Being respectful of their time, these meetings should be short and sweet, with lots of opportunity for the customer’s top brass to give you their feedback. If possible, introduce your organizations leadership to the customer’s high ranking management.

We believe this management level dialog should be an ongoing part of your strategic plan. We’ve shortened the process for the sake of brevity.

Look forward to the details additional items in our upcoming book on strategic plans for accounts.

Friday, October 3, 2014

Strategic Account Planning Part 5

What value do you bring to the customer?

Several months ago, I had the opportunity to “ride along” with what my client described as “one of our promising new sales guys.”  Because I wanted to just get a snapshot of the quality and quantity of this guy’s work, I didn’t do much to brief him on our objectives for the day.  Instead, I emailed him, "I just want to ride along and observe your work."  A few days later he texted coordinates of a greasy spoon where we would slosh down a cup of coffee and brace ourselves for the day.

After a handshake and a few social niceties, we dove into the day ahead.  I was pleased.  He had real live appointments at three accounts and plans to drop by another couple if time allowed.  Demos and literature were well thought out and carefully stored in the back seat of his meticulously clean company car.  He had invested in timely topics to explore with the various people scheduled to see us.  I could easily see why this guy impressed the boss.

During our 30 minute drive to the first appointment, we talked about his company; locations, people, size, products on their line card and lots of sundry details.  These folks were on the move.  About midway into our drive, I asked, “What kind of value to you deliver to the customer?”  The answer was both typical and scarey; something to the effect of, “We have the best service in the whole area.”  And, in spite of a couple of unfocused pushes, the best I could get was “better outside sales”, “great customer service” and a “willingness to listen.”

This is an all too common response.  And it’s epidemic in our industry.  For knowledge-based distributors it could be a fatal flaw.

What should have the sales guy responded?  A detailed list of services (which translate into value) provided to customers would have been a nice start.  Here are a dozen examples:

Policy of stocking emergency inventory to assist customers during emergency and downtime situations.
After hours access to inventory and staff in emergency situations.
Ongoing customer training sessions including one-on-one training for new engineers, maintenance personnel and others.
Ability to handle blanket orders and provide summary billing which drives down the customer’s administrative costs.
Inventory services to assist customers with managing consumable parts.
Willingness to join customer in tri-lateral negotiations to improve costs on high volume purchases.
Salespeople with technical backgrounds capable of assisting in the selection of the best product for the customer’s application.
Highly trained Product Specialists who assist with product concepts and layouts.
Troubleshooting assistance with technical products.
In-house value add group with capabilities to provide complete sub-assemblies ready for installation.
Engineers and Specialists who work with customers to “value engineer” existing designs in search new technology and/or products with better fit with the goal of driving down unit costs.
Willingness to source hard to find parts which drive up administrative costs at the customer.

Is this a complete list?  I doubt it.  Most distributors we work with can come up with 20-50 more things they do to provide value to their customers.  The point is you have something to sell above and beyond the products shipping from your warehouse.  And, a good strategic plan pulls from the list.  Why?  Because not all of your services match up with every customer, but you need to have a very solid grip on what’s available before you can proceed with your plan.

On to the plan…
Way back in the 1970s, Feature/Benefit selling was the rage.  You detailed your product one feature at a time; matching corresponding customer benefits to each feature.  Average performers simply reiterated each feature/benefit set in every customer presentation.  It sounded like the drone of a skipping record.  Great salespeople, on the other hand, worked to only stress the features and benefits of importance to the customer they were speaking to at the time. 

The same thought process must be used when matching your company’s value to each account.  Additionally, care must be taken to closely match values presented to the right person at the account.  For instance, in example 5 above we noted the distributor had the ability to assist the customer in managing consumables.  No doubt, the customer contact charged with the task of inventory may see this service as a potential threat to his job security.  At the same time, a facilities manager concerned with driving performance at that same account may see this as very valuable and as the key to reassigning the inventory guy to something more productive. 

Thinking more deeply...  In most instances, it pays to bring your values to the customer in an order which is well thought out.  Some values are expensive.  Others may actually be less well defined (a nice way of saying "worse") than an incumbent competitor.  This dovetails back to the power of a strategic plan for each major account. 

Where might you easily demonstrate your ability to provide value?  Once that value has been demonstrated, how can you expand into other areas of increasing importance?  Are there competitors which could easily be displaced and their business rolled into your cart?

A final couple of thoughts…
It’s never enough to just provide value.  Get feedback from your customers.  Customer emails detailing how you helped solve a problem open other doors to sales.  Ask the customer if they will send an email you can share with a supplier or your boss.  And even if the customer hesitates to send you some documentation, create your own log of actions, values provided and other milestones at the account.

Never try to introduce multiple values at the same time.  While they do make for a great capabilities presentation, too many choices confuse the customer.  Instead, work to understand the customer’s own priorities.  Gather the kind of data we spoke about in Part 3 of this series.  Ask additional questions and introduce your value; one step at a time.