Monday, March 24, 2014

Demos and Samples – Are your demo units showing up on Pawn Stars?

Demos and Samples – Are your demo units showing up on Pawn Stars?

I believe in demonstrations.  I trust that samples placed in our customer’s hot little hands still plays a part in selling.  In an age of internet everything, one critical difference between the well versed knowledge-based salesperson and the web-only competitor is a customized demonstration.  I love demo units.  But, most distributors do a poor job with demo units.

Why do I say this? 

First, conversations with dozens of distributors reveals massive investments in samples and demos.  It’s not uncommon for even a small sized distributor to have $50,000 tied up in demo equipment.  

Secondly, I have visited the storage spaces where demo units are held.  Many could best be described as massive heaps of scuffed cases, dusty products and mangled wires.  
A good many have been robbed of parts; rendering them all but useless to any sales activity.  Finally, I have seen dust laden demos stashed in demo graveyards, otherwise known as the trunk.  There amongst the golf clubs, leftovers from the last family outing, and other assorted  junk, lays a $500 demo with yesterday’s catsup stains.  If we weren’t talking about large outlays of cash, it would be a great joke. 

Last night, this ugly picture resurfaced in my mind.  After a long day at the River Heights World Headquarters, I got home, plunked my tired carcass down in front of the family room TV and tuned to the History Channel.  I got there just in time to catch the last 15 minutes of Pawn Stars.  Let me give you the rundown. 

We’ll fast forward past the part about the Old Man’s Birthday and zoom by a couple of random shots of the Chumlee’s bumbling jokes.  In walks a guy with a top secret case.   In the cursory pre-meeting interview, he describes something tied to TOP SECRET nuclear detonations.  The case is pristine, unmarked and contains lots of flashing lights and pushbuttons. 

As our hero Rick examines the case, I immediately recognized it as one of the Rockwell Automation Safety Product Demo cases.  We’re not talking about the case that holds the products for customer handling but the full-blown wired case with a fully functional Safety Controller and wired push buttons.  This is a nice bit of sales collateral.  The picture below isn’t the exact model, but it will give you an idea:  

They have posted the video here:

Rick goes through his usual spiel about the background of the item (salesman’s case), but he obviously doesn’t know much about safety guarding.  I plan to stop by and give him an education on my next trip to Vegas.  Watch for my new reality show: Distributors Gone Wild. 

The rather husky “picker” carrying the case wants $500 bucks for it.  Rick tells him no way, the guy quickly drops his price from $500 to $300 then on to a couple of sawbucks.  Rick refuses to buy.  Period.

And while this whole event was mildly amusing to the average folks, I couldn’t help but wonder what would happen the next time a salesperson actually needed the case.  Somewhere, there is a guy searching around his backroom, looking under desks, asking all his buddies where the case was last seen.  Not good.
Without sounding as grumpy as the Old Man, let me ask you a rhetorical question:  Could this have been you? 

Want to find your missing demo case?  Watch the Head Games (Premiering March 20) episode which will repeat on these days and be posted online in 2 weeks.  March 27, 2014 8:30 ET, March 28, 2014 12:30-1:00 AM ET.  

Want to talk about a better way of handling demos?  Call me.

Friday, March 14, 2014

I Have Something to Say!

American Music Icon Willie Nelson is turning 81.  While most octogenarians enjoy hanging out at home and occasionally doting over grandkids, Willie is still way out there; touring, “toking,” and writing songs.  For those of you who happen to be near Austin, Texas, Willie has a big shindig lined up on April 29th to celebrate his birthday.  True Confession:  I love Willie’s music, it comes with growing up in a Texaco Station.  But this isn’t about Mr. Nelson, it’s about you.

Some time ago, I read an interview where Willie said his songs rang true because he really had something to say.  The same concept might be applied to individual sales effort.

If we don’t have something to say, why visit the customer?  This sounds sort of strange.  But, “having something to say” might mean having a plan for the sales call; better still, a strategy for the next three or four calls. 

Why am I writing this?  A couple of days ago, I heard the following two back to back comments.  The first from the head of a customer’s engineering group, the other from a sales person.

Comment One (Engineering Group Manager):
“Sales people have the easiest job on the planet.  Most don’t do much these days.  It seems like they are just dropping by to say, 'don’t forget to call me if you want to buy something.'”

Comment Two (Salesperson with 2 years of experience):
“We are just stopping in to see this customer as a way of showing the flag and letting them know we want their business.”

We have a failure to communicate.  The two statements bounce off one another.  Certainly, the Engineering Group manager’s thoughts were confirmed.  Seemingly many sales types don’t have much to say.  I want to explore why this might be the case.

Back to the Engineering Manager.  During our short time together, he shared the biggest concerns in meeting his departmental goals.  Lack of qualified people, issues with maintaining the proper software to commission his equipment, and understanding the lead time of purchased components weighed heavy on his mind.  What’s more, he told me these juicy details during a 40 minute conversation which was originally scheduled to cover his views on 3-D printing.  I wasn’t selling anything, but if I were a distributor salesperson, all of these could have and would have fallen straight to my wheel house.

On to the sales guy.  Wouldn’t it be nice if he had something to say?  I know some new salespeople struggle for topics.   Creating a list of topics is easy but it does require some thought and planning.  I could spew forth on this topic for hours.  But since I have a self-imposed limit of 750 words, let me give you three often overlooked topics for discussion:

What trade publications does your customer read?
Every lobby in America has a stack of trade publications thrown around the waiting area.  National Hog Farmer, Bulk Transporter and Aviation Week join Foundry Magazine and Coal Prep Magazine on the side tables of mismatched naugahyde chairs throughout our territories.  If your customer advertises in these publications, you have double discussion points.

Has the customer been in the news recently?
The CEOs of companies large and small are often quoted in the press.  Using Google Alerts via you can receive an email (for free) every time your customer is mentioned in any news publication on the planet.  Try following your customer via social media sites like Twitter and LinkedIn.  Some even do product demonstrations on their own YouTube channel.  Let them know you pay attention and want to know more about their business.  

Warranty follow-ups might be a good thing to talk about.
If your customer uses any product on your line card, discussing warranty periods is a natural ice breaker.  You’re not selling, you are servicing.  For some products, the warranty periods are expanding.  Case in point, some sensors and drives have gone from one year to three year warranty periods.  Bringing in this information gives you something important to say.

Finally, last week one rookie sales friend asked me if there was a question I would never use.  The answer is yes.  And, this is a true story.  Way back, during the Regan Administration, I was forced to make calls with a pipe smoking guy who launched every call with the same question:

“You don’t have anything you want to buy this week, do you?”

Mostly…. the answer was no.

Wednesday, March 5, 2014

The Lost Art of Value Engineering

As featured in Industrial Supply Magazine online this month. 

I would like to suggest a new term to the lexicon of selling: value engineering. Today, many of the worst and some of the very best salespeople touch up against value engineering for completely different reasons. Let me elaborate.

The worst of sales guys use a low-end form of value engineering. With no real eye for adding new value for the customer, price is their crutch. Armed with the customer’s bill of materials, the price seller searches for discount opportunities. Sacrificing their own margin and that of their suppliers, they look for ways to provide the same stuff at discount prices. Basically, the customer gets a minor discount at the expense of those who actually came to the party with ideas in the first place. In extreme cases, these low-skill sellers suggest lower quality parts without regard to customer application, life cycle needs or improved performance.

The high-end sellers take a completely different approach. Instead of low-quality, low-end part substitution, they take a whole new look at their customer’s efforts. They weigh labor costs against product costs. They take life cycle needs, cost of installation, speed of deployment, ease of making field changes and other points into their equation. They focus more on function than on acquisition costs.

Real value engineering brings more to the customer. Better designs, easier assembly, faster shipping, easier support, quicker set up, smaller investments in engineering, lower cost of ownership and, quite often, lower cost on some of the parts purchased. And, the value can be measured in real terms, like dollars and cents. All of this easily trumps low-end parts at discount prices.

To put this in perspective, here is the definition of Value Engineering from Wikipedia:

Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.

Value Engineering as a Service
The activities being carried out by some of the worst of our selling colleagues (the substitution of cheaper parts) is purely a sales related activity. And, in my mind, it is a bad one. However, real value engineering is a service; a top-of-the-line service at that.

I believe distributors need to be paid for their services, not only in terms of extra sales and expanded gross margins, but in cash. (If you don’t believe me, read my book, The Distributor's Fee-Based Services Manifesto.) The first step is in professionalizing your service. Talk about your Value Engineering, often. Be able to explain the difference in the service you provide and the parts switching offered by low-end competitors. Measure the effect of your Value Engineering efforts in monetary terms. Share the financial impact of your work to the customer’s management team.

When we work with distributor clients, I am constantly amazed at the real financial impact they bring to their customers (and their supply partners). What’s more, most have convinced themselves that this financial impact is just part of their job. When you build a track record of generating proven results, it’s easier to make a case for being paid for the activity.

A final thought…
Years ago, my boss used to say, “How much will you pay me to make you a million bucks?” We need to ask our customers the same question.