Tuesday, August 26, 2014

Strategic Account Planning Part 1

Strategic Account Planning Part 1

How Strategic Are your Sales People?  Here's a three question test to find out.

Just ask any salesperson if they work a strategic plan focused on developing their accounts and I will bet you a brand new nickel they will answer with a resounding YES!  Most will back up their story with lots of details on how they are exploring new opportunities, meeting new contacts, improving their business relationship and lots of other good stuff. No doubt, you will start nodding along. Perhaps you will be completely sold. Salespeople can be optimistically convincing. And, I like this quality in a seller.

But, I suffer from buyer’s remorse. A few weeks after being “sold” on the salesperson’s strategic plan, I ask for something relatively simple. Maybe it’s a sales projection for a new product, insight on the customer’s market position or thoughts on whether an OEM uses spare parts as a profit center. My inquiry could be just about anything, but the answer isn’t very satisfying. I need to be resold.

Do you ever find yourself in this position? If so, don’t feel like you are the only one. Sales managers from around the country candidly share their concerns: their teams don’t plan enough. More specifically, they rarely plan in a long term strategic way. Apparently, they too suffer from buyer’s remorse.

Over the course of our work with sales groups from dozens of distributors and manufacturers, we have developed a sure fire three question test for strategic planning at the account level. And because it’s a beautiful hot summer day here on the high bluffs of the Mighty Mississippi, I am going to share this test with you.

Question One: Tell me the plan for your next sales call at XYZ Company (which is in their top 5 accounts.) I want to know as much detail as possible. Who are you going to talk to? What are you going to talk about? Who else from our organization will be involved?

For most sellers this is easy. They have a strong idea of the next selling opportunity, what needs to be handled and often have plans for some sales ally or product specialist to be part of the mix. You will like the answer and the information will smoothly flow off their tongue. Perfect, now move the next question.

Question Two: Thinking about this same account, what will you be doing on a sales call in say 30 days? Again, give me as many specifics as possible.

If the salesperson has even a rudimentary plan, they will demonstrate how the first call is tied to this next customer interaction. Or, you may discover they are working multiple customer issues and this interaction some 30 days forward is another well thought out standalone event. In any event it will provide perception to short term planning at the account.

Experience dictates experienced proactive salespeople have a handle on their strategy a month out. Even the sales guy who merely reacts to customer emergencies and various product requests can bluff their way through this discussion.

Question Three: Looking again at this same account, what do you feel you will be working on in 120 days?

A plan for activities four months forward is an early litmus test to strategic planning. One would expect even a rookie strategic plan for an account would extend into the next quarter. Saying this, most salespeople will provide definite clues to their lack of planning.

What would a good answer be? Well, for one thing, a sign of a plan would be thoughts on expanding the business. A good response might go something like this:

“By the end of the calendar quarter we hope to position ourselves with the field service team of the customer. We want to gather information on the number of emergency field trips taken and the cash outlay for each of these trips. This will enable us to present our plans for a remote access system to management complete with financial data.”

Or the conversation might look like this:

“We want to strengthen our position with the customer by eliminating small vendors. Over the next few months I will be identifying products for conversion and presenting them to our current internal coach. I suspect that in four months we will have made identified a hit list and be ready to ask management to switch the business to our team.”

How do you get your team to think more strategically?
I believe we have to start by working to develop strategic plans for the top five accounts.

Wednesday, August 20, 2014

Frank on Building a Sales Process

We don’t normally post things like this, but recently River Heights Consulting’s Founding Partner Frank Hurtte was interviewed by Distribution Center Magazine. His informal interview was captured online and put out on podcast.

Listen in as Frank discusses Building a Sales Process here:

Wednesday, August 13, 2014

Marketing the Last Frontier

Marketing the Last Frontier

Marketing plays an important role in business. By definition, marketing works to
inform customers of the value created by an organization. Extending further, marketing also complements the sales department by acting as the mechanism for collecting customer data, determining why customers buy, developing a comprehensive value message and matching a company’s product/services to various customer groups.

In years gone by, Distributors sorely lacked marketing knowhow. When a marketing person was on staff, they were most generally described as event coordinators and keepers of the trinkets. I’m not saying they didn’t work hard. Nor, am I implying these early marketing folks weren’t an asset. But they certainly did little to actively direct the Distributor to higher sales or greater gross margin.

Happily, those days are gone.

Last week, I attended the National Association of Electrical Distributors (NAED) AdVenture Marketing Conference in Chicago. The event was a gathering of 200 plus professionals from the marketing departments of both Distributors and Manufacturers. And, these folks had a purpose: generate growth in the industry.

Top speakers covered topics ranging from Social Media to Amazon to going digital. My own presentation covered building a killer loyalty program. Without taking away from the speakers, the most exciting part of the whole gathering came via networking. I couldn’t help but notice the sharing of best practices. And, I noticed supplier marketing teams and their Distributor counterparts sharing ideas for future efforts.

Distributor Marketing is Accelerating
Failure to get your marketing effort off dead center will be harmful to your financial health. Just like the medical field of the 1800s, snake oil toting experts are beating the drum and passing themselves off as “Dr. Marketing.” There is no elixir of life or ancient cure-all remedy. Despite the bark of these later day charlatans, social media, search engine optimization, email marketing and CRM systems won’t magically heal your bottom line and cause your warts to vanish. It takes commitment, hard work and some planning for the future.

Here is a short marketing checklist:
• Customer segmentation – A lot of distributors break their customers down into a few categories for pricing, but put little thought into the basic differences in business operation. Thought must go into customer values, motivations and what the customer looks for in a supplier.
• Contact segmentation – Engineers think differently than maintenance people. Business owners respond to different messages than project managers. Provide the wrong information to a person and they are likely to tune you out.
• Branding message – Distributors used to rely solely on their supply partners for brand recognition. What do you want to be known for?
• Consistency of message – We just spoke to a Distributor who found themselves with 4 different versions of their logo. Another, Distributor has a different tag line on their line card than their website.
• Plan your programs – What happens when programs overlap? Customers are confused. Even your sales team has a hard time understanding which program carries the priority.
• Coordinate your programs with supply partners – When the distributor and their key suppliers work together it’s a thing of beauty. There should be ongoing meetings to understand how you can build synergy.
• Website – We used to be able to build a website and then say we had one. But that’s not good enough anymore. If you website hasn’t been updated, overhauled or added to in the past 3-4 years you may be in trouble.

Friday, August 1, 2014

Let the good times roll – growth and expansion create people issues

Let the good times roll – growth and expansion create people issues

According to a just released survey from the National Association of Wholesalers and accounting firm McGladrey LLP, distributors are experiencing robust sales growth. Actually, the numbers looked even better than one would expect; 74% had growth over the past 12 months and 91% expect to see growth in the coming year. The distributors came up with projections just shy of 9% projected increases ahead. All pretty darn good.

Here are a few factoids from a couple of the National guys:
• Wesco reports organic sales increases of 6% with Gross Margin holding in the 20.5% range.
• Lawson Products reports sales increases of 5.5%.
• Graybar, the electrical giant, reported a record first quarter.
• Praxair and Motion are talking 6% increases.
• Grainger was up 5%

Yes, this is a very rosy outlook for distribution.

Why do I share these numbers? I believe we all need to benchmark ourselves against the industry. It’s easy to say things are great because our numbers are up, but the whole market is up. You are most likely not growing your position in the market unless you are pushing double digit growth.

To sustain growth like this many distributors, including the big national guys, are adding people. According to the same survey, 66% of distributors are contemplating the addition of more people. Many of these positions will be customer facing positions.

Based on experience, finding good people is tough. Actually, much more difficult than you would imagine.

A couple of months ago we wrote a piece for Industrial Supply Magazine called “Hiring Right”.
You can read the whole thing here:  I want to make one point clear, everyone is on the hunt. Lots of people will be “fishing for employees” from your sales department. You may be thinking about going after some of theirs. I had this to say about “stealing” Sellers from the competition:

Credit: www.recruiter.com

Talking about this topic is both taboo and time honored in our industry. I would have to wonder if the practice really brings the “dreamy” results some people imagine. Experience dictates that many recruits actually disappoint their new employers. Promises of large customer followings and instant sales results fall unmet. Unless particular care is exercised, people recruited from competitive organizations bring along years of bad habits, unwanted supplier issues and potential legal issues.

I would like to leave you with three of additional thoughts:
• Let your salespeople know you appreciate them. Most people leave good companies because they are upset by something small and it gives them pause to consider other offers.
• Consider your current bench strength. It will take you far longer to find a new person than you can imagine. Start your process now instead of six months from now.
• Keep your eyes peeled for customers and/or supplier people who may be getting cut loose. Some of the Fortune 1000 companies are still shedding people for seemingly ridiculous reasons. There is a good chance of finding a keeper in there.

And even though it may seem self-serving and arrogant, I do recommend reading the article in Industrial Supply.