Wednesday, September 24, 2014

Strategic Account Planning Part 4

Prioritization of Accounts

Just to bring everyone up to speed on the process of building a strategic plan for our accounts: 
First, we talked about knowing where we stand with the account, things like our strengths, whether the customer sees us as a pipsqueak specialty vendor, one of the top suppliers or as their critically important partner in business.  Later, we covered what you need to know about the account.  By now I know many of you are thinking, “I just don’t have enough hours in the day to go through this exercise with everyone customer.”  And, that is precisely the point we want to address.  You don’t have enough time.

American Founding Father, Thomas Jefferson said, “All men are created equal.”  As smart as he was, Jefferson wasn’t a top flight salesperson.  Top sales guys learn, early on, that all accounts are not created equal.  Some will never contribute much to your commission plan.   Figuratively speaking, blowing up a high-octane customer puts more to your bottom line than a tiny account.  We have to focus our work on the accounts who have the ability to add to our bonus check.  Doubling the size of a $20,000/year customer doesn’t add near the results of a modest 10 percent growth at a $1M/year account. 

We must target to be effective.  The question is where to start.

Looking over the results of hundreds of distributor sellers indicates to me the power generally lies with the top 10-12 accounts.  If we focus our research and strategic thinking on the big guys, we maximize the use of our time. 

Not only does focusing efforts on the top of our customer printout help us build business, the effort strengthens our existing relationships.  It both an offensive (as in sale growth) and a defensive (as in fending off competitors) play.   

Further, I worry we don’t have time to spend with many more than 20 accounts anyway.  Here is an excerpt from an article I wrote:

A stroll through the account assignments of dozens of electrical wholesalers reveals sales guys with 100, 150 or even more accounts to their name.   I believe this is a sham. 

First let’s look at the math. 
Number of selling days

Calls per day

Total number of calls available per year

Calls to top 10 accounts
Let’s assume the following:
·        We have multiple contacts
·        Ongoing business requires 1 call of some kind per week
Calls to next 10 accounts
Let’s assume the following:
·        Ongoing business and development of new opportunities requires 1 call per month
Total calls remaining


Based on experience, after subtracting vacation, holidays, training, office and meetings days, the average seller has around 160 days of selling time per year.  If we credit salespeople with 4 real calls per day, this equates to something like 640 calls per year.  If we assume a few of the top 10 accounts require a call every week, the salesperson is left with just 140 calls for the rest of the list.   I suspect the next 10 on their list require at least one call every month, this leaves us with a whopping 20 calls left for the year.  

Now back to “Targeting” our planning efforts.  I sincerely doubt if extra calls will be required to gather much of the information we have talked about.  However, gathering the information does take time and if we really buy into this strategy, we do have 20 calls to invest in the process.

Starting something like this requires a schedule, a strategy and a plan.  Why not start with your top five accounts?  Hopefully, you know them best.  Much of the information may already be floating somewhere in the deep recesses of your mind.  Thinking about precisely what you know and, more importantly, what you don’t know, will open your mind to the topic.  We do recommend you create a space for storing the information either in writing or electronically.

Why store the information?  First, most distributors today operate in a team selling fashion.  Specialists, Customer Service and Inside Sales groups from your own company regularly touch the customer; quite possibly it’s the case with supply partners and other allies.   Periodically reviewing information with others often provides valuable insights.  "Second, and more importantly, developing a document enables you to start/continue refining your strategic account plan.  Many of our long term plans for positioning require ongoing inventory of our current situation. 

I encourage you to create a list that looks like this:
Account: Frank’s Widget Warriors
Our Situation
We sell FWW all of their flex tubing, a most of their automation needs, some of the gasses used in their process.
We are viewed as an important supplier in our category but certainly do not dominate the whole of their available business.
·   7Dee Distributing sells more of the process gas than we do they are viewed as expert and provide low prices when contracts can tie up the business for a long time.

·   MMark provides a portion of their automation needs.  Most of these were specified into the plant by their parent company. 

·   WWG Distribution sells some of the fittings used with our tubing.  They rarely call on Frank’s WW.  We have crossed over their parts and are ready for the next bidding cycle.

·   Haven’t had time to research other suppliers
What do we know
·   The biggest source of revenue comes sale of complete systems

·   Considering moving spare parts to more of a profit center
-We are looking for metrics and figures

·   They have rejects – don’t know numbers?

·   Burdened Labor on Shop floor - $38.00

·   Burdened cost of Engineering - ???

·   Sales team need assistance explaining some technical issues to customers
-Working to understand how we can help

·   The energy cost to build full sized widgets is going up rapidly

Going way back to the second of this series, we quoted the words of a long forgotten song, “If you want to get to Hollywood son, you better know where on earth here is.”  I believe the second verse has to be, “It’s long, long way to Hollywood…”  Creating a document similar to the one provided above will keep you up to date on your progress.   The document will allow you to pull out a map and check your progress along the way.

Wednesday, September 10, 2014

Strategic Account Planning Part 3

What do you know about your account?

Everybody claims to be a Solution Seller these days. It’s the place where the cool kids are supposed to be hanging out in world of selling. To illustrate, a quick “Google” of the term Solution Seller turns up something like 179 Million entries. As a group, we are talking the talk, but deep dives into the topic make me wonder.

Many of the top salespeople in our industry confuse product expertise with providing a customer-centric solution. Is there value in helping your customer select just the right product for their application? Absolutely. Does your troubleshooting assistance provide something important to your customer? No doubt about it. But, I believe solution selling extends well beyond this type of product domain customer support. If the only solution you provide comes in being able to answer customer questions about products, I suspect you are vulnerable to future competitive threats. Here is why.

We are moving into the next generation of internet and mobile driven apps. For instance, I recently became aware of some apps which are pretty comprehensive in their ability to direct a novice customer through the selection of very technical questions. Reports of manufacturers and mega-catalog distributors creatively applying cell phone pictures to the problem of identifying obscure parts are increasing exponentially. Companies with internet based monitoring of “programmable devices” are upping the ante on product based troubleshooting. Frankly, I see some of these as being game changing in the world of product driven expertise for sale.

In days of old, the knowledge-based distributor’s “stock in trade” was product expertise. Complex products with lots of nuances demanded and received high margins than simple products. Vary early on, the salesperson acted as a “human search engine” turning the customer’s request for information on some type of product into an assortment of product data sheets. Later, the salesperson translated customer start up or troubleshooting questions into pages from the user’s manual. Things have changed. Today the value for this type of service is declining. Where is the real value to be provided?

Here’s where we get to the whole solution selling thing comes into play. We are talking about recognizing and proposing solutions to the customer, often before the customer even realizes there is a problem. While your products play a role in creating the solution, the real meat of the sale revolves around what you know about the customer. And, often salespeople lack a deep rooted understanding of even the simplest information about the customer’s world.

This brings us back to precisely what do we know about the customer.

In order to have a real strategic plan for our accounts we need to take inventory of what we know now and what we should learn in the future. Our plan must revolve around positioning ourselves to really be solution providers. Or, in some instances, understanding that providing solutions to the customer is a poor use of our resources.

Here are a few items I believe are central to real customer knowledge:

• How does the customer really make money?
• What are the customer’s competitive threats?
• Is your customer part of a larger organization? How are they viewed by the parent company?
• How does your customer’s sales process work and can you somehow improve it?
• How might the customer improve their process to decrease expenses, improve output or sell more product?
• Does the customer have seasons where only a portion of their resources are used?
• Does your customer have issues finding the right people or getting those people trained?
• What is the burdened cost of labor at your customer?
• Are there labor issues related to unions, skilled trade groups or others?
• What are the raw materials used by the customer? Are any of them in short supply?
• Does it cost a lot of money to store the materials? Is shrinkage an issue?
• Are there governmental or other regulations that impact the customer’s business?

Understand, this is not an all-encompassing list. Your list will vary based on the type of customer, your own industry and other variables.  For instance, if you are an Electrical Distributor, this may be a good fit.  Regardless of your industry, you do need to look at each of these as strategic to your own customer’s future. Aligning your strategic plan to customer strategy is important to building a plan.

Wednesday, September 3, 2014

Strategic Account Planning Part 2

Knowing where you stand

The wizened and gnarly voiced singer on a scratched old 78 rpm disc said something like this to me this:
“If you want to get to Hollywood son, you better know where on earth here is.” I believe sellers must apply this advice to the first step of their strategic account plans.

Where are we with the account?

As reasonable as this sounds many sellers refuse to truly understand their importance with an account. Most don’t understand their strengths nor their vulnerabilities. Repeatedly salespeople tell me, “I get the lion’s share of the business at this account.” Yet, when I visit the account on joint calls with them, I see pallet loads of the competitive product coming in the door. Deeper research indicates whole technology segments which are supplied by the guy down the street. We see a long list of competitors signed in at the reception desk; many calling on people we don’t know.

How do we know where we stand as a supplier? Are we viewed as an important extension of the customer’s organization? Are we seen as the guy who provides a widget so complex that dealing with us justifies the pain of our idiosyncrasies? Are we one of many suppliers or are we important for some real reason?

We’ve got to understand this in order to build a plan that extends anywhere past next Tuesday’s call.

The first question is why sellers don’t simply ask, “Where do we line up with your organization as a solution provider?” I believe the real reason many don’t is fear. Sometimes the truth smarts. What happens if the customer responds with a negative answer? Sometimes, sellers ask the question of the wrong person. Your company may be “numero uno” with the one guy in maintenance, but viewed as a necessary evil by plant management. Other times, the evil ones in purchasing deliver misinformation to sellers to satisfy their own price-driven agenda. Understanding the real answer involves talking to
a number of people at the account. And, financially focused management types must be on the list.

In addition to simply asking, here are a half dozen sure fired ways to understand your position:
1) Do a plant tour/facility tour with an eye for competitive products in use.
2) If your customer maintains a store room or parts crib, look at products kept in stock alongside those you are providing.
3) Drop by the customer’s receiving area to check on service levels. While there, look for shipments coming in from your competitors.
4) Analyze your sales to the customer. Look for gaps in purchases. Think about what other products might be used along with those you are selling the customer.
5) Ask your key contacts who else is a supplier and what they like about their service.
6) Ask someone and be prepared to listen not argue the point.

None of this tells you precisely where you stand with the customer, but it will give you a better idea of the landscape you operate in competitively. In addition, it will take you to the point of being able to identify precisely who competes in your favorite customer. Your strategic plan will make use of this information to determine how to approach the customer.