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

160
Calls per day

4
Total number of calls available per year

640
Calls to top 10 accounts
Let’s assume the following:
·        We have multiple contacts
·        Ongoing business requires 1 call of some kind per week
500
Calls to next 10 accounts
Let’s assume the following:
·        Ongoing business and development of new opportunities requires 1 call per month
120
Total calls remaining

20

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.
Competitors
·   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.

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