Sunday, July 31, 2016

Dealing with Renegade Factory Salespeople

In a recent conversation with a very progressive distributor, we touched on an age old topic: the activities of factory salespeople.  To give you a flavor for the call a bit about the distributor. 
They are extremely qualified, technically competent and have demonstrated the ability to drive their business forward.  In a time when most distributors in their sector are struggling, their sales are still pushing upward; well ahead of the industry average.  At the highest levels, their supply-partners admire their work, but there is a strange disconnect at the local level.  The local factory sales guys don’t seem to get along with the distributor folks. 

Things get complicated from here.  The distributor, being technically qualified, well trained and totally familiar with their supplier’s products doesn’t need a lot of support.  In a couple of instances, it turns out the distributor team is actually more savvy on the products and applications than the factory sales team.  At a glance, the scenario sounds like the factory salesperson’s dream.  However, friction has developed between the groups. 

The root of the problem...  
The distributor salespeople don’t feel like the factory sellers bring value.  In fact, they believe the factory team slows down the selling process.  On the other hand, the factory guys don’t feel like they are being used properly and see this as a lack of aggressiveness on behalf of the distributor.  Communications suffer and ultimately the disagreement creates problematic “noise” in the relationship.

Complicating the situation, the distributor shares the line with other distributors, which creates some serious repercussions.  Lacking a connection (or sense of appreciation) with my distributor friend, the factory sellers focus their efforts on the other distributor.  In some regards, the factory team actually serves to “prop up” the lesser sales efforts of a weaker competitive distributor.  This happens in a number of ways, but here are a few examples:
·         Most of the factory generated leads go to the competitor.
·         When the factory person “stumbles onto” potential business it is steered to the competitor. 
·         Factory people provide technical services on behalf of the competitor and, thus offset the technology based resources paid for by my distributor friend.
·         Distributor activities reported up the chain of command at the factory paint a picture of aggressive action from the competitor.
·         Negative, or at best, neutral reports are provided back on the better distributor.
·         The response time on pricing required for special commercial situations are slow in coming and most likely questioned more strongly.  This impacts the good distributor’s ability to improve gross margins.

We must understand the whole situation…
Let’s walk a mile in the factory salesperson’s moccasins.  They have a job to do.  And, if my friend’s sales team won’t work with them, they are going to find another outlet; in this particular case – the competitor.  Getting uncharacteristically soft and fuzzy in my comments, they want to be appreciated.  If they feel the love from the competitor and not you, they will help the other guy and (perhaps unconsciously) do harm to your effort and definitely damage your relationship with their management many miles away.

Taking this point a bit further, these factory sellers will work doubly hard to justify their decisions in the field.  It’s a mistake to believe that routine reports and casual conversations with co-workers will not continuously play a narrative of their hard work, customer intimacy and strength in the market.  The customers they choose to introduce to management will be those of the competitive distributor, and probably carry loud messages of why they selected the other guy over you. 

Experience dictates all of this leads to unnecessary and unwanted friction between business partners.  Something needs to be done.  Even if you are right, you still loose.

An action plan….
No message of love and appreciation here, instead think of this as a business plan.  Three basic principles apply; invest, manage and harvest dollars. 

What is the investment?  A little time, some direction, a few compliments and a dash of activity.  Let me hammer out a few ideas:
·         Does the factory guy know on which accounts you are currently?  If they don’t, there is a chance they could inadvertently visit the prospect with the competitive distributor.  This could create a new competitor and might end up with the other guy getting price support which could be used against you.

·         Have you asked the factory guy for leads lately?  The other folks are probably getting the lion’s share of the leads now.  When you ask, promise to communicate results back and involve the factory sales guy in future activities.

·         Set target accounts together.  Assign some responsibilities to the salesperson and some to yourself, keep records and agree to the end results.

·         Schedule joint calls.    While every situation is different, I typically recommend starting off with three days per month.  Spending a day with the salesperson allows you to build a relationship, that’s a good thing.  Further, a day spent with you is a day not spent with the competitor.

·         Arrange for the factory salesperson to handle a few routine issues.  You probably know how to get literature from the factory.  You may even know who to call to get samples, demos and other sales tools.  Assign the action to them.

·         Involve the factory salesperson in lunch and learns, technical presentations and anything else where their presence can be viewed positively.

Now for the managing portion:
·         How can you help the factory salesperson meet their goals?  Get a list of the points on which they are judged.  Don’t expect all of these to be in full alignment with your own goals.  However, understand will help you get more from the vendor sales guy.

·         Keep track of the agreed upon activities.  If the factory salesperson misses a date, doesn’t come through with the promised sample or something else specific, keep a log.  This allows you to provide some level of critique and also understand their weaknesses. 

·         Provide praise, share the thrill of victory.  If they assist, even in a small way, in the capturing of a new account or gathering more business, make it a point to thank them personally.

·         Help them understand the value of working with you.  This comes in the form of periodic reviews of activities and successes.

·         When appropriate, praise them in front of their boss.  Nothing is better than a fat juicy compliment on your work to the big boss man.

The dash of activity:
Find ways to engage and keep them busy.  Remember, a day spent working for you is a day spent not working with the guy across town.  This is so very important, let me repeat.  Consume major portions of their time.

Finally, it is the real world, so let’s cover the two most common scenarios….
Let’s assume the guy is a total jerk and caustic to customers.  Working with him is painful.  Working with him may damage customer relationships.  His boss may or may not know the situation.  Complaining does little to move the needle ahead.  Specific examples allow you to provide feedback without looking like a whiner.  Follow the steps above and in short order, you will have a log of unfortunate instances to discuss.

Fortunately, most times the situation isn’t a complete fiasco.  The guy has some socially redeeming qualities, he just lacks the skills to work in your organization.  While it’s not your job to train factory salespeople, good things could happen.  The guy starts to get the picture and joins your team, leaving the clunky competitor in the dust.  You get an ally and another resource.  Life is good, we all live happily ever after….  Or maybe we just make a little more money, buy a vacation package to Bandera Bay.  Somehow, there aren’t that many unhappy people sipping cool drinks on the beach.

Thursday, July 28, 2016

A Funny for the CRM Haters

An engineering funny that had me laughing a bit more than necessary.  Tomorrow is Friday.  A great time to catch up on paperwork, follow up on calls, and check in with your favorite bloggers.  I'll be honest, my last post concerning CRMs was not well received.  I have a feeling so many of you just hate the THOUGHT of a CRM that you didn't even read the article!  Trust me, if you are a hater, and I can't say I have always loved them, there is something useful for you as well.  Brian Gardner knows what he's talking about!  That being said, I happen to love a little controversy.  Send me your hate mail concerning CRMs as I think this point needs some attention as well!  As usual, you will get a postcard from Iowa for submitting your idea!

Monday, July 25, 2016

Getting a higher ROI from your CRM

Thinking about Money?
Thinking about Sales Process?
Thinking about CRM?
(A Book Review)
Talking to distributors, we have discovered that many of them have made big investments in Customer Relationship Management (CRM) Systems.  Many of them have pushed their salespeople to track customer contacts and enter opportunities.  Candid conversations reveal, however, that the vast majority still feel like they are not getting their money’s worth from their CRM system.  This brings us to the subject of this post: a book by SalesProcess 360’s Brian Gardner.

Brian brings a wealth of information to the topic.  He has decades of industrial sales experience.  He worked as a salesperson, sales manager and as a software developer.  Make no mistake, this book isn’t a 100 page advertisement for some software platform.  Instead, it’s about sales process and applying technology to automate the sales process.

Mr. Gardner reverses the process most distributors use to select their CRM system.  While many would simply create a technology checklist, which includes the items listed below, Gardner goes a step further and lays out a plan for objectively examining realities of your sales group.  This, of course, allows for overall process improvement.

Technical Checklist typically tied to CRM System Selection
·         User friendliness of the screens
·         Ability to link with Outlook
·         Web-based platform so salespeople can log in from the road
·         Managers ability to review opportunities in the system
·         Easy to get reports
·         Email broadcast capability
·         Mobile capacity

Further, the author lays out a plan for reviewing existing sales procedures to determine how the CRM system might be better used.  Using what he refers to as the “SalesProcess360 CRM Audit,” he directs the reader through a step-by-step analytic of their sales team’s operation in their native environment.  A sampling of the kinds of questions asked are provided (with permission) below. 

Sample Questions from the Sales Process Review
·         Are outside and inside salespeople teamed up?
·         Do you have products specialists?  What is their focus?
·         When a new outside salesperson is hired, what does their getting-started programs look like?
·         What are your sources for leads?
·         Are you doing opportunity management?  What is your definition of a lead?
·         What is the estimated number of quotes done per day by the company?  By person?

The end result is a CRM Roadmap Matrix which assists the leader in selecting the best pieces of the business for CRM based automation.

The book lives up to it's title: “ROI from CRM: It’s about sales process not just technology."  Gardner goes on to build a plan for measuring what a company might expect to garner from deploying the right system.  To me, this is the real meat and potatoes of the exercise.  For distributors fighting to build on their bottom line, the book provides valuable feedback on the real reason for employing both CRM and a sales process; increased revenue. 

From my perspective, distributors need to see and measure the ROI of employing a better sales effort.  Like everything in our business model, there has to be a payback for our actions (and cash outlays.)  Distributors don’t provide world class customer service for the bragging rights, we do it because it attracts profitable business.  We don’t spend nearly 60% of our gross margin hiring the very best people to look flashy, we do it because great people create better results.  The same analogy can be made with inventory, efficient warehouses, or top flight computer systems; we do it because there is a return on our investment.   The clearer the cause and effect picture, the more dedicated we become to putting the tools to good use.

Extending beyond all of this, the book outlines a plan for implementing your CRM system once you determine the right path to follow.  Better yet, the implementation plan is designed to help you harvest the low hanging fruit first – reinforcing the whole ROI idea.  The plan steers expectations; including some of the inevitable pushback from those who will resist even the slightest change.

Since this is a book review here are a few other interesting points

The book is written in a conversational tone.  It’s an easy and enjoyable read.  I started reading it on a flight from Minneapolis to the West Coast and finished it somewhere over Colorado on the way back.  Along the way, I took copious notes and made a number of points to share with colleagues and clients.

The book contains links to at least a dozen worksheets, spreadsheets and other supporting data.  This is worth the price of admission in its own right.

Brian Gardner knows what he’s talking about and it shows.  I would absolutely recommend anyone thinking about implementing a CRM system or just thinking about how process might work in their sales department to pick up a copy. 

You can buy your copy from Modern Distributor Management.

Post Script One:  Thinking back on this book, I see plenty of information which could help a struggling distributor “re-launch” their current CRM System to drive better payback.

Post Script Two:  If you have a book that you feel would be of value to colleagues on the front lines of Wholesale Distribution, we are open to your suggestions to the group. 

Tuesday, July 19, 2016

The Life and Times of an Elephant Hunter

Last week I had the opportunity to meet a real live Elephant Hunter. No, not the African Safari kind, this elephant hunter
was of the sales variety. After years of bouncing from manufacturer to distributor and back, he called me to help him find his next opportunity. During the normal introductory niceties, (contrary to my wife’s opinion, I am a nice guy,) he boasted about a dozen or so really big deals he had singlehandedly managed during his two decade career. Make no mistake, this made an impressive list. I was buying into his story hook line and sinker. Until, we reached the point where I asked him, why he was looking for a new opportunity.

For some reason he didn’t share upfront, he was currently “between jobs.” With this impressive list, one would wonder how such a rain-maker could possibly be out of work. I know lots of sales organizations and very few willingly separate ways with someone who can really bring in business. It made me scratch my head. I asked him about it and the answer was shocking, he said my last couple of deals didn’t come through and my business dropped off substantially.

For distributors in his industry, business can be divided into “project” business and flow business. Even during the darkest hours of the Great Recession, the flow business for most customers continued to roll in. The ratio for a healthy end-user customer looks something like 70 percent flow and 30 percent project. Things look slightly different for OEM customers, but even there most have some flow business remaining.

About fifteen minutes into the conversation, I explained my thoughts on flow business and asked if I was missing something. After a long pause, I heard a reluctant story of no time to build a solid foundation of long term repeat business. This guy prided himself on bringing every resource possible toward capturing the big deal. He felt pursuing what he termed as “piddle” routine stuff was better left for those small minded types who couldn’t hunt the elephants.

The truth about our kind of selling
One of the issues I have with many of the generic off-the-shelf sales training courses comes from the backgrounds of the instructors. Many industries thrive on “one time” sales. The sale is an event rather than a process. For distributors, it works differently. Our sales strategy is a continuous string of discovering customer needs, proposing a solution, assisting with implementation of the solution and repeating the process. Over the years, we develop customer trust, build loyalty and grow our flow. We strive for what some call “customer wallet share.” When things go well, our ongoing actions entice the customer to purchase more from us because they know we desire the orders.

Capturing projects has a place in our world, but only after we have built a solid groundwork of customer knowledge, relationship and trust. Chasing projects which just happen to come floating across our desks is often an exercise in futility. We waste our time and resources developing complex quotes for business with little chance of success. Further, negotiation experts like Anthony Perzow of SPASigma indicate some of our quotations are simply used as rabbits to drive down the price of the guy the customer really wants to buy from. The rabbit has zero chance of closing the order. In a day when most distributors are fighting to channel resources, time spins down the drain.

What should we be doing?
Targeting the right customer list for our efforts makes sense.
Building a relationship and trust takes time. If we spend our time on customers with little potential, the payoff never comes.
Asking the right questions and gathering customer data pays off as well. Nothing accentuates our relationship with a customer like understanding their business. The more we know about the customer’s unique situation, the better our chances of providing valuable solutions.

Understanding our competitors on an account by account basis helps us better position ourselves. We must recognize why the customer buys from others. This is especially important if you “split” the business with several competitive distributors at an account.

Harnessing the efforts of our supply-partners builds our portfolio of business. Very few distributors enjoy exclusive supplier relationships. Protecting business against cross-channel conflicts preserves our margins and frees supply-partners salespeople to work directly in building your position at the customer.

Focus, but don’t be an elephant hunter…
It’s our job to capture as much business from our territory as possible. I believe focus is important. For most distributor salespeople, this means focusing in on 30-40 accounts. Elephant hunters want a list of 200 accounts so they can search for the jumbo sized orders as they appear. Working to create a relationship with 30 or so accounts gives you time to develop the relationship, grow the flow and when the elephant appears take it down in the normal course of business.

What happened to my newly found elephant hunting friend? I am not sure any of this advice sunk in. His last words were something to the effect of... “When the economy picks up, the big orders will come back and I will be there.” I only hope he has enough money to survive in the meantime.  I have a feeling he'll be singing the old Hoyt Axton song "Where did the money go?"

Sunday, July 10, 2016

50 Questions for Distributors

Last week I wrote an article titled “Six Questions that Demand an Answer.”  Sharing the article with a few trusted advisers, I received one consistent bit of feedback best summarized by this response.
“Frank, I agree these are questions we must ask ourselves; they caused me to pause and ponder.  I used them as an exercise with my team to think about our overall strategy.  I believe taking the time to think about our business from an outside perspective to be justified and worthwhile.   Sometimes it’s hard to do this subjectively.  I would like to see more questions just like these.”

The following is my first round of questions.  I have put them into categories to make them easier to digest.  Some will apply to your position, some will not.  I suggest spending a moment visiting these topics with members of your own team.

A note:  The readers of this blog come from a variety of backgrounds, hold a diverse collection of positions within distribution and come from a number of lines of trade (Automation, Industrial, Safety, Power Transmission, Fluid Power, HVAC/R, Building Materials and a lot of others.)  Not all of the questions apply directly to you.  Skip over the questions that apply to other departments or forward them on to your colleagues, but do take a moment to think.

Do you believe your customers’ worlds are changing?
1.       Are customers experiencing new global competition?
2.       Are customers under new pressure to perform financially?
3.       What pressures are your customer’s customers putting on them?
4.       Are there governmental regulations which impact your customers?  
5.       Are all customers experiencing the same changes?
a.       In what ways are they the same and how are they different?
6.       Are some customers experiencing shortages in trained workers?

Do you believe your supply partners’ worlds are changing?
7.       Do they have new competition in the market place?
8.       Is there current product technology under attack by something new?
9.       Have they recently been acquired or have they acquired a new division?
10.   Have they lost market share because they have not expanded into big box stores or alternative channels?
11.   Have they had new leadership come into the company?
12.   Is their stock value under some kind of pressure?

Do you believe change at the customer or supplier level impacts your position?
13.   Which five things are most likely to impact you in the next year?
14.   What five things are likely to impact you in five years?
15.   Do you see major customers or customer segments with no long-term future?

How does your sales effort differ today than in 1990?
16.   How have technology tools changed the customer interaction?
17.   What new positions have been added to the sales team?
18.   Do you segment your customers by industry, size and buying patterns?
19.   How do you know which customers are profitable?

Do you have a sales process?
20.   Do you have a written on-boarding program for new sellers?
21.   Do you have well-written job descriptions which explain expectations, measures of success and critical skills?
22.   Have you developed a product knowledge checklist which describes the level of knowledge sales people should possess to meet management expectations?
23.   Do you have a written sales process which defines the following:
a.       Who should be called on at accounts, including customer management?
b.      Behavior on the call? (such as note taking, recapping of action items)
c.       Frequency of sales calls?
d.      Entry of data from the call into a CRM or other knowledge base?
e.      Etiquette on joint calls?
f.        Use of support staff and specialists?
g.       When to introduce management into accounts?
h.      Quotation follow-up?
i.         What you should know about the customer?
j.        When to deviate from standard price?
24.   Does your company have a pricing process?
a.       Do you believe sales people can truly understand the price point for the thousands of products in your portfolio of products?
b.      How are market price levels established and maintained within your business?
c.       What percentage of your business uses “system” pricing vs. salesperson driven manual overrides?
d.      Does your business have a magic number (ie 15, 20 or 25 percent) which is used as a “safe” margin with customers?
e.      Do you measure each sales person against the percentage of sales falling outside of the pricing process?

What tools are used in the sales process?
25.   Do you have the ability to quickly review customer purchases by product technology?
26.   Do you have the ability to provide your sales people with FOCUS Fraction of Catalog Utilized (sometimes called GAP) analysis?
27.   Do you have a working CRM system in place?
28.   Are you capable of receiving EDI orders without manual intervention?  

Do you offer more customer value than in 1990?
29.   What services do you provide that weren’t available in 1990?
30.   Do you measure the internal cost of these services to your organization?
31.   What new services will you be launching in the next five years?
a.       Have you measured your company’s cost for providing these new services?
b.      Will you be charging a fee (outside of gross margin) for these services?

Is your company’s technology current?
32.   Is your ERP system modern and updated with the latest revisions?
33.   Do you have the ability to track inventory which has not been sold for 180 days?
34.   Do you have the ability to accept orders electronically?
35.   Do you have a mechanism for eCommerce?

Can your warehouse/logistics operation keep pace with changes in the world?
36.   Are items placed by location in your warehouse?
37.   Do you use wave picks to make order processing more efficient?
38.   Are errors (shipping, receiving, lost inventory) tracked in your organization?
39.   Is cycle counting accomplished so that fast moving items are counted at least 4 times per year?
40.   Do you regularly write off dead stock and other unsellable inventory?
41.   Is there a plan for efficiently handling returns and defective materials?
42.   Do you know the cost of running your delivery truck?
43.   Do you use GPS tracking on delivery vehicles to expedite deliveries?

How progressive is your financial model?
44.   Do you do a financial projection based on sales forecast for each year?
45.   Do you provide managers with parameters for measuring their portion of the business against industry standards?
46.   Do you benchmark your financial performance against industry standards using an industry profit report or some other national model?
47.   Do you know the approximate cost of transacting business?
a.       What is the cost of placing an order with a supply-partner?
b.      What is the cost of processing an order?
c.       What is the approximate cost of shipping an order?
d.      How much gross margin is required to break even per month?
48.   Have you developed activity based costing number to determine your most profitable customers?

Do you have a succession plan in place?
49.   If you are the owner and you are at least 55 years old what is your plan for leaving the business?
50.   If you are a salesperson within five years of retiring, what is your plan for passing on your deep knowledge of your customers?

We welcome your comments
Truthfully, we settled on 50 questions because it’s a nice round number.  It could have been, and maybe should have been, 100 questions.  What do you think we left out?  Send us your ideas and well send you a postcard from Iowa. 

If you want to talk about any of these questions, we’d be happy to spend a few minutes talking about your situation. Shoot us an email or pick up the phone.  We can’t wait to hear your thoughts.

Friday, July 1, 2016

Salespeople have feelings too…

A couple of weeks ago, we posted a blog called “We need more sales calls, but it’s not happening.”  The basic premise was this, sales people struggle to produce enough calls because they lack skills, have developed poor habits or just don’t think about how they schedule their time.  I went out of my way to say this…
"…before I rattle off the reasons, allow me to say I don’t believe sloth has anything to do with the situation.  Lack of skill, sometimes.  Bad habits, probably.  Deliberate laziness, no way."

I had hoped the article would spark controversy and conversation.  And it did. 

Since I value the opinion of others and would like the whole of the distributor landscape to give the issue some deeper thought, I am publishing a few of the better stated comments here.

First, I love the pithiness of this comment…
“Speaking on behalf of sales people everywhere. I want a supervisor’s advice on sales calls about as much as I want a tax audit.”

Here’s one that I hear often…
“I am always amazed how soon after someone moves up from a straight sales role to anything in management they forget what it is like out there on the streets.  All of a sudden they forget all of the totally unreasonable expectations and burdens that their managers put on them and start dumping them on their people.  The best managers I have worked for recognized this and worked hard to keep the level of BS to a minimum.”

One writer (name withheld to protect the innocent) went on to repudiate a number of my thoughts.  Here they are with very little editing.

Speaking on the topic of scheduling….
“Today for example, I had a full day planned 100 miles from my office. One of the counter people even took my premier parking spot. After an hour in a tire shop parking lot talking to my first sales call and fixing some structural issues with his service, my largest customer emails me on what he needs. This is business we have not previously had and will increase market share with him. Best laid plans down the tube.”

Counting calls to the guard shack as a sales call…
“I have done those guard shack sales calls. This is what I learned. Who has visited in my industry, the person’s name I need to see, the protocol to get into the gate, visiting hours. One of the most important allies a salesperson can have is the gatekeeper, be it a security guard or receptionist. You have to set up the knock out shot with a jab once in a while.”

The value of setting appointments…
“Technical Sales are the best kind of sales. They are asking your advice on what they need. This gives you the ability to customize the BOM to exactly what you have. Technical sales border on design/build and generally have higher margins than standard selling. Sometimes it's just better to freelance than having structured rigidity of scheduling all of your appointments. A little like "Ferris Bueller's Day Off" when you go impromptu you do not know where you will end up.”

A note from Frank:  Ferris Bueller’s Day Off was one of my
favorite movies.  For some sick reason I related more to Mr. Rooney, the Dean of Students, who spent his time trying to track down Ferris Bueller.  I hate salespeople who play hooky from work.  Someday ask me about the guy who lost his pager while making sales calls in a remote territory yet his pager turned up on the 11th hole of a local golf course.  My suspicions on him were right.

Comments about lazy salespeople…
“I have seen even "Lazy" Salespeople succeed. Much of the time the last person you see is the next person you order from. Some "lazy" salespeople just show up, nothing in hand, no sales pitch, and no plan. They will still succeed at some level.”

I stand by my original statements.  I believe sellers need to put process into their game.  I totally buy into the sentiment, some sales managers try to micromanage.  However, I also believe some very good journeymen sellers (comment not intended to be sexist), struggle with bad habits, sales slumps and variations in sales activity. 

I don’t believe in micromanagement, yet many consider even the smallest addition of process to be “dictatorial”.  There are sloppy managers and managers who aren’t operating at the top of their game.  There are even a few sales managers who could serve as poster boys for Dr. Lawrence Peter’s famous principle.  That’s another topic.  However, my advice to distributor leadership has always been to expect heated pushback from your sales team on any change. 

I believe pushback and resistance from sales teams is a good thing.  Debate is a key ingredient to the development of long term strategy.  Expect it, encourage it.  But once the debate is done, the strategy must be played out with fierce resolve.

Finally, here is a very important point brought by one of the respondents… I could not agree more.
 “….little of what we do today as sales people affects tomorrow. If your sales are sliding or are flat, that started long before it showed up on any numbers sheet.”