We are gathering information and building a list of frequently asked questions.   I am often asked about commission structures within the Automation, Electrical Distribution Industry and other knowledge-based distributor operations (Power Transmission Distributors PTDA, Fluid Power Distributors FPDA and Industrial Distributors). Considering the frequency of the question (from potential salespeople, experienced seller, managers and others,) I feel it appropriate to post some thoughts on the practice. While this is not our typical kind of post, I wanted to create a forum for discussion. Commissions based on Gross Margin are one of the most commonly used incentive practices on the channel side of the business. On the manufacturing side, many people are still paid based on their gross sales numbers. Often you will hear distributors refer to this practice as paying on “tonnage” because sales professionals compensated in this matter really aren’t required to worry about whether ...

If restaurants can upsell, why can’t we? After a whirlwind trip around the country and a couple dozen meals in places ranging from pizza to posh, I want to share an observation:  Restaurants know how to upsell. From the lowly “do you want fries with that?” to the more sophisticated and expensive, “at least let me show you our dessert tray,” food service folks have created a culture of upselling. Aside from the pounds I’ve managed to pack on, I wanted to gain something from the experience.  How can restauranteers train surly teenagers making minimum wage to automatically upsell when we struggle to convince professional, commissioned inside salespeople to do much more than say “thank you” and push forward? Thinking back, I don’t recall a single moment of agitation caused by this constant upsell campaign.  When poorly done, I simply smiled and said “no, thank you.”  But, getting back to the dessert tray, I was actually glad I was re-sold. Distribu...

Last week we wrote about the right activities for tough economic times.  One of our points was the need for improved negotiations training with our salespeople.  At the risk of repeating myself, I stated: “….major industrial firms have gone public with their plans to squeeze their supply chain.  Some have noticed, they can get additional discounts just by “asking” for them.  Customer purchasing types are going to negotiate with our sellers and we need to be prepared.  Based on my observations, most distributor salespeople have not received proper negotiations training in recent history.” Last week I attended one of SPASigma’s inaugural events called, The Battle for Margin, a two-day seminar developed to assist distributors in growing their gross margins.  Much of the seminar revolved around negotiating with buyers.  During one of the breaks, I had the opportunity to speak to several distributor salespeople who candidly shared their e...

For those of us selling into the industrial sector, the economy has turned tough.  One of the gauges of business levels comes from large manufacturers of industrial products.  Numerous end of quarter reports point to slumping sales.  We’ve seen everything from no growth to decreases from three to six percent being typical.   At the same time, a few large industrial corporations have announced plans to “revisit, reevaluate and rethink” their supply chains.  Their strategy is simple:  The economy is slowing and they plan to squeeze a few points out of their suppliers to offset other slides in profitability.  In the past 45 days or so, distributors have shared feedback on margin squeezing moves by key customers.  Longer payment terms (How does 105 day payment sound?) and requests for across the board price reductions are common.  In the past month alone, at least a half dozen distributors report moves to “eliminate the middleman” with cus...

It’s happening again:  Big Manufacturers Tightening Up their Supply Chain Over the past several years Mega-Manufacturers have settled on a strategy to sustain profitability in a slow growth economy: Tighten up their supply chain.  To the unaware, this sounds like a solid strategy.  Improving the flow of goods, creating more symbiotic relationships with those providing services, eliminating waste, streamlining, re-engineering and a tassel of other business buzz words, all resonate with Wall Street types.  Distributors have been through this a couple of times before, but unfortunately a good many sales managers have forgotten the lessons.  Many of our Millennial-generation sellers were still in school.  But, this is another page from the playbook of previous recessions.  Recalling the pain of the mid-90s, 2001-2002 and the Great Recession, allow me to review. Our largest customers jauntily inform us they “love” doing business with us....

Photo:GM Everyone knows Santa Claus-- red suit, long white beard, familiar belly laugh and long-time leader of all things North Pole.   For some strange reason, most don’t have a clue as to the early days of his career.     So let me break it to you, Santa got his start in sales.   A long time ago, hundreds of Christmases before occupying the big chair in the corner office up at the North Pole, Santa worked on the selling side of North Pole Distributing. Like many hardworking sales types with hundreds of years under his belt, Santa leveraged all the lessons learned out in a territory to move up in his organization.  Playing a front and center role in a global distribution organization with customers around the globe, Mr. Claus puts those lessons to work almost every day.  It’s difficult for a lowly industry consultant to get an audience with big time executives, but last week I leveraged over six decades worth of being on the “nice list” to gra...

Let’s start with two assumptions. First, your company sells solutions, not a hodge-podge pile of parts. Second, some of th e products you sell fit together nicely to solve customer issues. Some reasoning has been applied to the building of your product offering. As you set out to create solutions, you started assembling the right parts and pieces to address customer issues. But I have a question. Are your customers connecting all the dots? Most of us assume our customers realize how all the stuff in those gigantic catalogs fit together. Experienced customers probably rely on you to carefully select just the right products for their particular applications and offer them up in a solution format. A few might bring you into the equation by sharing business concerns and problems before they have fully analyzed the whole situation. Newer, and even some existing, customers are different. They may not fully understand your brand of solution selling. Some may not yet trust yo...