Taking marketing to the next level

BY RICH SCHMITT
Management specialist

Last month I talked about the need for basic marketing in our industry. Many wholesalers do not believe that marketing is important, and thus have no individual explicitly assigned to fill the role and perform the function. Others give lip service to marketing -- thinking that their trip program or annual golf tourney complete their yearly marketing obligation. Some think that co-op hats constitute their yearly foray into the black magic of marketing. At the other end of the spectrum, some wholesalers have slick “Madison Avenue” marketing that was obviously designed to impress their friends at the country club but certainly not the working plumber who is probably the “sweet spot” of many wholesalers’ highest profit business.

I further discussed that every marketing activity should be evaluated based upon its return on investment (roi). Finally, I addressed the need to focus on differentiating yourself through marketing so your company gets the first-call, first-stop and last-look from your target customers. 

This column will provide some additional thoughts and ideas associated with “Basic Marketing” for our industry.

Marketing is pervasive and comprehensive

Traditionally, marketing involves the determination of:

• Who will be sold to (the target customers)
• What they will be sold (the product offering; what the target customers need to do their work)
• What services and terms of sale will be offered (delivery, technical support, credit, training, etc.)
• Where it will be sold   (the channels, the locations)
• How it will be sold (outside sales, counters, branches)
• Promotions and programs to support the direction that was established above.

In some companies, these types of decisions are made by the owner or executive committee. Regardless of who is making these decisions, these are really marketing decisions. When companies start out, the owner wears all the functional hats, including marketing. As companies grow and as management functions are necessarily spread to others, these activities are a part of the traditional marketing function.

While I fully support non-traditional organizations, I am unwavering in recommending that these marketing functions be explicitly assigned to an individual or several individuals within the company. In our industry, I find that they are mostly not assigned and, therefore, marketing mostly doesn’t get done.

Marketing and sales are joined at the hip

Many of the marketing activities are implemented by the sales team (outside, inside and counter). In some companies, the sales and marketing functions are combined into one department. Regardless of the organization, these functional areas must work together. Marketing activities that do not support sales activities are suspect. Sales teams that do not support and implement the company’s marketing activities are also suspect. Said another way, when the company creates marketing tools and programs, individual salespeople must use those tools and programs -- it is not optional. 

One sales manager told me that his solution for dealing with sales resistance to their marketing programs was simple. Every salesperson had to indicate on his weekly call report when a specific marketing presentation was made to customers that were called on. The sales manager announced in his monthly sales meeting that he intended to follow-up with customers and ask them how the presentation went. He also intended to conduct surprise shotgun rides with the sales team to see how well they could conduct the presentation. As a final kicker he told the sales team that falsifying the call report or failing to have the presentation materials in the trunk of the company car -- at all times -- would immediately end the salesperson’s career.  He didn’t use this approach on every promotion, but he did when the program was critical to hitting their sales commitment.

It is also critical to have marketing initiatives that do not require additional work for your sales team. Mailings, for example:

• Do not burden the sales team
• Are delivered to all customers at about the same time (which means you can establish time-sensitive promotions that are not dependant upon the outside sales team’s monthly call schedule)
• Influence all customers, not just the customers with assigned salespeople.

Good marketing can take some of the pressure away from your pricing

Ideally, marketing processes help the sales team move beyond order taking into actually influencing the buying process. Marketing can help your customers understand and value the other things that you provide beyond product at a price. When the sales team acts as order takers, price is almost always a leading topic in the conversation. When the sales team has other tools in their toolkit, other (non-price) topics become a part of the sales conversation.

But you cannot assume that your sales team will somehow magically develop these materials and skills. Marketing is tasked with developing the materials and, working with sales management, training the sales team to expand the sales message.

You need a marketing calendar

Ideally, companies should have a marketing calendar that is drafted six months or a year in advance. Of course it is not cast in concrete, but it serves as your company’s outline for the tasks to be implemented throughout the year.

The calendar should include promotions of all sorts, including but not limited to: pre-season, in-season, price-perception, post-season, trip communications, new product introductions, etc.

Without a calendar, many of these important marketing activities get put into the “someday-maybe” stack, which is really the “never-happen” stack of activities.

Be a good source of industry and product information for your customers --

and make sure you get credit for it

As surveys are conducted with contractors, they are asked about the services that they expect a wholesaler to provide. Most contractors expect their wholesalers to keep them abreast of the industry trends, new products, new technologies, new tools of the trade and new business tools that are important to them in running their business. If you attend asa or hardi national and regional meetings, the information gained there can be the basis for filling this role more effectively. The preparation and delivery of this type of information is a marketing activity. If you are not providing this information, your customers are getting it from someone else -- probably one of your competitors.

Proper product training is good marketing

Product training helps make the trade customer knowledgeable and comfortable with your products -- and with you as their supplier of choice. Product training helps technicians upgrade their skills and, properly done, it is part of what bonds that tech to your company. They view your company as a resource and the training sessions help them get to know you and your team.

That bond, by the way, is fully transferable. Therefore, the bond follows the tech even if he is promoted, moves to another contracting company or starts his own company.

Business training is marketing

Helping your customers be more successful yields many benefits. Having a professional-quality, business-improvement training program can be another value-add that ties customers to your company while improving the customers’ business performance.

And if you really pay attention, you can get them to use some of the additional profit to pay down their accounts instead of buying a bigger boat or truck.

Multi-faceted marketing is critical

Marketing is like a pair of shoes -- statistically speaking, a “one-size-fits-all” approach doesn’t really fit most people. Different customers have different needs, hot-buttons and tastes, so you must be constantly creating promotions and programs that address the different types of customers that you serve. 

Many marketing activities don’t need to be -- and shouldn’t be -- expensive

I am much more impressed with the companies who create interesting (to the contractor) promotions and programs. Slick programs are almost always perceived as expensive. Many of your trade customers will resent them since they know that they are paying for those programs through higher pricing.

Order starters

The idea is to get the first product on the order. I don’t have statistics, but we have observed that getting an order started often leads to a full order. A customer calls in to check your price on a benchmark product (for example, a 40-gallon natural gas water heater). After giving your properly managed price for that item, the salesperson might say, “Hey we have a one-day special price on pvc cement, it’s a real good deal at $xxxx.”

The idea is to offer up something that they ought to have an ongoing need for at a special price. They order the cement and, as long as they have the order opened up, they may also order that water heater along with the other materials needed to install the water heater.

Unique order starters should be crafted for your inside, outside and counter sales teams. Ideally, they are also appropriate for the needs of the specific customer. For example, offering a great price on a wax gasket will not impress a hydronic heating contractor, but a service plumber may react favorably to that same wax gasket.

Order extensions

“Do you need any [flux, gas, dope, brushes, emery cloth, cement, primer]?” The idea here is to remind the customer of the other products that they might need for the job, or may just have an ongoing need for.

Your marketing team should be moving this level of sophistication into your selling processes. Many computer systems offer an on-screen reminder that is often not utilized because no one has taken the time to put the data and links into the computer system.

Simple stuff can make a difference

Coffee, popcorn, donuts, soda and other amenities can bring customers into your counters. Clean restrooms may tip the balance in your favor. Frequent buyer programs may be the deciding factor in turning toward your branch or toward a competitor’s.

Since counters are typically the highest margin segment of a wholesaler’s business, some marketing effort is well worth the time and investment. Some wholesalers forgo these potential benefits because a few people abuse them or because the branch team thinks they are a pain. As long as the normal trade customer responds to them, I think they are worth considering.

Competitive information

Marketing is the repository for competitive data. Ideally, it is used to shape your offering and pricing. It is used to create promotions and marketing programs that differentiate you from that competition. Information is collected, analyzed and used to your advantage. There must be a list of the information that is to be gathered by your team and who the information is to be turned-in to. Many of your people do not mind gathering data if you tell them what you want and what to do with it when they obtain it.

Then the marketing team needs to really use it for the good of the company. It is sometimes difficult to persuade the sales team to gather and forward competitive information. Frankly, I don’t blame them; in many cases gathering information is a waste of their time, since it is never analyzed or used.

Pricing

A couple of months ago, I discussed the need for wholesalers to have a pricing manager. Ideally, the pricing manager reports to the head of marketing for the company. The marketing team is tasked with understanding the markets, the competition and how your offering fits into the market from a pricing standpoint. The sales team is not allowed to grant a price concession without gathering and forwarding competitive information on the transaction. That information is compiled and analyzed, and then used to change, as necessary, the company’s pricing.

You must shape the customer’s perception or someone else will

Unfortunately, you probably don’t get credit for all the great things that you do for your customers. Many wholesalers are actually doing a pretty good job, but their customers don’t give them the credit that they deserve. As I have said before, this is not a 50/50 relationship.

The wholesaler, through good marketing, is responsible for making the relationship fun, exciting and interesting. Further, the wholesaler must make sure that the customer perceives and appreciates the effort and the value that the wholesaler brings to the relationship. When you cannot shape their perception of the value that you provide, the sales conversation often devolves to price.

Basic marketing is not a wispy, abstract exercise, it is a premeditated set of activities that should very directly and measurably help your company sell more products and make more money.  For reprints on the topic of marketing, e-mail me at rich@go-spi.com.

Rich Schmitt is president of Schmitt Consulting Group Inc., a management consulting firm focused on improving the profitability of distribution and manufacturing clients. Rich is also the co-owner of Schmitt ProfitTools Inc. (SPI), a business producing print, CD-ROM, web and palm-based catalogs as well as pricing management and analysis software for wholesalers.