It’s time to spiff up for 2011
BY RICH SCHMITT
Management specialist
As we get into the heart of 2011, it is a good time to renew your vows with the customers that you serve. The very best wholesalers understand that their relationship with their contractor partners is a lot like a marriage. This is one facet of earning the “Primary Supplier” relationship. There is a long term view, there is the desire for a win/win outcome and there is forgiveness. (When I described this at one of my live seminars, an attendee indicated that, based on his spouse’s “forgiveness” level, I might want to work on a different example. Since I knew the guy pretty well, I suggested that some of us needed a lot more forgiveness than others. He agreed that was true in his case.)
Your first task should be to review customer and prospect lists to plan your account goals and tactics for the year. I’ll outline some ideas for your consideration.
Evaluate customer impact
With all customer actions, carefully evaluate the impact to your company (economic, emotional, external) and take any actions at your convenience. One of our clients fired a long-time customer and got an unexpected reaction from other customers: “I was concerned that my other customers would be unhappy when I fired a fairly prominent contractor. Instead, several called me and told me that it was about !@#!$ time that I stopped carrying the no-good, %^&$%^ turkey. The fact that I carried the guy allowed him to screw up the market for my good customers.” They don’t all have a happy ending; but if you do it carefully, it will often make your life better in the end.
Review your account plans
There should be an annual account plan for each substantive or potentially substantive account that includes:
• Account size in dollars (how much they buy from all suppliers)
• Historical sales for your company — Expressed in dollars and as a percentage of their total buying
• Forecast sales for your company — Expressed in dollars and as a percentage of their total buying
• Account actions for the year — Grow, Maintain, Fire, etc.
• Planned sales efforts — When you see an action with no planned sales effort, you should remember that “Hope is not a strategy.”
• Executive initiatives for the account.
Review/revise territory assignments
Some wholesalers might be thinking that the quotas and plans are already set for the year. Most plans were set 30 to 90 days ago and things have changed some in that time so a review might be prudent. Of course, the company should honor all agreements. However, I would hope that all agreements allow for adjustments in account assignments and quotas as the company sees fit.
• First, look at call reports, account activity and planned sales efforts to determine which accounts are not being served or, in spite of sales efforts, are not performing and thus should be converted to “House” accounts. Always do this with care, but most wholesaler salespeople have assigned accounts wherein the salesperson’s only role seems to be dropping the customer’s price. Simply changing them to “House” accounts, with “House” account pricing, may make them more profitable.
• If, while you were reading the previous point, you said to yourself, “We really need to do call reports,” there is no time like the present. Call reports and call planning are a part of fielding a professional sales team. (For info on call reports and call planning, e-mail me at rich@go-spi.com)
• Typically, you will get some pushback from salespeople. I know that your professional sales team would never resort to these tactics, but in other industries they do occur:
A. Salespeople might throw tantrums on your office floor. Some might cry real tears while showing pictures of their kids and the family dog, who will all be homeless if any changes are made to their finely-tuned account list. (Having witnessed this, I have wondered if the salesperson was selling as sincerely to his customers.)
B. A few might tell some great “fish stories” describing how the customer only does business with your horrible company due to his or her outstanding sales efforts. Only through his/her tireless work will the customer put up with the poor service, outrageous pricing and meager inventories and still buy from the company.
C. Some might threaten to quit and take all their customers with them. While this seldom occurs, the fact that your sales manager spends significant time in the field creating a relationship with each customer will make this very difficult.
If your sales manager isn’t spending significant time in the field, now is the time to get that fixed, too. I think sales managers in our industry should have the title “Field Sales Manager” to clearly state that a lot of their time is out with their sales team and the customers. It is seductively easy to become an inward-facing sales manager who is a glorified sales analyst, sales forecaster, human resource administrator, salesperson for a couple of big accounts and baby sitter. Senior management wants numbers, HRM wants all the compliance forms, the sales manager is afraid to give up “his” accounts and the sales team doesn’t want their sales manager in their business.
D. Some may actually call a few customers for the first time in many years, to solicit support for their cause.
• When changes are not possible, put the assigned salesperson on notice that specific accounts may be removed from their list based upon performance.
• Also a reminder that in most cases, “territories” should be a list of customers and prospects, not a geographical area. This list is then the undivided focus of the salesperson’s activity. The salesperson or the company can always add a new prospect to the list but only the customers and prospects on the list are called-on.
Even though you may get some resistance, a review is still in order. You may decide to live with some assignments for now and adjust them for next year. You may decide that some assignments need to be changed immediately. The important thing is to conduct the review and then make explicit decisions.
Breaking up is hard to do
Determine if a divorce is in order for some of your contractor-partners. I was conducting a High Performance Wholesaling seminar for a wholesaler’s sales and branch teams last ?week and one of the activities was to build and discuss a list of the characteristics of a good customer. As we began, one of the salesmen admitted that his customer screening approach was very simple: “Anyone with a pulse is an acceptable customer or prospective customer.” He admitted this had led to some marginal to unacceptable customers over the years.
Trim unsalvageable customers
Get rid of the “no good unethical son’s of guns” that are not salvageable. I say this with some reservation because, in this economy, we are all looking for business. However, a small number of your customers are clearly over the line and you should look really look hard at firing them.
Reform the rest
Try to reform the ones that may just need some coaching. Sometimes they just don’t know they are doing things that make them a problem customer; just asking them to change may get them on a better course. If that doesn’t work, make sure their pricing allows you to make good profit for the indignities you endure.
Added attention never hurts
Target some customers for additional attention. When you sense that a contractor is going to be a winner in your market and that you can evolve him to a profitable primary supplier relationship, it might be worth some extra sales and executive effort.
Build that relationship
Visit and tell your good customers that you appreciate them and ask them what you can do to make the “marriage” even better. Also, while business is slow, plan activities that will make your relationship more interesting over the coming year. In a previous column, I described how boring most customer relationships have become and suggested that this is not a 50/50 situation — the wholesaler is solely responsible for making the relationship interesting. (For a reprint of that column, e-mail rich@go-spi.com.)
Commit to doing the basics better:
• Create a plan to present interesting counter displays that get rotated weekly or every two weeks. Displays should, whenever possible, be “hands-on” where the customer can touch, try, inspect, disassemble and reassemble the product. Collateral materials should be available so the customer can take home information for reference or further research. These displays can be:
1. Existing products as a reminder
2. New products being introduced
3. Specials designed to move product or to establish price impressions.
Finally, make sure your team can demonstrate the product and answer questions about it. When your team responds to any question with, “I don’t know what that is, the marketing people left it there,” you can bet your customers won’t be impressed.
• Create a separate area for your tired, your poor, your dinged, your damaged and your distressed — products that is.
A. The counter isn’t an area for closeouts.
B. Having a separate area for closeouts and damaged products is a good practice. Train customers to check your “closeout” area for bargains. Consider placing these products in a clearly visible designated area in small batches with really good prices.
C. This creates one more reason for the customer to regularly stop at your locations.
D. Consider selling these products at a WOW price — One of our clients does everything right, except, he prices the items at an OK-to-good price. So customers see it and may buy it if they need the product now. The wholesaler is missing the WOW factor of a great-to-really great price and the residual impact to counter traffic that can be generated.
E. While it may seem reasonable to blow out all this product as quickly as possible, it may be more strategic to pulse it out for its marketing value.
• Try to use the same “hands on” approach to sales calls when possible.
A. A salesperson armed with products that the customer can handle is better than bringing just literature and better than having a salesperson doing shadow puppets on the wall.
B. If you are forced to use literature, try to include lots of naked pictures — of products that is. While consumers like pretty air-brushed product photos, techs like pictures of products in all their glory. Since techs spend their time in the products’ guts, why not show them the guts?
C. Again, always leave something behind whenever possible.
So that’s my list for this month. I tried to make it short so you can pick a couple and make some real progress while business is slow.
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. Go to www.go-spi.com for more information.