Resolutions for a successful 2010

 

BY RICH SCHMITT

Management specialist

 

Here’s wishing everyone a happy and prosperous 2010. Many wholesalers have told me that they are glad that 2009 and the worst of it is over. There certainly has been an improvement in the economy and business climate compared to where we were a year ago. We can all be thankful for that.

 

I still don’t think that there will be a magic recovery back to the levels we saw during the boom years. We have all come to understand that a big chunk of the housing boom was based on selling property to people who were never going to be able to pay for their house. In my way of thinking, that means that we never really achieved the levels that we all believed were there. The massive greed in some of our lending institutions was truly amazing. I will say that I remain concerned that a lesser, but similar, situation may face us as commercial property loans come up for renewal in the next couple years.  Some of these situations can best be described as submerged. So keep a careful eye on your business in 2010.

As with the weather, we cannot change the economy, we can only prepare for it and ride it out. There are, however, many things that we can all be doing to make the best of it. In a recent visit to my dentist, I noticed a sign that said, “Only floss the teeth that you want to keep.” In addition to making me feel guilty about my own flossing schedule, it occurred to me that this is a good basis for my personal New Year’s resolutions for 2010. In addition to flossing, there are many activities in our businesses where a mantra of “Only do this if you want a GOOD outcome.” can help us focus on the right things. So here is my starter list for 2010. I hope you will make your own appropriate additions.

 

• Only pay attention to the customers that you want to keep. It is surprising that many wholesalers still have not increased their contact with customers in this tougher business climate. As I have said in other columns, spending a couple hours a week at the counter is great, but it is just not the same — not even close. Get out to the customer’s shop and listen to his view of the economy. Understanding how things look through his eyes gives you a huge leg up on your competition.

 

You may actually be able to adjust your approach to provide the specific products and services that he really wants, needs and values. This means you can better serve the customer and you can probably do it more efficiently. Talk to all sizes and types of customers that you serve.  While you should always be talking with your big, important customers, it is easy to forget that these companies are not necessarily representative of the rest of the customers that your company serves and wants to serve in the future.

 

Consider the mistake that some manufacturers made as they chased the big box stores. Years ago, one manufacturer confided, “We know how to sell to the big boxes, we just don’t know how to make money doing it. They make us do costly back-flips to get their business.  They continually demand additional concessions. They threaten to drop us like a hot potato if we resist any of their mandates. And they expect us to smile as if they are doing us a favor. We’re terrified that they will go elsewhere if we refuse any of their demands. Since we beefed up our manufacturing capacity to meet their needs, the loss of their business might take us into bankruptcy. To make matters even worse, all the wholesalers who helped build our brand are now so mad they can’t see straight and all the loyalty that we earned over the years is gone, gone, gone.”

 

The moral of the story is: Pay attention to all types and sizes of customers so you have a good balanced customer list. This makes you less vulnerable to problems with a single customer or type of customer.

 

Guidlelines for those ‘Onlys”

 

• Only show appreciation to the customers that you intend to grow. All customers like to feel appreciated. So as you are visiting them, make sure to say thanks for their business and tell them that you will work hard this year to deserve a greater share of their business.
• Only show appreciation to the employees that you want to keep.  It’s true, we all should feel fortunate that we have a job. However, in a people-intensive business like whole­saling, developing a team of the best and brightest is an ongoing and extremely difficult challenge. Part of keeping a great team is to show appreciation for their contribution. Ideally, the appreciation is in a tangible form, but in these times, many companies are not able to provide such monetary rewards. Most employees understand this reality. There is absolutely no reason you cannot thank people personally, send a note, fire off an e-mail or make a phone call.
• Only coach the employees who you want to perform at the highest levels. Even in this economy, every employee decides, every day, to give the job 110% or 75%. In most companies, either level of effort is a “passing grade,” but the company operates a lot better when the team is trying to excel, not just pass. Appreciation is important, but ongoing coaching keeps people on task and helps them improve their game.  Every pro team has a coaching staff that creates the game plan, and then is at the game to execute and adjust the plan as the game progresses.
• Only put GPS devices in the delivery trucks that you want to delivery efficiently. I have mentioned before that GPS trackers seem to make the delivery process more efficient. I think it will help your outside sales force too, but the technology isn’t quite as mature as it is for truck tracking. (FYI, I don’t own stock in a GPS company, I just think it makes sense and is now affordable.)

 

Only provide customer-awareness training to the employees who you want to treat your customers well.  Every employee with any customer contact needs instruction in the dos and don’ts of customer relationships. This includes your drivers since, in many companies, the greatest face-time with customers is not your salespeople, it is your truck drivers. So it makes sense to help them develop good customer skills. (As an aside, consider teaching all employees, including your drivers, to gather customer and market information in the process of helping customers. Ask your drivers: How does the customer’s business look? Which of our competitors is there? What other products should we sell them? Over the years, some of the best customer insights have been provided by the drivers. Instruct them in what you want to know and how to report it to the sales and marketing team.)

 

• Only ride with outside salespeople who you want to be effective. Many of your salespeople will object to this premeditated, deliberate act of field sales management, but it is absolutely critical if you want to deploy a top-notch outside sales team. It keeps them at the top of their game. It helps the sales manager evaluate the salesperson’s skills and his/her fit with specific customers. As a bonus, it allows management to develop relationships with the customers, so the salesperson and driver are not the only people with regular customer contact.
• Only visit the branches that you intend to keep. I talked to a wholesaler during the boom times and asked him how his branch in another city was running. His response was, “The numbers are pretty good.” I probed a little and he finally admitted that they were so busy that no one from headquarters had been to the location in two years. As the economy turned down, the branch’s performance nosedived and no one knows why. In good times, you must be visiting, evaluating and coaching every location. In tough times, you need to be doing it even more. Take my handy-dandy branch checklist with you and conduct an inspection. For a copy of the checklist, e-mail me at  Rich@go-spi.com.
• Only communicate with the banker, if you want him or her to continue financing your business. Generally speaking, most bankers don’t understand hard-goods distribution. Your first clue is that they seldom value hard-goods inventory more favorably than soft-goods inventory. You must help your banker understand that the definition of hard-goods (sometimes also called durable goods) is that it re­tains value better over time. Kept clean and dry, that 1/2-inch copper 90 that you purchased in 1990, or maybe 1980, would certainly be usable, and maybe even saleable today. Some bankers will devalue more than a six month’s supply of copper fittings. I am not suggesting that you keep that much copper but, if you have it, it has value. If you are talking about the food industry, the only food products that may have that kind of longevity are canned SPAM and the Twinkie (but I am not going to be the one to test the theory on that.) Ongoing conversations about the business and no surprises will give you the best chance of a good long-term relationship with your bank.
• Only keep your website updated if you want customers to use it. A surprising number of wholesalers are still showing “Under construction” on all or portions their website.  Some still have those first generation web pages that were really cool in 2000 but “not so much” in 2010. You can bet that your circa 2000 site is not attracting new customers. It may be reminding current customers that it is time to get hooked-up with a wholesaler who is in this millennium not back in the last one.
• Only provide a top-notch web order entry system if you want customers to use it. A growing number of your customers are buying on the internet or are thinking about it. If customers must memorize your internal part numbers to use your storefront or if your storefront is slow and cumbersome, it’s time for an upgrade. You can be their favorite website or someone else will. It is easier to earn that position early than try to lure them away from a site they already know and understand. For a reprint on upgrading your website or storefront, e-mail me at rich@go-spi.com.
• Only create checklists and procedures for those activities that you want people to do consistently, the company way. Companies in our industry tend not to be great at developing best practices. Some companies have procedure manuals with vague guidance like: “Provide good customer service.” One person’s good is another person’s not-so-good. Detailed checklists ensure that the employees who care, (most do care) know how you want it done.
• Only require people to perform their duties using the company best practices where you want consistency. While we struggle with best practices, I think we are even worse at getting our teams to do their jobs using those procedures. In a movie I watched recently, someone was describing the Italian interpretation of stop lights: Green, go like heck; Yellow, a decoration; Red, a suggestion. Properly developed procedures should not be viewed by your team as suggestions. Letting everyone “do their own thing” results in mediocre and inconsistent performance. 
• Only manage the pricing for products that you intend to make money on. Most companies manage some products. Why not manage every product for both competitiveness and for profitability.
• Only teach your people to deal with pricing challenges and objections if you don’t want them to always drop the price. If the only tool they know is to drop the price, that is the one they will use for every situation. Give them other ways to constructively address pricing issues and you will make more money, gather more market data and probably have happier customers.

 

For a reprint on dealing with price objections e-mail me at Rich@go-spi.com

 

I know I have given you a lot of “resolutions”, and no company can attack them all. If you pick a couple of important items from my list or from your own list and get them done, your 2010 outlook will be brighter. And by the way, my dentist asked me to remind you to floss, but only the teeth you want to keep.