Look at sales calls from a customers’ perspective

BY RICH SCHMITT
Management specialist

Bill, an outside salesman for a medium-sized wholesaler, has just left his customer Tom’s shop. Tom has been a long-time customer. Bill feels good. He took Tom to lunch and wrote a $2,200 order. He had to give Tom 5% off the order but Bill is real aggressive when it comes to his prices. Bill thought that it had been a good call. While the call wasn’t a cause for celebration, the order was a little bigger than the average order for the customer. All in all, not a bad morning. Bill looks at his watch and sees that it is 1:45. That leaves just enough time to drive back to the branch, schmooze with some counter customers and head home.

Now, let’s examine the call from the customer’s perspective. Sure Tom likes salesman Bill, but Tom is pretty busy so he scheduled a lunch meeting as a courtesy -- not because he saw any significant value in the visit. Normally, to save time, he would have grabbed a sandwich while driving to the job. So the meeting wasn’t a big loss of time since Tom had intended to eat lunch anyhow. Most of their time together at lunch was spent talking about baseball and how the relief pitching isn’t worth a darn. Tom normally orders most of his material through the inside sales line at his local branch. He places orders every day or every other day. This is because he is only planning his jobs a couple days in advance and Bill only gets around to see him once or twice each month. Tom’s standard sales call agenda is to get lunch, order a little material and challenge Bill on a couple of pricing issues to see if there are more discounts available. Not that Bill’s prices seemed out of line, but it had just become a normal part of every sales call’s unwritten script. Some months he tells Bill that he is just too busy to get together. Like many relationships, both parties are just going through the motions.

There are many things wrong with this picture:

Many wholesalers’ outside sales people tell me that they are not running what we used to call a sales route where the primary purpose is to regularly get to the customers and take their orders. Yet as we look at their activities, there is little to distinguish what they do from a traditional route salesperson. The salesperson drives to the customer or meets the customer for lunch and they chat. Often the most significant difference being that the salespeople have price-dropping authority that traditional route salespeople didn’t have. (As an aside, some people call it pricing authority but that would imply that there is some price-raising, too. Since there are seldom -- if ever -- any price increases, I like to call it what it really is: price-dropping authority.) When a salesperson’s only value to the customer is to provide a lunch ticket and to act as a target for pricing assaults, there is little reason to have outside salespeople. Most of the customer’s business is transacted through inside sales where the pricing confrontations are less frequent. In fact, the company might be better off without someone in this ineffective, margin-trashing role masquerading under the “sales” title.

I am very supportive of the outside sales function in wholesaling even though I am criticizing Bill’s approach. The outside sales team has a much tougher role going forward than ever before. Of course they need to build a relationship, as it is important that the customer like the salesperson and the company. But more important than being a customer’s buddy, the relationship needs to become one of trust and respect. Only after a customer trusts and respects a salesperson will the customer listen and accept guidance from the salesperson. After the trust/respect is earned, the salesperson can influence the customer’s buying decisions. Maybe Bill was once a trusted advisor, but the relationship has weakened over time.

The 5% discount wasn’t really a big deal to Tom since the material cost was marked-up then passed through to the customer. If he really thought about it, Tom would see that the price reduction actually reduced his raw profits since he always used the same multiplier for material and the lower cost then netted him less money. But price challenges are part of the script so it reminded him that he must keep testing the pricing. (Since the 5% discount was so easily gained, there might be even more discounts to be had. He made a mental note to push even harder next time.)

The wholesaler sustained a margin body-blow losing 5 points of profit in the process. Over the years we have seen instances where converting customers to “house accounts” (where there is no assigned salesperson) has actually increased the margin production from those accounts. We speculated that by eliminating the convenient and easy (the kind of easy that you don’t want your sister to be) salespeople, your margins will improve. I have come to believe that each salesperson should have a gross margin quota stated in dollars. The 5% discount on the original order of $2,378.79 resulted in a net order of $2,200. That means that Bill generated $115.79 less margin than budget. As a reminder, a 5% discount results in a 5 point margin hit on the sale. In my book, Bill is on the hook to sell Tom other products to recover that margin. If he doesn’t, his quota of raw gross margin dollars is going to fall short and the company will be forced to cut expenses or the owners will not see their expected profits.

Since Bill met Tom at the restaurant, he didn’t see Tom’s shop. Therefore, he missed a great opportunity to gather all the data that is available at Tom’s shop. Like the tempo of work, the number of people, the competitor’s delivery trucks, marketing material, products, catalogs, invoices, etc. Great salespeople do not snoop inappropriately, but they sure as heck keep their eyes open to the information and materials that are in plain sight. If you don’t visit the shop, you just don’t get that important information.

Also, not going to the shop prevented Bill from developing and evolving relationships with other key members of Tom’s team. Tom’s wife and son are in the business so bonding with them is normally an important part of the current and future relationship with the company. Building relationships with the technitions also positions you to land the business as some of these people start their own businesses.

The relationship is just plain boring. Bill’s interactions with his customers can be summed up by the bumper sticker you’ve probably seen: “Same Stuff, Different Day.” Who is responsible? Unlike a marriage or friendship where both parties share responsibility for the success of the relationship, in business the salesman has the sole responsibility for keeping the relationship meaningful and exciting. I know it doesn’t seem fair, but salesman Bill should be adding the spice and value to the relationship. That means new topics, new ideas and looking for new and better ways to help Tom to be successful.

Sales professionals work full days. First and foremost, you should insist that your outside sales team works full days. This simple discipline will make most sales teams more productive. The company has a right and a duty to insist that salespeople work full days, work efficiently and work with purpose. I have heard managers say that salespeople set their own schedule and work when they want to. Bull!

In my tough-minded approach, salespeople work at least eight-hour days and must have permission for any deviation from their published schedule. So far, I have not seen one company whose delivery efficiency was not significantly improved by putting gps devices into their trucks. One owner told me that their routes had gotten 25% faster. He guessed that the morning and afternoon naps or personal errands had been eliminated from the driver’s route. While the results have been mixed, having salespeople carry gps phones offers the same promise of higher productivity. The good drivers and salespeople don’t resent it since it often validates that they are working hard for the company and highlights the slackers.

The best salespeople and top sales managers are not fond of lunch meetings. Like Tom, they should consider the lunch period as a good time to travel to the next call. Lunches are not, generally speaking, efficient or effective forums for communicating and transacting business. And golf during working hours is seldom a good use of a salesperson’s time. In most cases, customers who have time for workday golf are not the ones that you want to hook your wagon onto.

In the limited “face-time” with a customer, the objectives must be clear, the planning must be good and the delivery must be practiced and professional. Many salespeople do not complete any of these fundamental steps in selling.

1. Account objectives -- At a high level, there must be objectives for each significant customer that describe what the outside sales effort is to accomplish over the year. These might include an increased share of the customer’s business, converting the customer from a competitor’s line to your line, getting the customer to try some of the new product lines that your company now stocks or getting the customer to take full advantage of your marketing programs.
2. Account activities -- Objectives are great but without a group of specific activities, there is little chance that the objectives will be accomplished. So each account objective is “chunked” into activities that will, ideally, over time accomplish the objective. These activities are played out in sales calls and customer meetings over weeks, months and sometimes years. Activities for getting the customer to use your line over a competitors might include
   1. Talking to the customer about his current line. Likes, dislikes, profitability, technical issues, installation issues, other factors.
   2. Determining how your line compares to the current line. Where the advantages are and where the disadvantages are. Your case must be balanced or the customer will not trust your case.
   3. Talking to the customer about your line. How it fits into his business and compares with the current product he is using.
   4. Describing what he can expect in the conversion. What additional training will be required and how that will be handled.
   5. Showing the customer the new product. Letting him touch it or inspect it.
3. Showing him the specs and comparing the specs to his current product.
4. Arranging for him to get a sample or to try your product.I am certain that there are many more steps in the process but you can see the concept.
5. Account delivery development --Many of the steps involve communication with the customer. Each communication is in effect a small presentation or speech. It involves preparing the materials, perfecting the presentation, practicing the presentation and finally trying the presentation on friendly customers. I know it sounds like a lot of work, but “wing it” is really not a viable alternative if you want to be effective. In larger companies, this sort of material might be provided by the sales manager or marketing team. In smaller companies or where the objective is specific to a single customer, the salesperson is tasked with developing the presentation.
6. Call planning -- Now that you know what you want to say, you have to plan when and how the information will be presented to the customer(s). Every customer “touch” is an at bat. Every time a customer touch is used ineffectively, it counts as a strikeout. Few companies in our industry insist upon call reporting. Even fewer insist upon call planning. Every sales call should have specific objectives and should be planned. Ideally, each salesperson will prepare and submit a call plan for each account to be visited over the coming week on Friday when he submits his call reports and expense reports for just-completed week. The idea is that the appointments and purpose for each call are planned in advance. This makes the visit more interesting and productive.
7. Call reporting -- The call report documents the completion or lack of completion for the items on the call plan. Between the call plan and the call report, the salesperson can more effectively keep the conversations fresh and interesting.

Finally, Bill needs coaching to help him to get back into the sales game. He is obviously not being coached properly or is not taking the coaching to heart. The sales manager should be riding with Bill, coaching him after each ride and providing feedback regarding Bill’s call plans and call reports. If the sales manager determines that Bill doesn’t want to or cannot improve his skills, Bill should be moved to a more appropriate role in the company. (Of course with the appropriate adjustment in compensation.)

My compliments to those salespeople in our industry who are out there really performing at a high level as sales professionals. It is not an easy job to do well, and I have great respect for the sales professionals who I have known in my career.

For those salespeople and companies who can see a need to improve, the good news is that even small changes in the way salespeople do their jobs can create significant improvements in the customer relationship and the salesperson’s productivity.

For a copy of sample call planning and reporting form, send me an e-mail me at rich@go-spi.com You can use the form as the basis for creating your own custom version.

 

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