Fall Tune Up for Distributors

Let’s face it, summer time is filled with distractions.  Our

customers are distracted; they have vacations, kids playing Little League, golf leagues, cabins in the woods, lawns to mow and who knows what else.  This distraction is contagious.  Being people too, distributor folks get caught up in all the summer stuff. 

Sometime around September 1^st, we snap out of our summer induced behavior and put our noses to the grindstone.  For the next week or so, we are going to talk about a few fall tune-ups for distributors.  Think summer end elixir for a better year end. 

If ever you planned to institute a new habit, this is the time.  For the next four minutes, let’s think about selling time.  We’ll ask a few questions:  How much time do our salespeople spend selling?  What distracts them? How might we put the beauty back into the process?

How much time do salespeople spend actually selling?

Based on observations of hundreds of salespeople and dozens of distributors, the answer is simple: not much.  Without getting into anything earth shattering, we can subtract vacation, holidays, training sessions, sales meetings and sundry interruptions.  Vacation, holidays and personal time for life issues alone typically account for nearly 8 percent of the work year.  Let’s add in a few sales meetings, training sessions, and off-site vendor meetings and we could easily come to some interesting conclusions.  First, let’s assume salespeople are paid to “sell,” yet they’re away from their job for more than 10 percent of the time.  Secondly, the seller spends just one day per week doing administrative “paperwork.”  We’ve somehow managed to drop time spent selling by another 15 or 20 percent.

 This brings the total time engaged in face-to-face selling activities down to 70 percent of the real year.  This is the functional equivalent of being paid regular wages for an 8 to 1:30 workday.  But those are just the mechanics.  For the next five minutes, let’s look at how we drop from 70 percent to the actual number, which experts have pegged at around 25 percent.

Salespeople, please continue to read…

This is not about sales department slacking.  While we may touch up against the need for planning, scheduling and effective use of time, this article isn’t about calendar management.  Instead, it’s about sales management.

What takes salespeople away from selling?

Operational issues are a major source of sales distraction.  Think back to the last time you went out with a member of your sales team.   Was a portion of the sales call devoted to discussing shipping errors, delivery issues or a poorly handled customer service issue?  Nothing sours a well-planned sales call like a little back peddling early in the meeting.  It’s hard to sell “ease of doing business” when you just cost your customer money based on something easily avoidable.

What’s worse for many distributor managers is this:  Most lack the data to determine if their growth problems are based on a sloppy warehouse and a crappy customer service department or an ineffective sales team.  Some wonder if customer issues with missed delivery dates or inaccurate shipments are just part of the “distributor sales game.”  With this in mind, one would wonder if gathering administration and logistics data shouldn’t be a standard procedure for every distributor.   We think it should be.

Pricing situations can spoil a selling situation.  While we could argue that price negotiations are an integral to selling, I believe we need to explore a couple of points. 

First, unless you have accurate pricing information loaded into your ERP system, just arriving at a valid price provides a selling distraction.  Each transaction requires additional research.  Every time a salesperson quotes an amount to a customer, a dozen questions flash through their mind.  Is the price right?  What price did we use last time?  Could someone in customer service have priced this differently?   Where do we sit compared to the competition?  And more.

Not only is time spent researching for the right price, we also create doubt and uncertainty.  When the salesperson guesses incorrectly, it creates additional distraction.  The salesperson spends even more precious selling time fixing the issue.

Secondly, when no selling process exists, the salesperson is stuck negotiating every single sale.  To summon up something said by my friend and pricing expert David Bauders of Cleveland-based Strategic Pricing Associates, you never see a dog beg just once.  His point is simple: If you give your dog table scraps one time, they turn into constant beggars.  When our salespeople lower their prices once, the customer becomes conditioned to request a lower price on each opportunity.  Negotiations take away from, you guessed it, selling. 

Unless the distributor employs a full-on pricing process, salespeople are left to determine price.  Customers bombard them with the message “your price is too high,” and it ruins the selling moment.  This constant bombardment of negative energy causes many sellers to lose perspective on the value their organization provides to customers.   Sales experiences, without the presence of value-creating solutions, are about as exciting as the paint page of the 1964 Sears catalog.  

Management teams syphon selling time on a regular basis.  Earlier, we listed all of the mundane consumers of time (vacation, sales meetings and so on,) but many times managers hurt their own cause by not thinking of the sales team when they set up meetings.  Any meeting scheduled for midday consumes the better part of a whole day, even if it only lasts an hour.  This is especially true when ending times are not strongly enforced. 

The office is not the salesperson’s friend, specifically, the practice of starting a business day in the office.  It puts the kibosh on selling efficiency.  Nothing cuts into sales time like being readily available at the launch of a business day.  Here’s why.

It’s natural for customers to ask for their salesperson on some of the most routine issues.  The sales DNA steers the seller toward helpful behavior.   They get wrapped up in lots of trivial tasks that should be funneled to someone in customer service.  What’s worse is this: Customer service people often don’t understand it’s their job to get the salespeople outof the office.  I have seen inside salespeople and customer service representatives complain when sellers refuse to handle incoming calls.  This quickly becomes a management issue.  You cannot afford for salespeople to handle things like order entry, stock checks and routine expedites.

How do we ramp up the real selling activities?

It’s a management-driven process.  First, you must ensure the distractions are removed.  Distributor selling today is a team sport.  Some of these are not directly tied to outside salespeople.  Metrics and measures must be inserted throughout the whole of the customer experience. 

You must develop performance expectations for all components of the selling machine.  Here’s a fact: Many sales types confuse routine reactive care with selling.  They feel good at the end of a long day of handling administrative tasks and minutia associated with their customers.  Customer care is important, but it’s not the best use of their time.  If they must step aside from real face-to-face selling, something is wrong in another department.

Finally …

I believe in data.  Hand waving and opinions are nice.  No discussion of politics, religion or Olympic figure skating should go without them.  In our world, I’ll take data.  I regularly require my clients to take inventory of their day.  How did they really spend their time?

Here’s how it works.  I ask every salesperson to log their day

in 15-minute increments.  Simply put, I want to know what they did from 8:00 to 8:15, 8:15 till 8:30 and so on throughout the day.  If they were talking on the phone, who were they speaking to and about what?  If they were at their desk, what task was at hand?

At the end of the week, I ask for tabulations.  How much time was spent in each of 10- activities?   I insist on real-time logs, but leave the tabulation to the seller.  The end result is always eye opening for the seller and their manager.   Most can radically improve their sales effectiveness.  Why?  Well, if your sales time is hovering at around 25 percent, just a few minutes a day can ramp you to 30 or 40 percent.  That’s a big jump.

If you would like to see the 12 activities we tie to times, drop me a line.  You can log the time spent under planning and process improvement.

Sales Training for Distributors – Don’t forget Inside Sales

Last week I threw out some thoughts on sales training for distributors.  The response was great, but I received more than a half dozen challenges from inside sales groups.  The overall feedback could be summarized as: Don’t forget about Inside Sales. 

The comments reminded me of a couple of points:

• Outside Sale people may make the phone ring, but it is the service the customer receives when they call that keeps customers coming back (aka customer retention).
• Most customers gauge Distributor customer service by the quality of the Inside Sales team.

Historically, distributors have focused on outside sales improvement…

Experience shows when distributors invest in skills training (which is meager at best,) they tend to focus on the outside sales position.  A quick “Google Search” on the topic of “distributor sales training” brings up something like 28,600 results.  While I didn’t read all 28 thousand of them, I did look at the first twenty listings.  All were outside sales related.  Assuming that training organizations follow the money, we can assume there is darn little effort devoted to the team who keeps the customer calling and by which our customer service is often judged.  Houston, we have a problem...

Inside Sales was once a baby step in
the trail to Outside Sales

There are three potential reasons for this lack of investment in inside sales: 

1. Back in the good old days, inside sales was viewed as a stepping stone job for outside sales.  The career trajectory for most people looked something like this: start in the warehouse, move to the counter, go to inside sales and finally grab a company car and hit the road.  Compensation for inside sales people was meager and anyone who stayed in the department was viewed at lacking in personality, drive, motivation or intellect.  You might say the good old days were not so good for the inside team.
2. Most of the sales managers serving the distribution world grew up in the outside sales world and don’t understand the inside sales role well enough to realize what training should be focused toward.  They realize the need for training but tend to see it as a subset of the training they provide for outside sales people.
3. Again going to distributor sales managers, most grew up in a pre-internet environment.  Only the most progressive managers realize selling roles have shifted.  Customers no longer count on their outside sales person as the harbinger of information.  Research indicates customers review products, find information and make preliminary decisions without waiting for data sheets to be delivered by their friendly outside sales resource.

The job of inside sales is changing…

Just a decade ago the job of inside sales centered on transferring phone and fax orders to computer system (ERP) orders, answering questions on delivery and selecting the proper part number from a customer’s detailed description.  All good stuff for the time, but nothing like today.

The end of these activities is on the horizon.  New computer technology allows orders entered onto customer PO forms to be automatically entered into the system without human interface.  Further, some of the product selection criteria has been automated or moved to mobile apps allowing customers to better determine the proper catalog number (even in instances where complex part number strings are involved.)

Today customers look to inside sales for more.  For instance, for most distributors, the first line of price negotiations has been switched to the inside sales team.  Front line technical support falls on to inside sales to do some logistical matters like expedites, freight issues and invoice clarification. 

Provide world class technical support and you will attract customers.

How do we train for customer support?

If your companies sells highly technical products (Programmable Controllers, computerized operator interfaces, complex sensors, drives or irrigation controllers, programmable heating systems, etc.), we recommend establishing an inside specialist(s).  This person would be the phone resource for customers with urgent issues. 

The inside specialist need not be a new hire.  We have seen companies delegate slices of their technology to individuals with keen interest in the products.  This will work well assuming the person is not overloaded with other tasks. 

But product support can be taught.  First, let’s assume customers commonly ask the same set of questions.  Identifying these questions and training on the answers grows the overall support.  Rather than being tasked to learn everything, inside sales is taught to understand the 20 most commonly asked questions on the product. 

Further, inside sales is taught a plan for escalating the call to someone more knowledgeable.  Years ago, my own organization created a “who to call list” which allowed the inside team to access factory and internal experts on various topics – but not until the problem was qualified.

Train for add-on product sales…

The most powerful marketing tool in history is McDonald’s

own, “Would you like fries with that?”  Sure, everybody knows Mickey D’s has fries, but just prompting the customer with the question turns a five dollar order into a seven dollar ticket (a 40 percent sales boost not considering fries have a high gross margin for the company.) 

Many of our computer systems (ERPs) allow the addition of suggested sale or “goes with” products.  We need to reinforce the importance of both populating the system and training our people to remind customers of products they may have forgotten.

Proper pricing can improve the inside sales role.  First, without a well-developed pricing system, inside sales teams devote lots of time looking up last prices paid and checking on price levels with their outside sales counterparts.  Inside sales should be trained to spot poorly maintained price files and provide the feedback required to get these fixed.  Second, inside sales people should learn a few basic negotiating tricks to avoid being “duped” by procurement professionals who have been trained in the science of negotiation.  If you have not yet see the information provided by Strategic Pricing Associates or their sister company SPASigma, we recommend you check out this really funny video.  

Again a special offer…

Last time we offered a postcard from Iowa to everyone who shared their suggestions for sales training with a grand prize of a professionally developed training class set up to be shared with your team.  We are repeating the offer.  No obligation, no telesales calls, no nothing.  Everyone will be a winner. 

Postcards from Iowa for every entry.

Free Sales Program to the coolest suggested subject.

BTW –Sue from California was our winner last time.  Sue claims she had never received a genuine postcard from the Tall Corn State.  Sue, we expect more entries.  The USPS wants to bring you another card.  

Inside Sales in Tough Times

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.

Distributors encouraging their inside sales or customer service teams to upsell, add-on sell, or otherwise pro-actively impact business, always get pushback.  Typically, complaints fall in to five major categories:

1. My customers don’t want to be sold.
2. Our products don’t lend themselves to upselling because they are too technical, too expensive, too bulky, etc.
3. Our people don’t know what to recommend as an add-on.
4. Our inside/customers service people don’t know how to sell.
5. Our customer service/inside people revolt whenever we ask them to sell.

Our attempt at an upsell...

A few weeks ago we wrote “Tough Times Call for Tough Love.”  I believe now is the time to determine why your team isn’t upselling.  If your company falls into category five, something needs to change.

Some Thoughts on Starting

Start simple.  Instead of asking for a product sale, ask if the customer is aware of some new program, training event or if they receive the company newsletter.

Develop a list of add-on, lower cost commodities.  For example, electrical distributors might want to consider asking for wire markers or the multi-color tape used for identifying cables.

If your computer system allows for “suggested other products,” invest in populating the data fields for your top 200 items sold.  

Hold a weekly “Inside Sales Huddle” to reinforce the need for add-on sales.  Ask each rep to share their successes.  Talk about the customer value of properly done suggested sales. 

Here are a couple of topics to discuss with your team:

1. The phrase “Would you like to supersize that order?” has been estimated as generating over $1.3 Billion in added sales.
2. Amazon recommends additional products (add-on sales) by saying “customers who bought this item also bought…” and lists other products.
3. The young lady in Chicago who suggested that I “just look at the dessert tray” ended up adding $14 to my bill.
   You'll notice these are all examples of painless ways to upsell.  They are not forced, but rather have a natural flow.

We need to begin the journey now…
Times are getting tough.  I just read a great report on the Electrical Trends Blog indicating the electrical market is trending downward for the first time in seven years.  For years, distributors have talked about getting started in with upselling.  A few have been successful.  Most have simply allowed the topic to wither on the vine.  Now is the time to make it happen.

13 times You Should Never Discount

A quick review of the Profit Reports generated by several knowledge-based distributor associations reveals a few undeniable facts:
• Distributors sell thousands of SKUs
• Distributors sell to thousands of customers
• This equates to millions of customer/product combinations

Another point dwells just below the surface. While it is harder to spot without lining up the reports over long period of time, our research indicates the typical distributor discounts more when times are good than when they are bad.

You would think that margins would go down in tough times and up in good times, but the preliminary results indicate just the opposite. Perhaps times of economic growth cause us to loosen up our grip on pricing mechanisms. Maybe we get just a little sloppy. Or, perhaps our customers rev-up their negotiating strategies. Still, we find ourselves discounting.

As we say here in Iowa, "let’s put some lipstick on this pig."  Our customers don’t think poorly of us because we discount. They have even put a kinder name on the beast – they call it “leveraging the relationship," “customer concessions” or “rollbacks."  You can thank Wal-Mart for that last one.

They reason - their size, industry sector, quantity of purchases, advanced ordering techniques, or plushness of their office carpet somehow justify a price slightly lower than

your norm. In extreme cases, we have discovered situations where customers insisted on discounts because of clerical error. Really, the inside sales person made an error in a one-time quote and the customer insisted on the price for the next 12 months. My guess is, if times were tough, the distributor sales manager would have fought and argued to get the money back, but what the hay-- times are good.

Other times, we discount without the customer’s assistance. In these cases, our purchasing department makes a special buy. Instead of putting the extra margin in our pocket, we get discount drunk – dishing out special deals to everyone who crosses our path. Don’t believe me? Next time copper takes a jump, watch electrical sales guys fight to sell their customers copper wire at last week’s older and lower copper price. That’s a form of wacky discounting that seems to only happen in distributor-land.

I realize these discounting practices have been going on for a very long time. Further, old habits are hard to kick. But join me for just two minutes while we talk about the 13 situations where you should never discount.

1) Never discount to make your quota or goal.
There are salespeople who really do try to end their years with a bang by offering some amazing discounts. This strategy seems to be part of the American lexicon. Just listening to radio or TV for a couple of hours you will most likely hear ads touting end of the year (month or week) discounts from car dealers, appliance stores and carpeting outlets. Remember, these people sell on price. When knowledge-based distributors get sucked into this mentality – they lose. Don’t be tempted to offer up an end of the year deal… ever.

2) Never discount on emergency stock.
Good wholesalers hold onto certain items “just in case." Here’s a quick example. A number of companies in your area use gigantic fuses to protect their plant’s electrical system from catastrophic failure. This almost never happens but you decided to keep a couple of these fuses around as a customer service. It’s emergency stock. When the emergency rolls around, price should not be an object of discussion.

3) Never discount on your exclusive products. 
There are products where you are the exclusive supplier. If you happen to be the only source for the product, why would you offer a discount? It doesn’t make sense.

4) Never discount spare parts.
Really, you already sold the solution. It has provided the customer with years of solid operation and finally something must be repaired. Why would you discount these parts? Providing a special price here really won’t guarantee you future business. It will guarantee you less margin.

5) Never discount a modification to an existing product.
An existing product needs to be modified to work with new equipment. Adding the modification extends the life and the serviceability of the product, discounting is not needed.

6) Never discount weekend or after-hours deliveries.
It’s totally amazing that distributors will go to the trouble of opening their doors for after-hours pickups or weekend deliveries then succumb to a request for a cheaper price. Say no to discount requests here. If the customer really wants a lower price, ask them to wait until Monday. If they won’t wait; you shouldn’t cut your price.

7) Never discount on parts required after troubleshooting.
If you or your distributor specialist help the customer figure out what is wrong with their existing product and helped establish the solution, say no to requests for a discount.

8) Never discount after the fact.
One negotiation ploy purchasing types have learned is the request for a lower price after the product is installed. They will ask nicely and you should respond nicely as well. Sorry, but we cannot do anything about the price now.

9) Never discount on a first time sale.
If your price level is right (and it should be,) this is wrong. We have heard of companies offering a “welcome to our business” discount. Here they unilaterally provide a discount to customers who have placed their first order. In our opinion this sends a message – everything we sell is priced high, so always ask us for a better price.

10) Never discount to someone who is slow pay.
Unfortunately some of our customers are slow to pay. This fact alone most likely justifies a higher price. I ask sales managers repeatedly, why discount?

11) Never discount a safety related product.
We’re not talking about the consumables sold by Safety Distributors here. Instead, think of products which impact workplace safety. Things like machine guarding, particulate monitors and other products. Safety shouldn’t be purchased on price. You shouldn’t sell it on price.

12) Never discount to convince a customer to return,
This one may sound strange, but when you offer discounts to convince an ex-customer to return to the fold, you are in essence sending the message that you are willing to match any price on the planet. It’s a reverse auction on steroids.

13) Never discount without getting something else in return.
When you come to think of it, this really isn’t discounting – it’s called negotiating. When you are absolutely forced to make some type of price concession, get something of equal value in return. Freight, long term commitment, other products which are not discounted or payment terms all can offset a lower price. As you do this, remember whatever you’re given in return must have a value.

We don’t want to discount our time together…
Many people inadvertently discount because they are unsure of where the pricing should be. In the world of wholesale distribution, this puts pricing responsibility on the shoulders of someone who should be concerned about helping the customer create real value.

Salespeople, customer service reps, counter sales folks respond to customer need when pricing levels are systemized and maintained properly. Pricing expert David Bauders of Strategic Pricing Associates recommends that his clients to establish a management-level Pricing Czar. This person bears the responsibility of establishing company price.



We recommend three actions to virtually every client we work with:

1) Build a process around sales activities.
There is no such thing as an informal process. If you lack metrics, coaching points and the ability to train on your process, you need to reevaluate your process.

2) Pricing responsibility belongs in the hands of somebody besides the line sales team.
I am not saying you don’t need the sales team’s input. I also believe in aligning gross margin with sales compensation. But unless there are some rules and some separation, your sales team will give away margin. It’s too prevalent to argue away.

3) Unless you understand the value you provide to customers, you will have a tough time with the first two – Measuring and understanding the value you provide makes you price proof.

Call on us if you want to argue these points. We would love to be proven wrong.

If you are a distributor specialist involved in the pricing process – we would like to interview you for some research we are conducting.

Strategic Account Planning Part 6

Sometimes, it’s not just what you know, but who you know

...and how you treat them.


I’m sure you’ve heard the saying, “Sometimes, it’s not what you know, but who you know that counts.” Perhaps you’ve been on the wrong end of this old axiom. You did your homework, researched the products, built a killer presentation and followed up with amazing vigor; only to lose an opportunity to someone who already had a relationship with the customer’s top guy. These things happen and sometimes there is really nothing you can do about it. As salespeople, we can either shrug our shoulders and go on about our day, or do something about the situation.

Most salespeople focus on the technical users of their products. For automation sellers, it’s the engineering department. Industrial supply salespeople hit on maintenance. Janitorial and paper product distributor sales folks go to the head of facilities. I could elaborate on the list to nauseating length, but the point is, most frontline sellers focus on a narrow group of contacts at their customer. Strategically, this is a mistake.

Let’s fast forward, your efforts at an account are successful. Your company starts landing some meaningful orders. You find yourself harvesting some big dollars from the account. All of your contacts appreciate the service you provide. Somebody, somewhere is writing some big checks to your organization. Doesn’t it seem strange that you don’t know them?

But then something happens.

A new supplier does an end around and goes straight to the money guys, by-passing all the product knowledge, expert services and other goodies you provide, they deliver a compelling pitch on how they can save your customer money. Suddenly, you’re on the defensive.

Wait, you don’t believe this can happen? Let me reference you to Chapter 5 of The Challenger Sale, where authors Dixon and Adamson go step by step through the selling model W.W. Grainger unleashed on the Industrial sector. Basically, Grainger did an end around and created a new model for MRO purchasing which sent many incumbent salespeople scurrying to save their hard earned business.

Here’s my point, it is impossible to have a solid strategic plan at your account without covering the financial side of the customer.

Every account has a person who is compensated by bottom line profitability. It could be the profitability of the company, a single plant or (as is sometimes the case) a single production line or product category; but somewhere there is a person responsible for money. For the sake of our argument, let’s call this group of people Top Management. Ignoring this potential relationship with the upper level folks borders somewhere between stupidity and travesty in the making.

Here are three things to ponder on dealing with this type of customer contact:

• They are extremely busy. Be prepared to impress with the few minutes they give you.

• Financial folks really don’t understand your product. And, they don’t really care for a tutorial. Instead, they want to understand the financial impact of the ideas, solutions and services you bring to their organizations.

• Most of these people complain their technical people don’t truly understand all of the financial ramifications of their actions. So if you’ve been counting on others to share your high end value story, it probably is not working.

We need to establish a relationship with management. There are a number of strategies for setting up meetings with this type of person. We won’t go into all of them, but here are a couple of my favorites.

Set up an introductory interview
Note the word interview, as opposed to a sales call. In this meeting we quickly introduce ourselves as a supplier of critical goods and services to their organization. Then, launch into a few well selected questions on market conditions affecting their company, difficulty finding technically qualified new people, issues impacting their bottom line and their view of the future. That’s it. No selling, no elaborate product demos, no elaborate mission statement presentations.  

Set up customer satisfaction review

In this instance, you essentially thank the management guy for previous business. Let them know you are working to assist in getting the most bang for their buck and ask for feedback on how the whole thing might have worked better. Again, no selling.

But this is not a "one and done" process.

After these first meetings, find an excuse to arrange a similar type of meeting every few months. Being respectful of their time, these meetings should be short and sweet, with lots of opportunity for the customer’s top brass to give you their feedback. If possible, introduce your organizations leadership to the customer’s high ranking management.

We believe this management level dialog should be an ongoing part of your strategic plan. We’ve shortened the process for the sake of brevity.

Look forward to the details additional items in our upcoming book on strategic plans for accounts.

Product Training, Sales Training, Price Training?

It just dawned on me; the way distributors view training is skewed. After observing hundreds of confabs carrying the “Distributor Sales Meeting” moniker, I would characterize the content as product-centric community bulletin boards with an occasional dash of something else. Here’s my unscientific rundown of content:

49% New Product Introductions
Everything you ever wanted to know about some new product. Often these are conducted by Supply-Partner field sales teams with little grasp of the local customer mix, competitive landscape or the sales team’s technical abilities. Only rarely is customer application information discussed.

20% Existing Product Re-Launches
We started selling this product a year ago. After limited success, we decided some of the sales team didn’t pay enough attention to the product minutia shared last time. So here we are back with more information, only this time the sales guys ask a little better questions.

15% Delivery/Logistics Issues
Time is devoted to issues with long lead times, factory recalls and seasonal stock outages. These meetings are good because often they provide “work-a-rounds” to keep customer’s plants running and minimize damage.

10% Company Policy, Quotas, Performance

Everybody needs to understand the new benefits program and vacation policy. Meetings to discuss Quotas and annual performance are equally important and may be the only thing we’ve talked about that deserves to be part of a “sales meeting.”

5% Sales Training
Once every great blue moon, someone talks about how to better sell the company and products. Generally these come in half day bursts every 18 months or so. The rest of the time, there is no discussion of the company’s intrinsic value, no talk of presenting to customer management and no words on developing better questions.

1% Pricing
A rookie may receive misguided price training while shadowing a rock star salesperson on the road; however, this type of training barely makes list. If it comes up at all in a sales meeting, it generally follows a distributor association meeting where somebody does the “Power of One” presentation.

Why do I believe this is totally skewed?
First, we live in the age of information. Twenty years ago, distributor salespeople were viewed as important sources of customer information. Things have changed. Customers have access to massive quantities of product information. Raw product data presented by a salesman is almost viewed as a nuisance. What is valued is application support, tips on product interconnection compatibility and troubleshooting support.

Customers do value training; however, most distributors charge product specialists and application engineers with this task. On a side note, I believe salespeople can gain important understanding of customer issues by accompanying their customers to training and asking customer-focused questions about what is being discussed. But, this is not something for the sales meeting.

What should be covered in a sales meeting?
One major point is why a customer would benefit from the use of your product. This benefit question must be tied to value drivers. Labor savings, lower cost maintenance, better energy usage, increases in uptime, and improved operational efficiency must be studied in detail. Whenever possible, it makes sense to tie these to monetary values. For example, our product saves the customer $105 dollars during the installation procedure.

Distributors also add value via the services they provide. Just in time delivery, emergency back-up stock, parts kitting and application support join valuable yet mundane tasks such as locating and serving as a source for some obscure manufacturer.

A real sales meeting would stress the importance of the value the distributor provides to each and every customer. A real sales meeting would cover the questions needed to bring out customer-centric information which would allow for better solutions.

But what about Price Training?
Would it make sense that some distributor solutions are scarcer than others? With this in mind, the
distributor is entitled to charge more. The problem is, most distributor salespeople don’t fully understand the cost of handling the products. This could be part of price training.

A few of the products we sell are truly commodity-like. When commodities are sold, quantity and types of logistics required impact the price. Would it make sense to talk about precisely what makes a “quantity order?” Is it 10 pieces, 10 cartons or 10 pallet loads? Are the people in customer service aware of the price breakdowns? Are they measured by the way they adhere to management’s directive?

The sales team must continually review (and occasionally improve on) the following topics:
1. How was the system price derived?
2. What are the natural customer segments and how do they impact price?
3. What product types deserve a higher margin? And why?
4. How do we handle pricing exceptions?
5. How are market prices impacted by competitors?
6. The importance of understanding customer-based negotiations?

Based on my experience, very few distributor sales managers can answer questions arising from a discussion of this list. And, price training is not a place to stumble around in your response.
Here’s why:
Customers are trained (perhaps conditioned) to question our price. Many use price as an excuse for not doing business with us when the root cause is actually something else. It’s easier to say, “Your price is too high,” than it is to outline the truth, “We decided to go with your competitor because they out service you on routine stuff.”

The message is confused. Training is difficult. At the same time, it is an extremely important topic.

In distribution, a gross margin increase of just a couple of points stands to increase bottom line profitability by 50, 60, maybe even 100%. To achieve the same results by way of sale growth requires a near doubling of company size and that kind of growth can take years. Successfully impacting pricing can happen in a few months.

Price Training starts with a Pricing Process.
Developing a real pricing process is central to price training. The Strategic Pricing Associates (SPA) process uses scientific computer analysis of data pulled from your own past sales. Further, the process has detailed documentation designed to enable multi-layer training for literally everyone within the distributor organization (Sales, Customer Service, Purchasing, etc.) Finally, the SPA process has metrics developed to coach, help and manage the sales team into the future.


Strategic Pricing Associates has assisted over 350 distributors through the implementation of their process. Most SPA clients see results in 90 days. The results pay dividends. The typical SPA client sees a gross margin increase of two full points.


A final thought
Strategic Pricing Associates hosts several Pricing Strategy Seminars. These are a gathering of clients already using the SPA system, Industry Experts and companies considering a pricing process.  The seminars are thought provoking and powerful.  I have had the honor of speaking at a handful of these events and will be doing so again in Chicago on June 6th.

If you find that your company has not had price training since the days of the Carter Administration, I encourage you to attend. What’s more, attendance is free.  Click here for more information.