An Exercise in Questioning Your Sales Compensation Plan

Some might call it eavesdropping, but we call it our uniquely unscientific methodology for tracking distributor trends. We listen. Plus, we get phone calls, emails and occasional text messages from distributors. When we hear the same topic mentioned more than a dozen times in the course of a month, we know the topic is coming to the surface.

For some reason, the topic of sales compensation is showing up --- repeatedly.

Here are a few questions I believe are pertinent to any thinking directed to the topic.

Point One: Do you see you sales efforts becoming more team focused?
• Do you see your business employing more or fewer people in the sales function in five years?
(Potential new positions might be Specialists, Project Managers, Customer Crib/VMI maintainers, Tele-sales, Application Engineers and others.)

• Do you believe a well-developed team could sell more than semi-autonomous salespeople?

• Do you believe your current outside sales force will be or should be part of that team or will/should they operate somehow independently from the team?

• If not operating in a semi-autonomous “lone ranger” capacity, how do you see outside salespeople fitting into the organization?

Point Two: Which is more important, Account Maintenance or New Account conversion?
• Have you ever had accounts which maintained their ongoing volume during the interval “between sellers?”

• Do you have an inside sales team, customer service group or specialists who have built followings amongst your customers that matches or eclipses the efforts of the salesperson?

• How much time do your sellers invest in prospecting for new customers or additional contacts within an existing customer?

Point Three: Do you currently employ commissions or base plus commissions in your compensation plan?
• Are good salespeople open to working in a non-commissioned environment?

• Do you rely on commissions to drive quantity or quality of output from salespeople?

• Do you ever offer additional incentives or special performance awards to impact sales?

• Do you rely on commissions to provide variability to your costs (i.e. lower sales compensation during bad years?)

• In his book Drive: The Surprising Truth about What Motivates Us (chapters 1 and 2,) Daniel Pink lays out research indicating creative knowledge-based work is not enhanced by monetary rewards. If you use a commission-based compensation plan, could it not be working as planned?

• Do you believe a greater volume of selling engagements is more effective than increased quality of the engagements? How does commission impact the number of appointments?

Point Three: How autonomous are your sellers?
• If you use a compensation plan which is heavily focused on commissions, how do you keep sellers goals aligned with company goals?
• Is it possible for salespeople to be totally autonomous with responsibilities and compensation tied directly to sales results and at the same time be cheerful about attending sales meetings or spending needed time to update CRM systems (in which they see little value?)

• Does a good salesperson view their account list as “their customers” or “your customers?”

• What happens when each autonomous salesperson insists other team members operate according to their specific rules of engagement with “their” customers?

Point Four: How do you handle small customers?
• Do you see small customers as a source of income or growth?

• How many customers are on each outside salesperson’s account list?

• Do you assign accounts and pay commissions to sellers on accounts which probably do not warrant much of their time, just to be sure there is somebody responsible for the account?

• Is there a lower cost way of handling some of these transactions without a “normal” assigned salesperson?

Point Five: How do your sellers spend their day?
• How do you define a sales activity?

Here are some thoughts in order of perceived importance:
 With customers personal visits?
 On the phone with customers?
 Researching customer needs?
 Tracking opportunities?
 Creating quotations?
 Following up on quotations?
 Entering orders?
 Expediting orders?
 Babysitting orders?
 Administrative work?

• Do your salespeople duplicate work performed by others in the organization?

• Would your sales numbers improve if work were routed to others?

Point Six: Thinking about new territories and newly hired salespeople.
• Do you ever use “guaranteed commission” plans for new hires because the territory currently does not generate enough business to justify the seller’s compensation? How long are the guarantees in place?

• How long does it take for a salesperson to build a new territory from nearly zero to profitable for your company?

• Have you ever had an issue where a new seller’s compensation grew to an acceptable level before the territory became profitable?

• Have you ever hired an experienced seller with the promise of them bringing along established customers? What percentage of the promised business came through?


Point Seven: What else impacts selling strategy? Miscellaneous thoughts…
• Does your sales team struggle to launch new products in a timely manner?

• Most distributors depend on manufacturers for leads but the quality and quantity of leads has dropped off significantly in the internet environment. Where do your salespeople get their leads?

• Are there strategic products that require a great deal of missionary work (during which actual sales commissions are not flowing?)

• At what point might a salesperson run out of bandwidth?

• What have you done to make your “outside sales” process more efficient in the past five years?

• If you are currently using internet-based order entry, how are sales compensation be handled? If not, is tis part of your future plan?

A call for your input…
I would love to hear your thoughts on the whole topic of sales commission. Feel free to send us an email or drop an anonymous comment. Specifically, what other questions are missing from your perspective?

It will be better than this one!

There will be prizes…
Everyone sending us a comment will receive a shiny new postcard from Iowa.

Product Training or Sales Training?

When I ask the question “Do you have sales meetings?” most often the answer is to the

Without teaching about the
science of selling,
your meeting room
may as well be empty

affirmative.  Weekly, monthly, quarterly or something else is the standard answer.  But when it comes to content, a few follow up questions are often needed.  That’s when the truth comes out; distributor sales meetings are rarely about sales.  Oh, sometimes the numbers are reviewed.  Goals are generally discussed near the beginning and ending of each year.  And occasionally, distributors talk about the need for results on some supply-partner’s new product line.  Rarely, if ever, do distributor leaders actually talk about the science of selling.

Over the past few days, I have participated in over a half dozen conversations (phone, email and social media) on the topic of sales meetings.  Allow me to highlight.  In one conversation a manufacturer asked one of their top distributors if they did sales training.  Immediately and with great pride, the distributor manager launched into a conversation on the product technology training his team had covered over the past few months.  The manufacturer tried to steer the meeting back to selling skills with the mention of the Strategic Account course they recently put their team through, but the conversation immediately turned to product details. 

Just this morning I received the following message from a new LinkedIn.com connection: 

“I enjoyed the article you posted on selling.  I am always interested in what’s happening in distribution sales, as it is a pretty unique type of sales.  Most of the information I get is product based, so I always find it refreshing when I see something that addresses the type of selling I do.”

This is not an isolated situation.  Over the years I have heard this comment from distributors in the Industrial, Safety, Automation, Fluid Power, PT and Electrical markets, as well as the Irrigation, Automotive Parts, Sporting Goods and Motorcycle parts industries. 

Considering distribution is an industry which is primarily a “sales function” driven business, I believe this is both a threat and an opportunity. 

If you are a long-time reader, you probably realize we cater to distributors who are knowledge-based and solution selling organizations.  Most of us pride ourselves on our product and application skills.  We add massive amounts of value to our customers, but the customer has to get to know us first.  Further, our industry is ever being squeezed to be more efficient.  For distributors, 60 percent of our budget is spent on our people and salespeople represent a large share of the outlay.  Developing, refining and growing selling skills serves to address both the speed of relationship and sales efficiency issues.

Why do we continue to ignore the sales skill part of the equation? 
Here are some possible answers:

• Managers believe their sales teams are already seasoned veterans and training would be a waste.

• The manager’s mistaken belief that professional sellers devote time to improving themselves through books, tapes, podcasts and online programs.  (My apologies and best regards to the one percent who actually do this stuff.)

• Salespeople resist training especially if they believe management will require changes in activities

• The “salesmen are born not made” theory which still persists despite research to the contrary.

• Cultural tradition – they didn’t have sales training back when I was a “rookie” and I turned out all right.  (Maybe you’ve heard me reference “dinosaurs” in previous entries.)

• A belief that sales training doesn’t work for our industry

• Training is expensive

We wrote this in an article published by “The Distribution

Center Magazine” a publication dedicated to the HVAC/R distribution industry:

“… people are our greatest asset.” Yet, according to research conducted by Jonathan Bein, Ph.D., of Real Results Marketing, only 22 percent of distributors have a learning management system.  Sadly, distributors struggle to fund skills-based training for their organization during tough times. 

This will sound strange coming from a guy who offers training for a fee, but I would much rather see distributors spend 20 minutes a week reinforcing sales or leadership training than put their teams through a two-day session without follow-up.  Training can be part of your culture for next to nothing.

Sales meetings with selling skills content can be part of your culture. Every month, hundreds of great ideas are published in trade publications and in online blogs.”  

Why not take 20 minutes from your sales meeting to discuss one sales related topic?  The sales manager can provide personal examples and challenge the team to try something for the next couple of weeks and report back to the group.

Keeping with this theme and using “The Distributor Channel” blog as a reference, here are a few topics to explore:

What do you know about your account? 

To have a real strategic plan for our accounts we need to take inventory of what we know now and what we should learn in the future. Our plan must revolve around positioning ourselves to really be solution providers. In some instances, this means understanding that providing solutions to the customer is a poor use of our resources.

Sales Question: How Long Do I Chase an Account?

After nearly a year of calling on a couple of major accounts, orders still weren’t flowing.  As our day wound to an end, he asked me point blank, “How long should I pursue an account before I give up and move on?”  Here are some thoughts for you to consider.

A Pricing Tale: Old Joe

From where I sit, standardized pricing, or whatever you want to call it, is destined for failure in our business. Our customers are tight with their money. They don’t want to pay more, they want to pay less.  This is a great introduction to using a pricing process.

The Gross Margin Equation - For the Record

This seems a bit silly, but I keep running into people who talk Gross Margin without really knowing the formula.  If you’re anything like me, this is a huge pet peeve.  BTW: this one is great for your suppliers too.  They clearly don’t teach this equation in most MBA programs.

A Challenge for my Friends…

Spend a little time thinking about the half dozen issues you, your coworkers or maybe your team have in the selling process.  It might be setting appointments, breaking past voicemail, getting customer time, establishing new accounts or a rash of other topics.  Jot them down and determine how you could introduce the subject into your next sales meeting. 

A Post Card from Iowa

Send me the ideas for your next sales meeting along with your address and I will send you a genuine post card from Iowa.  For one lucky reader who sends an idea, I will provide a customized PowerPoint covering your selected topic along with discussion points.  That's a minimum of 15 minutes of sales training for your team…

Looking back at our blessings

Looking back at the nearly 200 articles posted to this blog, most were designed to provide insight,

suggestions and training for distributors and their supply partners. Our mission has been, and continues to be, creating a catalyst for better ideas within the distributor channel. But, for just a couple of minutes, allow me to take a look back in time.

We are celebrating out 10th Anniversary
River Heights Consulting was formed ten years ago on November 13, 2005. After many years of consideration and sleepless nights, I decided to take my gathered knowledge and skills to launch out on my own. It was my long-time dream to consult in the distribution world.

When I first launched, I had no clients, no prospects of clients and very little idea as to how to find new clients. For a couple of days, I felt like Jack from Jack and the Beanstalk, somewhere deep within my consciousness I heard voices say, “Jack, you traded the cow for these three magic beans? How stupid of you…” But I was blessed. A few days following my resignation, I received an unsolicited call from Phil Allen of Grace Engineered Products who wanted to be my very first client. I am happy to report Grace is still a client. Blessings continue to flow.

During the first couple of years, it was tough connecting with new clients. The good news was that it was fairly easy to find organizations where I could provide really strong value.  They wanted to hire me!  The trouble was, they wanted to hire me as an employee, not a consultant.

It seemed as though every baby-boomer with any level of success “put out a shingle” and called themselves a consultant. At least until somebody offered them a job. My wife encouraged me to stay the course. Again, I was blessed. At some of my most discouraging times, a new client would join the River Heights Consulting family. The family grew and now at the end of ten years, we are maintaining that momentum. With each new client, I have learned something.  I have learned about their business, how to be better at my own business, and how to help others overcome obstacles and prosper.

Over the past 10 years, River Heights Consulting has:
• Interviewed over 1,000 distributor executives (we quit counting at 800 about five years ago). Each one of these folks generously shared the issues facing their businesses. In many instances, they talked openly of their successes and the pitfalls they experienced along the way.

• Interacted with some of the top thinkers in the wholesale distribution. The folks who run distributor associations really do have a handle on the issues facing wholesalers. They shared, they bounced around ideas and they generously assisted with research.

• Written five and a half books. Why the half book? Well, there are a few that are near complete but need either some final editing or a bit more research required to move them from mildly interesting to worthy of the readers' time.

• Authored over 400 articles. This has put me in touch with some world-class editors. They helped me improve my writing skills. Don't forget, I am an engineer by trade, so writing was never a strength. These people were patient with me, offering amazing tutorials.  Plus, they taught me to not be afraid of putting some of my personality into the work.  "Frank speak" is a real thing around here.

Since many people want to know, here is a list of the work we have performed.
• Executive coaching. In spite of claims made by others, I don’t believe any one course can provide the background needed to be a top-level distribution executive. We work one-on-one with great people to help them be even better. We play devil’s advocate and challenge their decisions. We ask dumb questions and demand smart answers. We help them refine ideas.

• Sales training. We do training on target-based selling, Value-metric selling and solutions selling. We often ride along with salespeople to provide them with a bit of coaching as well.

• Speaking. We have been honored with the opportunity to speak to groups all over the world.

• Distributor Advisory Councils. This is one of my personal favorite tasks. River Heights Consulting has conducted dozens of these meetings and helped suppliers build a better relationship with the wholesale partners.

• Rep. Council Meetings. Sales Agencies, AKA Rep firms, are part of the landscape. They provide real value to the channel. One rep recently pointed out a notable fact. According to Forbes Magazine the average tenure of a rep in their market is 22 years versus just over two years for a salesperson working directly for the manufacturer.

• Strategic Planning. Without a plan, it’s hard to grow. We’ve had a lot of fun helping all kinds of organizations refine their vision for the future.

• Customer Focus Groups. The voice of the customer is powerful. Understanding why people buy from you is as important as any fancy sales strategy.

I could go on and on with this list. I know I have skipped over some important stuff. I suspect in another ten years the list will be even bigger and better. So allow me to close with the most important point.

We have been blessed with literally thousands of friends, people who have helped us succeed. We have been blessed with a modicum of success.

But it’s not about Frank Hurtte or the team here at River Heights Consulting.
Instead the real secret is all of you.

Thank you for your help and support since November 13th of 2005.  You have given me hope in the face of adversity and have kept me laughing with your distributor stories.  You have blessed me.

I hope to be a blessing to you and your company some day as well.  And with the next 10 years ahead, I thought I should share our new and improved logo:

As always, I would love to hear your thoughts!  Happy Thanksgiving!

Strategic Account Planning Part 8

Follow the Money

In an earlier edition, we talked about understanding the opportunity presented by an account. Let’s push this thought further. Way back in the late 70s, there was a movie called All the President’s Men that popularized the catch-phrase, “follow the money.” And while the movie put a negative stench on the phrase, for sales types, it comes with a great connotation; almost like a new car smell. So with this thought, hop in and join me as we… follow the money.

The truth is most sales people follow technology, applications, customer needs and pursue friendly contacts. Salespeople rarely follow the funds. I can’t help but wonder if a lot of guys actually feel like their work is cheapened by the exchanging of money. Just think back about how many times you have heard a salesperson lament:
“The proposal was perfect. The product was everything the customer wanted. We were the best supplier on the planet. But, the customer didn’t have any funding.”

Think about this for a moment. Selling time, pre-sale research, product specialists, engineering resources and a ton of money spins down the proverbial drain. And, it all could have been avoided by asking a couple of well selected questions/phrases.
Here are six easy examples:
1. How does your company justify projects like this one?
2. Does the whole thing go through a process or committee?
3. What kind of budget do you have for something like this? I want to make sure you get the best deal for your money and understanding the budget helps me focus our work.
4. What are the financial issue driving this decision? I want to better understand how the need for improvements are discovered.
5. What kind of payback are you looking for to make this project work?
6. Who holds the purse strings for a project like this in your company?

In an earlier article on the whole topic of Strategic Planning for Accounts, we spoke about the need to understand the value you provide to the customer. Following the money is partially a financial play. You focus your attention away from the “stuff” in your catalog and onto the workings of the customer.

An aside from Frank:
This is for those of you who were forced to study Shakespeare as a teenager. Ms. Miller, my 8th grade English teacher, called these a soliloquy. I don’t write many but here goes…
I know your products are spectacularly interesting; they probably have the latest “double-dip-thong” technical wizardry. My guess is your company has a really creative Vision Statement and a trip through your warehouse is like a visit to the top secret NASA Space Lab. But, all of this is only mildly amusing to your customer contact. If the contact happens to be a financial guy (Plant Manager, VP of Operations, Production Manager or somebody else), your product selling scoop bores them to tears. They only want to talk about their company and money. Period! Now back to the article already in progress….

Understanding where the money comes from is important to your credibility but it gives you some old fashion selling advantages as well.

Anticipating the money
We have discovered salespeople who know where the money comes from are able to anticipate its arrival. Knowing about a potential project early is a powerful advantage. The salesperson who knows about the coming “money” can build credibility with people they may have missed in normal calls to the customer. They can research new product advantages. Gain new insights to drive the proposal forward and jockey for better competitive position.

Distributors with non-exclusive supplier lists can use the extra time to lock in on special pricing agreements, strengthen relationships with the supplier and leverage the suppliers for competitive advantage.

Signing off for now…
There are a half dozen other advantages to following the money. Many of these involve nuances in managing your business; things like inventory and staffing. But from a purely selfish selling standpoint, imagine the time advantage of knowing the difference between funded spending and a pie in the sky chase down a rabbit hole. Time is the world’s first unrenewable commodity. There will be times when something has to be pushed aside. Why not put off the unfunded sale?

Strategic Account Planning Part 7

How to Think About Opportunities

At the mere mention of the word opportunity, most sales guys’ nostrils flare, blood pressures spike and pupils dilate. Perhaps left over from some prehistoric caveman fight or flight gene, they seem to check their cognitive skills at the door and wildly rush ahead. Make no mistake, I like aggressive sellers. But, it’s important to take just a moment to fully understand the full story at an account before investing time, effort and company resources.

The full story comes at the crossroads of three very important variables:

1. Real dollars/gross margin potential
2. Estimated time to achieve business success
3. Level of effort involved with getting the business

Dollar/Gross Margin Potential
Many experienced salespeople miss the dollar/gross margin potential of their accounts for number of good reasons. Often, it’s hard to get accurate estimates of the potential in the early stages. This is one of the reasons why we believe that a certain amount of information gathering is important early in the stages of our work in the strategic plan. Generally speaking, as time goes by, the salesperson’s understanding of the precise opportunity involved should improve. Furthermore, most salespeople tend to be wrong in most of their estimates regarding accounts. This has to do with lack of training and oftentimes the level of thought put in to actually forecasting and thinking of the opportunity. I believe that this is an important skill for salespeople in the future. In many instances, we have recommended that sales managers constantly/continually work with their teams to develop forecasting skills. This, of course, plays well into the team’s ability to measure future potential not only in critical/key accounts (where a strategic plan is developed,) but in all accounts under their charge.

A number of ways to gather information around the real customer potential exist. As I like “good examples of bad examples," one of the worst methodologies is via contact with purchasing groups. Our experience dictates purchasing groups are trained to overestimate their purchases in order to improve their negotiating positions for lower unit prices. Some of your customers may have developed a level of partnership where accurate purchasing information is provided, I believe it is wise to approach the information with a degree of skepticism.

One of the best ways to check buying potential is via contrast and comparison against other similar accounts with verified data. This might be a customer of similar size in a similar business. Or, the estimates might come through ratios and similar breakdowns derived from complementary product. It is not uncommon to see rules of thumb which give an overall better understanding of potential.

Let’s think about this rule of thumb idea. Imagine we were selling office supplies. In a time when most companies are using electronic formatting and digital printing, a relationship between paper sold and toner used certainly exists. Similarly, we find relationships between classes of automation devices such as programmable controllers (automation computers) and field sensors (devices to measure variables which are connected to the programmable controller.)

Establishing a best estimate on a product by product basis gives you understanding, not only of your market share within the customer, but also provides a picture of products the customer is not buying from your organization. For many years, I have suggested our clients use a FOCUS (Fraction of Catalog USed) analysis to contrast product groups sold to the customer against one another using the types of relationships explained above.

Timeline to Success
Let’s break away from the money discussion and move on to another important factor; the length of time required to reach personal growth goals. While it might feel good to say that someday we are going to turn this account in to a million dollar deal, some day does not really allow us to do much towards establishing a real strategic plan. Therefore, if we are like many salespeople, judged by our ability to reach certain growth goals in a timely manner, establishing a timeline is important.

Breaking down our progress at specific accounts into easy to manage and measure steps is both strategically and tactically important. In a previous installment of this series, we talked about the importance of gathering customer particular data. This includes information regarding the customer’s own business model, plans for growth, and operation parameters within the business. Certainly, one of our milestone goals might be to complete the gathering of a subset of this information.

Because a portion of the overall strategy at each strategic account is to increase our importance and therefore attract more business, removal and replacement of small competitors might be a reasonable timeline goal. To redefine our goal we might state the plan calls for a tactic of eliminating short line suppliers selling only one or two SKUs to the account. It might single out companies selling via the internet.

Keep in mind the customer’s cost for administering and dealing with a small supplier is quite high; especially in an MRO environment. If you know an approximate cost of managing a purchase order at your customer, this data could be used to justify paying a little more for the same product purchased from you.

Another timeline goal might be the insertion of your company in to the internal processes of the customer. These include activities such as inventory and crib management, parts kitting, building sub-assemblies, or anything else that puts you in a place where you directly mesh with the customer. Instances where your team actually replaces or enhances the customer’s staff strengthens your position and moves you closer to your longer term strategic goal.

Bringing the strength of other member of your own team to the account might also be one of your time-centric milestones. If your company is one of the many using product managers, specialists, or other support people, why not add dates for their introduction and interaction with the customer. Any activity which creates a new connection between your company’s management team and the customer’s top brass is extremely valuable. Hence, date specific milestones should most definitely include connection of your management team.

Remember, this information must be managed with timelines and dates. What we’re looking for is something which allows us to say something like, “By December of next year, we will have accomplished steps one, two and three. Step four will happen by March first.” Each specific and measurable activity moves us closer to the strategically dominant position at the customer.

How Much Effort Will be Required?
One of the questions I like to ask salespeople is how easy or difficult will it be to get this work accomplished? Let’s just think about it for a moment. Some accounts require massive hand holding, others require lots of technical resources and still more are slow to adopt change.

An example which springs to mind is the difference between OEMs and End User Accounts. Many companies select the OEM sector in order to maximize the revenue in early stages without clogging administrative flow with small one piece orders. By focusing their efforts on the early stages of their growth, they build volume without need for extensive infrastructure.

The difference in account types is not just centered on the OEM/End User example. Some organizations have discovered customer segments which best match their own internal organization. It’s definitely worth exploring. Ask yourself, does our company think about different types of customers and the stress and strain put on our organization in the form of shipping, warehousing, logistical, and other value-add types of labor requirements? Why have these targets been established? Generally, going outside of the boundaries of your company’s sweet spot means extra work.

Further, some accounts are noted for poor or at least unmatched business behaviors. It might be safe to say that if your customer is operating with an unstable financial condition, there could be extra work generated in clearing orders through your credit department and/or collecting payment for your efforts.

On a similar note, if a customer has a known propensity for being very price driven, you may discover that it’s really not worth your efforts to constantly be spending time tracking down prices and doing the additional value engineering.

In many ways, what we want to look for is opportunities for which we have a large chance of success with a minimum of extra effort.
Thinking about the balance of effort, time and potential
On first glance, the thought of strategically identifying the properties of an account based on these three categories is daunting. However, failure to recognize their interaction can send a salesperson’s efforts whirling down the drain.

In many instances, the really huge potential available at an account might outweigh the lower scores in the time and effort categories. The truth is most sales guys are charged with a portfolio of accounts. Some possess lower potential but are otherwise easy to convert; the legendary “low hanging fruit” of sales. Others offer massive gains but require a great deal of time to convert or fall out of your organizations sweet spot.


There is no magic bullet one size fits all approach. Suffice it to say, nothing outweighs good judgment. Build a team, bring your company’s leadership team or other experienced sellers into the discussion.

But remember, skipping this step because it is difficult will only hamper your progress.

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.

Strategic Account Planning Part 5

What value do you bring to the customer?

Several months ago, I had the opportunity to “ride along” with what my client described as “one of our promising new sales guys.”  Because I wanted to just get a snapshot of the quality and quantity of this guy’s work, I didn’t do much to brief him on our objectives for the day.  Instead, I emailed him, "I just want to ride along and observe your work."  A few days later he texted coordinates of a greasy spoon where we would slosh down a cup of coffee and brace ourselves for the day.

After a handshake and a few social niceties, we dove into the day ahead.  I was pleased.  He had real live appointments at three accounts and plans to drop by another couple if time allowed.  Demos and literature were well thought out and carefully stored in the back seat of his meticulously clean company car.  He had invested in timely topics to explore with the various people scheduled to see us.  I could easily see why this guy impressed the boss.

During our 30 minute drive to the first appointment, we talked about his company; locations, people, size, products on their line card and lots of sundry details.  These folks were on the move.  About midway into our drive, I asked, “What kind of value to you deliver to the customer?”  The answer was both typical and scarey; something to the effect of, “We have the best service in the whole area.”  And, in spite of a couple of unfocused pushes, the best I could get was “better outside sales”, “great customer service” and a “willingness to listen.”

This is an all too common response.  And it’s epidemic in our industry.  For knowledge-based distributors it could be a fatal flaw.

What should have the sales guy responded?  A detailed list of services (which translate into value) provided to customers would have been a nice start.  Here are a dozen examples:

1	Policy of stocking emergency inventory to assist customers during emergency and downtime situations.
2	After hours access to inventory and staff in emergency situations.
3	Ongoing customer training sessions including one-on-one training for new engineers, maintenance personnel and others.
4	Ability to handle blanket orders and provide summary billing which drives down the customer’s administrative costs.
5	Inventory services to assist customers with managing consumable parts.
6	Willingness to join customer in tri-lateral negotiations to improve costs on high volume purchases.
7	Salespeople with technical backgrounds capable of assisting in the selection of the best product for the customer’s application.
8	Highly trained Product Specialists who assist with product concepts and layouts.
9	Troubleshooting assistance with technical products.
10	In-house value add group with capabilities to provide complete sub-assemblies ready for installation.
11	Engineers and Specialists who work with customers to “value engineer” existing designs in search new technology and/or products with better fit with the goal of driving down unit costs.
12	Willingness to source hard to find parts which drive up administrative costs at the customer.

Is this a complete list?  I doubt it.  Most distributors we work with can come up with 20-50 more things they do to provide value to their customers.  The point is you have something to sell above and beyond the products shipping from your warehouse.  And, a good strategic plan pulls from the list.  Why?  Because not all of your services match up with every customer, but you need to have a very solid grip on what’s available before you can proceed with your plan.

On to the plan…

Way back in the 1970s, Feature/Benefit selling was the rage.  You detailed your product one feature at a time; matching corresponding customer benefits to each feature.  Average performers simply reiterated each feature/benefit set in every customer presentation.  It sounded like the drone of a skipping record.  Great salespeople, on the other hand, worked to only stress the features and benefits of importance to the customer they were speaking to at the time. 

The same thought process must be used when matching your company’s value to each account.  Additionally, care must be taken to closely match values presented to the right person at the account.  For instance, in example 5 above we noted the distributor had the ability to assist the customer in managing consumables.  No doubt, the customer contact charged with the task of inventory may see this service as a potential threat to his job security.  At the same time, a facilities manager concerned with driving performance at that same account may see this as very valuable and as the key to reassigning the inventory guy to something more productive. 

Thinking more deeply...  In most instances, it pays to bring your values to the customer in an order which is well thought out.  Some values are expensive.  Others may actually be less well defined (a nice way of saying "worse") than an incumbent competitor.  This dovetails back to the power of a strategic plan for each major account. 

Where might you easily demonstrate your ability to provide value?  Once that value has been demonstrated, how can you expand into other areas of increasing importance?  Are there competitors which could easily be displaced and their business rolled into your cart?

A final couple of thoughts…

It’s never enough to just provide value.  Get feedback from your customers.  Customer emails detailing how you helped solve a problem open other doors to sales.  Ask the customer if they will send an email you can share with a supplier or your boss.  And even if the customer hesitates to send you some documentation, create your own log of actions, values provided and other milestones at the account.

Never try to introduce multiple values at the same time.  While they do make for a great capabilities presentation, too many choices confuse the customer.  Instead, work to understand the customer’s own priorities.  Gather the kind of data we spoke about in Part 3 of this series.  Ask additional questions and introduce your value; one step at a time.