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.

Why Do Salespeople Need an Annual Plan?

I’m a Salesperson, for crying out loud, why do I need an Annual Plan?

Some will do just about anything before planning.
It takes more than just adding it to the top of your "do do" list.

Let me talk directly to my friends who fill the critically important role of Distributor Sales.

First, I consider myself to be a member of your brotherhood.  I know it’s a tough job.  Day after day, you load in to your vehicle, had out to face down angry customers, smart-alecky purchasing guys, and unsavory reps from vendors.  You trudge through rain, sleep, snow and traffic that would wilt the heartiest of letter carriers.  If no one has said it recently, thanks for what you do. 

Salespeople are the backbone of the Distribution Industry.  Now don’t you feel better?  But here comes the part where I explain precisely why you’ve got to make time for something many find distasteful.  Bear with me… I promise it will only take a moment.

Regardless of what you think, Annual Planning isn’t just for the guys up in corner offices.  Management needs to plan for financial ups and downs.  They need to worry about managing cash flow, maintaining the right inventory, measuring staff needs and budgeting for the coming year.  And, no doubt you will be asked to share in the fun.  Most of you will be asked to assist with sales projects.  Some of you will be assigned to being part of annual physical inventories.  A few might even be handed a paint brush as part of an end of effort to spruce up the office.  But there’s more for a salesperson to think about. 

Customers aren’t forever

Reviewing many distributors in a whole lot of industries, we’ve learned customers aren’t forever.  Typically, you can count on losing 10% of your “base” business every year to things like plant closings, mergers and acquisition activity, economic shifts and changing needs.  Simply stated, in order to stay even, you have to grow business by 10 percent.

A good annual plan would include evaluating customers on your list who may be on the decline.  Understanding where this loss will come from will direct your thoughts on call frequency and use of your time.

At the same time, determine which accounts are poised for growth.  Sometimes this has nothing to do with you.  If your customer has an expansion pending, your numbers may improve even without your special efforts.  But, working to increase your presence at a growing account pays larger dividends to your sales number.

Special pricing and supply contracts

Special pricing agreements have grown in importance in distribution.  In some lines of trade (like the Electrical and Automation business) they have literally exploded in use.  We tend to create them and forget them.  An annual plan would include reviewing the agreements for inconsistencies. 

Here’s how it works, a customer indicates they are going to buy hundreds widgets for their new project.  You provide them with a pricing agreement but sales of their new machine never took off.  But, when they buy a single part, they get the special price.  This fact cuts into your commission check and sets the wrong kind of expectation for the future.

A good plan includes candid conversations about raising the price to a more acceptable level.  While this may not be comfortable, we have discovered distributors who present massive price increases (6+ percent) often irritate the customer.  You can always lower the price later if and when their quantities grow. 

Pushing the envelope further, do you have any accounts where a special price agreement might give what one client calls “the new exclusive”?  Formulating special pricing agreements, locks out competitive distributors who handle the same product lines.
Click here for a brief tutorial on special pricing agreements

Personal Positioning with Supply Partners

We all have them; friends and allies who sometimes can make our job a bit easier.  They tip you off to opportunities.  They give you insider information.  They allow you to make more money for yourself and for your company.  And, sometimes they are easy to overlook.

Now is the time to plan a meeting with each of these people to talk about their goals and plans for the next year.  Chances are any manufacturer’s salespeople need extra details to feed back to their headquarters group.  Investing in a planning meeting will strengthen your relationship and create future opportunities.

Planning for information storage and retrieval

A lot has happened in the world of distributor data.  CRM systems spring up everywhere.  New ERP operating systems are being sold daily.  New phone apps, smart phones, tablets and internet availability nearly everywhere make it hard to keep up with things. 

In some instances we sales types have been left with more options, but never a clear cut path to bringing all the data together in the way we can use it.

I recommend spending some time thinking about what customer information you need on a daily basis.   We could do it just about any time, but end of year is a great time to plan and begin your implementation.  What information?  How will you add to it?  Where will you keep it?  What’s important for you versus requested/required by management?

Calculate the Gross Margin potential per call

Plan by understanding the gross margin potential required attain your 2014 goals.  Selling is an emotional endeavor.  We all have our favorite customers.  They appreciate the work we do, they greet us warmly and make the people side of the job pleasant.  But, are they big enough or likely enough to warrant our time? 

I have a spreadsheet used to calculate the gross margin potential for sales calls.  Shoot me an email; I will share it with you.

There’s more but….Lot’s more…

This message might run for another couple thousand words, but nobody would read it.

Let me sign off with a list of topics you need to think about:

·       Sales Skills – What are you doing differently today than five years ago?

·       Product Training – What are your strengths and weaknesses?

·       Specialists – Are you getting the full bang for the buck from the ones you work with?

And my favorite

Vacation, relaxation and play – Work hard, play hard.  Have you pondered loading the gang into the old family trickster and hitting the road for Iowa?  If your kids haven’t seen the sun shining over 13.7 Million acres of corn, they may be missing out.

Don't forget about our planning special running through the end of December.  It's a great time to help yourself and the nerds on your team.
Yeah, you read that right!  

The Time Bandit Strikes Again

Hey Buddy, you just stole an hour of my life:

The Worst Sales Meeting in Years

If only the real Bandit came with this shirt.
Courtesy of Zazzle.com

Hey Buddy, you just stole an hour of my life. It’s not that I don’t have a few to spare, I plan to be around for a few more years, but… they say that time is money and you just called me to throw a handful of twenties down the drain.

What’s got me hot? I just sat through the worst sales meeting of my life.
Here’s the scoop:

I was working with a distributor client and wanted to get a flavor for their company culture. I decided to sit in one of their sales meetings.

I like to do this because I’m a product junkie. I enjoy learning about new stuff and the markets served by the product. I especially enjoy hearing how the products are targeted to customer groups/segments.

As is typically the case with distributor sales meetings, the day was divided into one-hour segments with new suppliers being given the opportunity to introduce their company and generate sales through a very progressive (and technically savvy) distributor.

Twenty-some salespeople took their places in the conference room. As the introduction was made by one of the company’s sales managers, laptops were closed, cell phones set to vibrate, and all attention was focused front and center.

The speaker was a regional sales guy from what looked to be a pretty cool company. And, the first two minutes were pretty typical: Name, rank, serial number, location and a quick story about how he first discovered the distributor. Not fantastic, but not bad either. Then things took a turn- down the twisted path of tedium.

This guy’s quick introduction of his company droned on and on. Leading our group on a mind-numbing tour of manufacturing philosophy minutia, the presentation seemed bogged down in stuff with absolutely no sales value.

After over twenty minutes, we were still getting play-by-plays of the last “Kaizen” event. Finally, the Sales Manager suggested switching to a product overview topic. In spite of “losing his audience” earlier, the salespeople put down their text messaging and refocused. Perhaps something good was about to happen.

No such luck.

The next ten minutes were devoted to generic conversations on products focused on the auto industry. Unfortunately, the nearest auto plant fell 450 miles outside the territory. Again, the Sales Manager made a noble attempt to salvage the remaining half hour.

A quick glance around the room was revealing. Emails were being written, iPads were upgraded and the company’s top producing salesman was playing a quick round of Solitaire. Ouch. At least he had a diversion. I had to be on my best behavior, which was difficult, as it was a painful experience. I could almost feel
my life dripping by one painful minute after another.

Here’s my biggest anguish: the group. Twenty-two Sales Engineers were frittering away an hour of otherwise productive time. Using even conservative estimates, it was four grand swirling down the drain. If we apply my gross margin per call calculator, the time was worth well into the triple digits.

The whole exhausting, expensive ordeal could have been avoided. There were two ways to avoid this train wreck.

What could the distributor have done?
Distributor Managers must put a value on their salespeople’s time. I estimated this hour long fiasco was worth about $4,000 in burdened labor, not counting lost opportunities. Would anyone spend $4,000 on a product sight unseen, no description, no label, no guarantees? I would guess not. But it happens in distribution all the time.

What would have happened if the distributor would have asked to review the presentation ahead of time? What if the distributor would have shared theses eight requirements?
1. No more than five minutes of the presentation should be devoted to company history and philosophies. We know your company is cool and unique, but how can we work together to make money for both of our organizations?

2. Talk about industries important to our territory. We’re impressed that you are the standard of excellence in the Bosnian Bull Whip industry, but there hasn’t been a bull whip manufacturer around here for 100 years. If the supplier doesn’t know the industries critical to your business, brief them ahead of time.

3. We want to learn how to sell your product; the best applications. The right person to talk to the product about, the competitive strategy and why your product is better are all great topics.

4. Are there any sales aids available online or otherwise? These are good things to know and will help our salespeople get instant leverage.

5. Who can we call in the case of commercial situations like delivery and pricing issues? A printed handout works wonderfully

6. Are there other distributors serving our territory? If so, how can we avoid distributor-to-distributor channel conflict? Most distributors are used to sharing some of their lines with other distributors. Let’s get this out in the open early to avoid misunderstandings and wasted time down the road.

7. What is the best way to set up joint calls? Sometimes a manufacturer – distributor joint call does wonders to move a sale forward.

8. The most important point. Adult education experts indicate training has a short half-life. The best time for our sales people to begin the selling process for your products comes during the week or so immediately following your presentation. If you don’t bring a supply of brochures, samples, demos and other materials required to start the process, we both lose. Don’t do the sales training then send the materials later. Hand them out immediately following the presentation.

9. Bonus. Distributors and manufacturers who invest in setting target accounts for their products, services and solutions are 47% more effective in meeting their financial goals. Hang around after the sales meeting and invest the time required to assist every salesperson in establishing their best 4-6 targets for your product. You will be glad you did.

For Manufacturers and Sales Reps
A long time ago, we wrote an article on how to get the best bang from your time in front of distributor sales people. We’ve sold dozens of copies on lulu.com but if you shoot us an email, it’s your FREE. How’s that for a deal?