Directing the Conversation with Questions

A Question from the Sales Team:

How do I discover information without asking rude and possibly offensive questions?

Leading questions can uncover answers worth celebrating!

I regularly coach salespeople to learn more about their customers.  I often reference a bit from Harvey MacKay’s book from the 1980’s “How to Swim with Sharks without being Eaten Alive”, called the MacKay 66.  It’s basically a 66-question list of things to discover about your customer.  It covers all things personal as well as their thoughts around their company, job and career goals.  Quite honestly, it’s an exhaustive list.  But… I believe a salesperson armed with this information will outperform their competitors. 

And, since I have received the same question from several of my clients’ salespeople in the past few weeks, I feel compelled to address the topic.

One young salesperson stated point blank, “I have been thinking about the questions you have asked me to discover with customers and I am afraid that some of them border on offensive.  I don’t see how I can subject my customers to a game of twenty questions on every visit.”  He makes a good point.  The idea with questions is not necessarily to sit down and interrogate; the point is to prime ourselves to listen better.  More importantly, we need to actively listen.

When we know what our questions are, we are free to listen better.  The pressure to think of the next question is diminished.  We’re able to learn more from our customers and direct the conversation to areas which provide us with the right stuff to enhance the solutions we offer up in future sales calls. 

While this is not intended to be the end-all piece on the art and science of the question, let’s look at a few points around questions.  We all know that people generally enjoy talking about themselves.  Let’s use this knowledge to steer the conversation.  Here are two examples:

Example One:  You meet a new contact at one of your accounts.  You introduce yourself, exchange a bit of small talk about the weather (Dawgoinit, it sure has been cold/hot/rainy/dry this week) then ask:

“How long have you been working for Acme?” 

Using this question, you can lead the conversation to where the person worked before, the customer’s career path, educational experience, their service in the armed forces and lots more.  What’s more the discussion is likely to lead you to this follow-up question:

“What are your areas of responsibility here at Acme?”

The flow of the conversation then takes you into job duties, issues with finding trained people, and reporting structure.  Along the way you can ask for clarification, points of conflict, and bottlenecks in the process.  Listen closely and you get some understanding for politics at the customer.

Example Two:  You’re calling on a customer you have known for some time and see a broken part laying in greasy heap on his credenza.  After taking care of pressing matters you ask the following question:

“I couldn’t help but notice the greasy thing on your back desk.  What’s the story here?”

The customer relates as to how and why the broken part has become a desktop decoration and provides you with information on what it is and how it was broken.

Possible follow up questions include:

“Is this something that happens often?”

“How long does it take to replace the part?”

“Does this impact other areas of operation?”

“Do you have ideas as to the root cause of the failure?”

The point to remember is this…

It’s a conversation not a light shining in the face Gestapo-style meeting.  To steal from a cheesy Humphrey Bogart movie, “Well Mr. Customer, we have ways of making you talk.”
But none of them are about running down a list of questions. 

We have much more to say about questions.  We even have a self-study program called the Art and Science of the Question.  I personally believe questions are the key to success. 
Don’t believe me, email me a question.

Sales Question: How Long Do I Chase an Account?

A Question from the Sales Team:

How long should I pursue an account before I give up?

Chasing money is a timeless art.

A couple of weeks ago I was making coaching calls with a sales guy who possessed lots of potential but less than 18 month’s experience. He’s a smart, aggressive guy with a professional attitude.  He targets his accounts, studies his results and devotes time to prospecting.  But 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:

Was the customer properly selected as a prospect?

Is the customer in the right industry, possess the right potential volume and credit worthy?  A lot of this information is available via a little research.  Armed with a manufacturer’s directory, the internet and maybe a D&B report, we can narrow the answers to this question down rapidly.  Experience tells me this step could be completed in the first month of exploring the account.

Was the customer properly qualified?

During the first round of making calls on any new account, one critical task is qualification.  Here we answer this list of questions:

·        Is the account real? 

Sometimes sales offices with no real potential show up on our radar screens.  If your information says 300 employees, you can tell by the parking lot and building size. 

·        Is the company stand-alone or part of a larger organization?

This information is important for multiple reasons.  First, if they are subsidiary of a company that makes your kind of product, purchasing options may not include you.  Secondly, larger Fortune 500 companies often have supply agreements in place which restrict the supplier count.  We’ll talk more about this later.

·        Are your kind of products being used in the quantities you suspected?

A quick walk through the production or work in progress area will typically tell the tale.  Do you see your products being assembled into the machines?   Are there stocked shelves in the storage crib containing the kinds of quantities you need to make this a good account?

·        Are you able to gather information from the customer?

Does the customer share product and company information with you?  It’s impossible for you to do your job without information.  The list of information is long, but you should be able to ask: what they make, who they sell to, current suppliers, lead times required, design standards followed, government regulations and a bit about annual usage.

Is there some reason why you cannot do business?

Everybody already has a supplier; some have good suppliers.  Count your blessings or place a strong hand over your wallet anytime a customer tells you they were looking for somebody just like you and the day you walked in the door was a gift from a higher power.  A relationship with a competitor may slow down your work; probably making your work harder.  But, it’s not a reason why you cannot do business.

However, there are several good reasons why you cannot do business a potential customer.  Here’s a short list:

·        The company has a long term supply contract with a competitor which is strongly enforced.

·        The company is part of a larger organization with sister divisions producing your kind of products

·        The company has shared ownership with a competitive distributor.

·        The head of engineering, purchasing or some other high ranking person at the company is related to your competitor.

·        The customer is purely price driven and your offering is not the “low price” brand. 

Back to the original question:  How long should I pursue the account?

The answer is complex.  The simple answer is this; until you discover a reason why you cannot sell to the account, you should continue to pursue the business.  In the meantime, most salespeople manage a territory.  It’s a game of juggling and balancing time.  Current business is important.  However, many salespeople make the mistake of pushing this type of account to bottom of their priority list.  If the volume is right and if the customer matches well with your value proposition, it is in your best interest to continue to mine for information.  Sales opportunity could be just around the corner.

Pricing Process: 10 Simple Questions

Some questions demand an answer, they literally jump up and down screaming for intelligent action. The problem is this; many times these questions develop over a long period of time. Because they develop slowly over time, they become invisible. Life’s like that. My dad used to say, “We’re too busy picking up acorns to see the tree.” I think we’ve gone past the tree and are neck deep in forest.

Last week I had the opportunity to address the leadership teams from a select group of distributors at the SPA Strategy Session in Fort Lauderdale. I was the final speaker, and the meeting was running long. To cut my talk short and put a little life into the meeting, I cut my presentation down to ten simple questions. I feel each of these questions demands an answer. Together, they demand action.

Question 1: Do you believe our business environment is changing?
It’s pretty hard to justify any kind of answer except for a resounding… yes. Our customers want more services, faster responses, more solutions and tons of other things. We’ve got more competitors. The big national chains are pushing into the sacred waters of our product niches. Amazon and Google are eyeballing the green grass we once claimed as our own.

Supply Partners want more from their distributor partners. We find ourselves doing some of the tasks once performed by their field sales teams. Besides these obviously sales related functions, suppliers want POS data, online order capabilities and extensive customer training capabilities.

Technology is a wonderful thing, but the internet has changed the role of selling from human search engines capable of coming up with specification and application data to complex problem solvers. Phone systems and voicemail have created a world where everybody is hard to reach. Technology is now available to everybody regardless of company size and type.

Even the people we work with has shifted. Boomers are marching off to the retirement sands at a rate of 19,000 a day. Generation X and the Millennial Generation aren’t behaving or thinking like the old timers ahead of them. Demographics shifts make our world spin like a broken boomerang.

Question 2: Does your own company need to change keep up?
“Eliminate the Middleman and save”, for some reason I can’t seem to get the picture of that old billboard along Route 151 out of my head. It’s an American axiom that’s only true if we distributors fail to change and morph our business model to match the needs of the folks we deal with, both customers and suppliers. Distribution is a change business; not changing brings death to our industry. Or, it brings extinction to our own organization.

To me the answer has to be yes. We need to be in a constant state of change.

Question 3: Does it work better if everyone in our company changes in the same direction?
As leaders, our job is to direct the change. When everybody flies in formation, we are more efficient, more effective and more profitable. All departments, all our branches, our technology resources and our culture has to change in the same direction and at roughly the same time.

I find any argument for changing in divergent direction questionable. So again the answer must be yes.

Question 4: Is it harder to change when you don’t know what you’re doing today?
The answer to this question comes via my dash-mount GPS unit. Before providing any driving directions to my destination, it goes through a series of steps called “finding current location”. Most distributors feel like they know what they are doing today. But deep analysis indicates they aren’t really sure how things work in the sales department.

I concur with my GPS on this one. We need to know where we’re at and what’s going on before we start making any changes.

Question 5: What’s the difference between your accounting and sales department?
Some say, “She’s was a natural born salesperson”. I’m not going to get into that argument, but I wonder if it’s feasible to say, “He was born an accountant”? True some folks have natural skills with numbers, they like to keep track of things. But, would you trust your accounting functions to a “natural” if they didn’t have a strong understanding of standard accounting procedures?

Tax codes, financial institutions and others insist on specific procedures and distributors are pretty good at following them. As leaders, we insist on it. But when we get to sales, we have few procedures, no measures of success in building customer relationships. Many of us have a hard time explaining if a salesperson is successful because of their regimented activities or if they happen to have a “lucky territory”.

I believe evidence points to a simple answer to this question. Accounting has a process. Sales does not.

Question 6: What happens when you try to change the sales group?
Screaming, kicking, gnashing of teeth? Most distributors discover the one department which should be a harbinger of change is the most resistant. What’s worse, salespeople can be pretty darn convincing. They offer up dozens of excuses; customer issues, competitive issues, supplier issues and some even more convincing.

The very nature of their work puts them outside the eyes of supervision. Some say they’ve changed, but don’t; silently biding their time until management relents. Others use their commission plan as a trump card against change. A good many will go underground. Their company begins charging for delivery on nickel and dime sized orders, and they take time from selling to personally run all over the territory delivering from their car.

The point of all this is we’ve got to anticipate pushback. And, as leaders, we’ve must hold our ground.

Question 7: Why is it important to document your direction?
Thinking about sales department pushback, one of the things the sales guys will say is “our boss goes out and hears some slick talking consultant (who probably has never sold) and comes back with a hair-brained idea and tells us to go forth and follow the plan”. It’s the old idea of the month thing.

Documenting slows down the whole activity. It forces us to rethink the idea. It helps us refine the course. But there’s more… Documenting the direction helps others better understand the direction. It allows better and faster training. It steadies the course removing distractions along the way.

Question 8: Why measure your progress?
“That which is measured improves, that which is measured and documented improves exponentially”
Pearson’s Law
In a world filled with distractions, measuring progress keeps you moving in the right direction. One client of mine is fond of saying, no coach trains their team to the final score; no football coach says we need to score more touchdowns. Instead, they work on blocking, tackling, first downs and lots of little steps that lead to better scores. They realize it’s the little things that drive success.

For the leaders of a distributor, it’s about the steps that lead to more customers, customer retention, more efficient handling of orders. Simply stated, if we only measure the final gross margin, we miss out on the things that drive customer orders.

Question 9: What’s the difference between coaching and managing?
For one thing coaching is about personal development; helping each and every person perform to the best of their ability. Coaching is one-on-one. Coaching is the first approach to growing your team. Coaching is about building playbooks and organizing the players so everyone is in the right place. It’s about getting the most from everyone on team.

Managing is the next step. Sometimes coaching involves setting harsh reality that a player doesn’t belong on the team. Managing sometimes involves jettisoning a person who refuses to respond to management.

Ideally, both managing and coaching is based on objective metrics. People aren’t judged on personality or attitudes. Instead, decisions are made based on performance data. Are they following the documented procedures? Are they performing in the small steps needed for larger success?

Question 10: What can we do today?
This is the question that needs the greatest thought. Doing nothing is easy. Doing the right thing involves the evaluation of risks and rewards. Doing something right now is important. There may be a lot to do.

Here are some points to ponder.

First, in a well thought out plan, the processes are interactive. Improving one thing typically improves a many other points along the way. Everything in our business interacts with the things they touch. Here’s an example.

When you build a pricing process, one of the typical first steps is segmenting customers by size, business type and ease of doing business. The activity of segmenting improves marketing, sales effectiveness and planning. Different pieces of the puzzle, but each is improved. Building a real process is important.

Three parts of a real process
First, there is no such thing as an informal process. Many distributors lull themselves into believing they have a process but it’s done on a person by person basis. Not so….

To be a real process it must have three important ingredients.
1. Documentation – a detailed written document which describes how the process works, who is specifically responsible for each phase of the process, how success is measured and who has the ability to modify the process in exceptional cases.
2. Metrics – metrics take the subjectivity out of the equation. We can understand if progress is being made. Our team can easily understand their own personal improvement, without management intervention.
3. Coaching and management points – the metrics give us places to help our team improve along as the organization moves through the growth plan. Coaching and managing is predictable and without opportunity for personality to come into play.

Let’s get moving
I am often asked how and where to start in building a process. I believe there are a two places that stand out in comparison with others. Here’s my criteria. First, they carry major impact to the distributor’s bottom line. Secondly, they interact with the greatest number of other processes within the organization. In other words, do a good job with these, and the interaction affects the rest of the business. Here they are…

Targeting
Companies who work a real, and vibrant targeting process are 47% more effective in reaching their sales goals. They understand their value. And, more importantly, they know which customers are most likely to benefit from their value. Salespeople plan better, bring new products to market faster and waste less time. Managers have more and better coaching points and measures of success. New salespeople especially get traction faster and with less thrashing around.


Pricing Process
I have had the opportunity to closely observe the work of David Bauders’ Strategic Pricing Associates for the past two or three years. Their clients typically drive two full points to their bottom line. The cool thing about gross margin improvement comes because most of it (80% is a good estimate) falls to the distributor’s bottom line. We see instant profit improvement for the home team. And the Pricing Process improves the distributor’s work in segmentation, value selling and overall operational efficiency.

We’ve asked you a lot of questions. Do you have a question for us?

Windows of Opportunity: How Not to Miss Them

I wrote this article for a major publication back in 2007. Just yesterday, a client reminded me of its contents. Apparently, he runs everything on a 90- day window. And while you may choose to update the technology referenced, the idea works, whether you are a product specialist, salesperson or manager. 

-Frank          

The Product Specialist’s Window of Opportunity

Picture Benjamin Franklin – old Quaker outfit, printing press in the background – sitting at his writing
desk. He coins phrase after phrase, a number still popular in daily life 250 years later. “The early bird gets the worm,” “a penny saved is a penny earned,” “a stitch in time saves nine,” and the lesser known; “Make a plan – live the plan.” Just for fun, let’s test this 250 year old kernel against the grit of our own laptop toting, blackberry driven life.

Distributor managers put together a financial plan at the beginning of every year. Typically, this plan revolves around financial data. Sales, gross margins, operating expenses, and new equipment are covered in detail. Specific sales and marketing activities have been the domain of the vendor marketing plan. Major suppliers ask distributors to “do a business plan” around the first of every year. Running the gamut from single page and simple to lengthy and complex – these plans are often not implemented. Regretfully, these plans often become clutter- the kind found in forgotten files and unopened credenza drawers of factory marketing people. We know intuitively a plan is a good thing, yet somehow these things just don’t seem be part of our daily lives. If you find yourself turned off by the whole planning idea - Distributor Specialists tell me they are – let’s explore a better idea.

Distributor Specialists profit most by controlling the calendar for (just) the next 90-days. While we know we plan to do some really important things “next summer,” rarely can we make important planning decisions until we are 90-120 days away from the activity. A sliding-window plan guides major activities, allows for coordination, and guides your thought process. For the sake of simplicity, let’s call this a 90-day sliding-window. If you develop an annual plan, a 90-day sliding-window breathes new life into what otherwise can be static. A 90-day sliding-window can be used to effectively measure the results of group activities over a long period of time. Best selling author Michael Gerber (of The E Myth) calls this process Quantification – the application of results to efforts. Without Quantification there is no judge of what works in your environment.

In addition to the intrinsic value provided as a Quantification tool, a 90-day sliding-window provides value in a number of other ways. In order to survive and prosper in today’s business environment, a distributor salesperson must be able to balance a number of priorities and handle multiple initiatives. The Specialist who provides the best opportunities to anticipate the future wins the battle for mindshare. A Specialist armed with a 90-day sliding-window allows salespeople to see over the horizon - to better anticipate events looming in the 5 or 6 week future. The sad truth is; your important product launch - only 6 weeks away - may be completely invisible on Herb the sales guy’s radar screen. By bringing the next 90 days into better focus, you plant seeds of success. Account targeting improves. Your company executes sales plans better. Your sliding window acts as a sentry to warn of upcoming events. Far fewer salespeople will slap their forehead and say, “Darn it, I thought the launch was scheduled for next Wednesday.”

Let’s stick with a product launch example. As Specialists, you are often charged with a number of responsibilities. A 90-day sliding-window will help you if you find yourself scrambling to handle any of the following the night before a meeting:
• Is the meeting room still available?
• Will the local Manufacturer’s Salesperson be able to share in the presentation?
• Are demos available and working?
• Is the proper literature (resource material) in place?
• Does lunch need to be ordered?

These are the little things that turn into big headaches. I have seen important initiatives postponed for weeks, just because something “slipped through the cracks”. With the help of a 90-day sliding-window, little details become much less likely to be the handful of sand that grinds the machine to a stop.

How to begin
There are companies who sell 90-day calendars. Hopefully, they won’t line up and sue me for suggesting that instead you use a MS Excel spread sheet. To assist you in getting started, I have included a starting example below (Table 1)

Table 1: Example 90-day window (started Jan 1)

	Date	Event	Notes
January
	1-17	Product technology launch	Br 3 Target customer group
	1-23	Cust Serv training	Start at 11:30
	1-25	X-Y Co. Demo	With Account Manager
	1-31	Demo for RHC tech update	Rep
	1-31	Literature for sales blitz
February
	2-05	Com. College Tech training	w/ supplier rep
	2-10	Literature for Mar. Sls Mtg	Sharon in Marketing
March
	1st wk	Mar. Sls Mtg
	3rd wk	RHC technology update	Get date from Joe
	3rd wk	Technology demo in place
	3-4th wk	Sales blitz
April

Begin by listing the most current activities, then work your way forward. Note that most items for January are specific dates, while items scheduled for the third month are less specific – week of dates. On January 2nd you might not know whether the RHC technology update will be Monday or Wednesday. By placing these items into your marketing plan, you can begin your plan by arranging for a demo on January 31. Using Excel allows you to add additional rows and cells as needed – some months will be “action packed” others will prove to be slower. Using a 90-day sliding-window allows you to fit more into the same limited amount of time.

The point (and purpose) of the plan is to extend your planning period. As you review items scheduled for 90 days forward, you add clarity. In year end reviews, Specialists often discover they weren’t able to schedule as many customer seminars, training schools, and other high impact events as they would have liked. They were wrapped up working urgent items rather than important items. Because you are able to schedule them further out, you naturally find ways to schedule more high impact events.

Successful Specialists lead teams of people – they make the products they are responsible for easy to sell – and they cultivate “mindshare” amongst their sales teams. The sliding-window should be constantly at the ready. By focusing sales people on future events, they move the activity to top of mind. A Specialist should have her sliding window at the ready – always. During “windshield time” on a joint call, the Specialist can involve the salesperson in the process. At important sales meetings – a Specialist can ask the team to “mark their calendar”. And, you will never postpone a meeting because you forgot to order the demo.

Get started…
No need to make a big deal of the process but start a 90-day sliding window soon. Spend just ten minutes on the task today, and then invest just a few minutes every week modifying your plan - constantly slide your calendar window forward – adding new items for the coming months. On your next meeting with your manager, ask for his/her input for important events on the horizon. And after you have a few months under your belt, I suggest coordinating your 90-day calendar with fellow Specialists to look for overlaps and windows of opportunity in the larger collection of plans. Fine tune the process, strategize for efficiency, grow your business – you will love the results.

_______________________________________________________________________________________
And for those of you realizing you didn't do your 2014 plan, it's not too late.  Check Amazon.com for a helpful tool.  You'll thank us later!

Ship and Debit Programs

Special Pricing Agreement and Thoughts about Ship and Debit Programs

Click here for a brief tutorial on Ship and Debit Programs.

Special Pricing Agreements (SPA) have been around for a very long time. The concept is simple; a manufacturer uses their distribution channel as a vehicle to service a customer who requires very low pricing to match some commercial situation. The details of the commercial situation aren’t really all that pertinent. They can arise due to customer potential, competitive pricing pressure, or supply contracts driven with large mega-corporations. The point is normal distributor margins no longer support the selling price and the distributor plays a critical role in providing some service to the customer.

In years gone by, distributors involved in these situations purchased products earmarked for the special priced customer at sub-distributor price levels. The freshly purchased (at lower than normal cost) products were either brought “into stock” to sell later or drop-shipped to the customer. But issues arose.

One common issue involved distributors using the lower price purchases to “steal” business from competitive distributors with the same product line. Simply put, they used price to undercut the legitimate work of other distributors. What’s worse, is this action was done at the manufacturer’s expense. Channel issue galore were the result. To illustrate the point, I will retell a story from my early days as a salesperson.

While visiting the distributor location of a friend, I noticed an inordinate amount of fuse inventory. Since fuses were not a top seller at my own location, I asked the manager how they had managed to become so successful with the product line. His answer shocked me. Apparently, the company had managed to acquire the business of a single large OEM. The manufacturer provided very low “into stock" prices to support the OEM customer and this branch used the “hot price” (their words, not mine) to get the lion’s share of the business in their area. The margins were good and the other distributors struggled to keep up.

Was this illegal? In the day, it was a common practice and generally ignored by the manufacturer’s sales team. Did it create issues for brand loyalty with other distributors? One can only assume that it did. Either way, I felt it was a bit unethical.

For distributors suffering from a bad case of ethics, there were other daunting problems. If playing by the rules, the distributor was forced to maintain two sets of inventory; one for the “special priced customer” and another for everybody else.

Manufacturer’s addressed the issue by setting up a new program: Enter the ship and debit system.

With ship and debit programs, the distributor buys product “into stock” (or drop ships to the customer) at the “normal” distributor price. Any inventory is treated just like normal stock. Once the sale is made, a report is submitted to back to the manufacturer. The manufacturer subsequently issues a rebate credit to the distributor to cover the loss and gross margin. It sounds pretty straight forward, but the process is full of pit falls. Let’s explore a few of the issues.

The distributor-side submittal process
Reporting sales results back to the manufacturer can be both time consuming and difficult. While most modern ERP systems have a mechanism for creating reports, many distributors struggle with building the reports. Further, mistakes in the system can cost the distributor in loss margin.

To help you build a better system, here are a few recommendations:
• Build a process around ship and debits – A good process includes documentation, metrics and coaching points. Investing time early allows the work to be moved to “lower level” clerical workers; freeing up the time of sales managers and others.
• Make sure your sales team knows how to identify ship and debit sales– One of the most common occurring problems comes from poor communication between distributor sales teams or distributor specialists, purchasing and the back office admin staff in accounts payable. This is not the place for informal process. Side comments and casually mentioning special pricing agreements at the water cooler will cost you company tens of thousands if not properly contained.
• Automate the process – Invest time up front to automate with your ERP system. Most times these reports can be done in-house, but spending time in the early stages will save you much heartache later.
• Build checks and balances into the process – If product is sold under a ship and debit system and not properly reported, money can be lost (see my comment on tens of thousands above). River Heights Consulting recommends monthly spot checks and bi-annual review in detail. Again, if the process is well documented, the task can be straight forward and not all that time consuming.
• Don’t forget to regularly review for “disputed” invoices – Occasionally, manufacturers and distributors disagree as to precisely what is to be rebated. These become hung up in the credit departments of the manufacturer. Never let these ride for longer than 60 days.

On the manufacturer end
In order to be a good distributor partner, manufacturers need to follow a few simple guidelines of their own. These will cut down on future issues and ultimately allow the distributor to better serve your customers. Here’s a short list for your consideration:
• Establish a policy for your field salespeople, manufacturer’s agencies and others to follow in administering ship and debit programs – Experience dictates salespeople often lack the time and/or discipline to carefully handle ship and debit record keeping. I suggest devising a plan for quickly disengaging sales teams from the details of the plan.
• Process the rebate information in 30 days – Respect the distributor’s investment. Since distributors typically submit at the end of the month, they have already lost the use of their money for 30 days. Adding another 60 or 90 days to the process of recouping their margins places undue stress on the distributor’s cash flow.
• Simplify your reporting requirements – You aren’t the only manufacturer to whom the distributor will be submitting reports. Make your reporting requirements simple. The ERP systems of some distributors allow for specifically formatted reports, however many do not. We typically suggest the exchange of Excel files which can be formatted for automated entry into your own systems.
• Build a plan to handle “disputed” items quickly – The sooner these items can be handled the better. Typically, the cause of many of these come via lack of attention to detail in the sales departments of both organizations.

The practice is exploding
We have noticed a near exponential growth in the use of Special Pricing Agreements. The Electrical Wholesaling industry alone has experienced 400-500% growth since the end of the last recession. Special Pricing Agreements have become part of the strategic plan for many distributors. One of our clients calls them “the new exclusive agreements” and certainly many larger national chains have picked up on how to use the agreements as an offensive weapon. If your company hasn’t seen an increase in SPAs and experienced growth in the use of ship and debit, I suggest you inspect. Allow me to explain why.

In 2012, we did a straw poll of distributors and manufacturers who serve the Electrical, Automation, Power Transmission and Fluid Power Industry. All noted marked increase in use of Special Pricing Agreements. This is probably not major news, but the next point will shock you. Several manufacturers’ sales managers, candidly shared that requests for Special Pricing Agreements are part of the criteria they use for measuring the aggressiveness of a distributor’s sales force. Forget solution selling, throw out value-metric arguments; these guys gauge you on how many times you come to them for lower than normal prices. Hmmm….

Finally, to illustrate the interest in Ship and Debit Programs – below is the raw data on search results landing people onto this blog. Based on 25,000 visits during 2013, here are the numbers for individual searches on Ship and Debit information. We think it’s pretty interesting:

• ship and debit   911
• ship and debit definition   249
• ship and debit process   207
• ship & debit  127
• what is ship and debit   48
• ship and debit wikipedia   28
• distributor channel   25
• "ship and debit"   23
• ship and debit program   23
• ship and debit model   16

We know many other people are looking into how to implement their own Ship and Debit process. We have assisted many of them in establishing the right kind of process. If you happen to be working on developing a strategy for your own organization, shoot me an email.  We can typically get you headed in the right direction in pretty short order.