You can systematically improve profits at your accounts by planning properly. In today's business environment, the concepts of planning and analytical evaluation are synonymous with overall success.
Profitability is a salespersons' main productivity index. You need to generate profit in a moral, ethical and legal manner, but ultimately, salespeople are seen as more productive if they generate more profits. Salespeople do this by adding value at the customer level by providing a package of services and support. It's the only way for salespeople to increase their productivity and keep customers happy.
Potentially more important than adding value at the customer level is adding value to your planning and learning expertise. This may sound radical, but let's think it through. If you plan a sales call better than you do now, your customer is the prime benefactor. Planning sales calls reduces the wasted time spent on a call. More importantly, it shows customers you value their time by coming to a call prepared with a specific agenda to discuss.
Planning customer activities over multiple sales calls requires coordinating company-wide service efforts for an extended period of time. Whenever planning sales calls and other aspects of a customer relationship, ask yourself these questions:
Are additional resources required to ensure a successful close?
Does the sales process require technical assistance?
Is vendor assistance needed?
Are there any special delivery requirements?
You must understand these factors prior to quoting a customer a price or finalizing a major bid presentation. It's critical to maximizing overall profitability.
Another key to proper planning is strategizing with managers, inside support, peers or vendors prior to quoting that customer. Getting a different viewpoint about a problem or opportunity usually leads to a better end result for the customer and builds a stronger foundation to handle future issues. The increased communication accomplished during the process helps strengthen morale and builds a more successful department, organization or customer satisfaction team.
The following example is an actual sales situation, but the concept could apply to any facet of business. Effective planning and learning can help organizations improve profitability in each department. While this example uses a municipal bid, the bid could just as easily be for a warehouse automation project, major lighting upgrade or any number of different electrical projects.
ABC Electric Supply has held a major piece of municipal business for five years. Many competitors are bidding against them, but XYZ Electrical Distributors is the main competition. They have a similarly sized piece of municipal business in the same market. Unfortunately, recent bids have shown a bitter battle for control resulting in price erosion.
The same is expected on this bid, which runs for three years with a potential two-year renewal. The size of the bid is larger than noted based on special projects coming due within the next couple of years. All bidders are aware of the special projects. The bid award will be based on the largest discount off of the common trade sheet for the entire market basket of products.
ABC Electric Supply knows planning and experience will be critical to win the bid. Four weeks before the bid is due, they create an internal bid team consisting of the outside and inside salesperson, inside sales manager, market sales manager and director of sales. The team's brainstorming led to the following actions:
By clarifying any special bid requirements, they will keep in touch with the customer and get a better understanding of issues before quoting.
Analyzing account profitability by product ensures they will know the specific reasons for positive and negative line-item profit results.
Sharing the bid specifics with the company's operations department will give the purchasing department and the warehouse a better understanding of how to service the account.
By requesting pricing levels as soon as possible, the vendor will get adequate time to respond with the most favorable pricing levels, and let them know the company is bidding on the project.
Continuing ongoing discussions on an as-needed basis will allow group members to share information and maintain a steady flow of new ideas.
This process required many discussions over several weeks. After meeting a second time to brainstorm and digest what they had learned, the account team decided to pursue the following activities:
Discuss pricing with vendors so they would get price protection and resolve issues regarding unprofitable lines. Vendors are usually more flexible with pricing on the front side of a bid.
Continue ongoing customer discussions so they know how badly the company wants the business. These discussions would include the customer's operations management needs and the costs to handle them. The continuing discussion also would give the team more time to brainstorm and fine-tune their strategy.
The sales team reconvened two days prior to submitting the final bid. All new ideas were discussed in the full group meeting to ensure everyone understood what other members had learned. Vendor pricing was reviewed and compared to existing levels. A price discount was considered by the sales team.
This was the first time sell-price discounts were discussed. The team previously agreed to delay customer price discussions until all available facts were discovered and digested. All members felt the data collection and analysis process would be more productive without discussing sell prices while collecting information.
It's crunch time. Team members write a sell-discount on a sheet of paper. One by one, they revealed what they would like to offer the customer. Motivation for each team member is similar because they all want to retain the business. Each member had a different idea on acceptable profit levels to service business. Continued discussions result in an agreed-upon discount and final bid documents were prepared. The end result is positive, and ABC Electric Supply barely wins bid over XYZ Electrical Distributors.
Bid situations are agonizing. Competitive companies could have low-balled the bid and rendered an intensive month of work non-productive. But because the team members from ABC Electric Supply were methodical in their planning during the bid process, they gained invaluable experience by openly discussing the customers' needs, vendor support, internal capabilities and acceptable profit levels to service business. The process of assessing the customers' needs, developing a plan and evaluating the process with specific objectives was a learning experience that could be re-created on a daily basis with other accounts.
Involving the operational management galvanized a trust, because the salesperson learned it cost money to service accounts. This trust and the improved internal relationships also opened the eyes of the outside salesperson for the account. He became less protective of his customers and more receptive to other individuals' ideas on how to grow his business. Sharing other customers' needs with the organization led to improved resolution of the customer's problems and increased awareness of their needs. The salesperson understood the valuable role peers, management and vendors could have in helping him become more productive.
The process of planning and learning led the members of this team to start incorporating those concepts on their own. The salespeople started brainstorming ideas to improve profitability at other customers. They scheduled meetings to discuss what each knew and jointly learned more about all customers. Understanding the customers' needs and wants, they helped solve their customers' problems. Additionally, they analyzed product-line and item-specific data to better understand what drove account profitability. The planning and learning process allowed this sales team to grow their business and improve profitability.
Customers want to feel like they are Number One. All like to be treated well and have their problems resolved in a timely manner. In reality, planning specific activities in advance, combined with adjusting strategies based on what you learn, are the real expectations customers have for distributors.
Remember the controversial statement noted earlier, “Potentially more important than adding value at the customer level, is adding value to our planning and learning expertise.” Said another way, adding customer-level value depends on your ability to incorporate improved planning and learning into their business.
MEET DOUG AND PATTY WALO
Doug and Patty Walo started Walo and Associates in the fall of 2002 to provide sales and marketing consulting and health wellness consulting. Doug runs the sales and marketing side, drawing on experience as a director of sales at Stuart C. Irby Co., Jackson, Miss., and Standard Electric Supply, Wilmington, Mass. He previously worked 13 years for Osram Sylvania, Danvers, Mass., in various sales, marketing and sales management positions. At Osram Sylvania, he managed work teams from four to 100 people and has spent the last five years on the executive committees of companies, helping run all aspects of the business.
Patty runs the health-wellness side, drawing on her experience as a nurse practitioner at Massachusetts General Hospital, occupational health manager at Medcor and a nursing professor at Salem State College in Salem, Mass. Her specialty is cardiac care, stressing the needs to understand risk and prevention factors in total wellness. In addition to personal consultation through health coaching, she focuses on groups by performing smoking cessation, wellness initiative and overall worker's compensation clinics.
You can contact Doug or Patty at 207-935-2738 or by email at [email protected]