Change

It is that time of year when I reflect on what happened in the last year and recent past and look forward to the future. From a high level view, the most dominant factor in our journey are the continual changes that face us. Change is relentless.

Embrace change? Should we embrace change? Maybe we should and maybe not. Not all change is good.

Over the last few decades’ pay phones disappeared. You can’t find a travel agent with a search warrant. You really don’t need a checkbook anymore to do your banking and to manage your finances. My new car doesn't even have a key. It has a FOB. What is a FOB? When I have computer or software problems I consult with my grandchildren. They know more than I do about technology. When and how did that happen? Yes, change is in the air and continues to happen.

My marquee client manufactures environmental equipment. Their systems help clean up air and water pollution. The Environmental Protection Agency (EPA) continues to enact and enforce pollution laws that are progressively strangling business and industry. Talk about relentless. The EPA has put business and industry under considerable pressure and continues to tighten down on polluters. Business and industry, in general, is not happy with these continual new rules (changes). On the other hand, my client is delighted by the new and ever stricter regulations. For them, this change is good, very good for business, it means money. So I guess the value of change is subjective.

I am looking forward to and planning my 2015 professional and personal life to the best of my ability. Markets, opportunities, technologies, processes, procedures and people continue to morph. I can’t stop change and don’t intend to try.

In my opinion, the best way to deal with change is to identify and attempt to understand changes and how they affect us. Once understood, we can deal with change, good, bad or indifferent and leverage it to your advantage and future success.

Order Taker? Order Maker?

I have not blogged much in 2014. I have been busy and distracted by summer, my garden, coaching football and other non-work stuff.

I had lunch with a client last week. He owns an industrial distribution company.

Distribution is a great business. Distributors sell things that customers need and make some profit from every sale…very straight forward. Not too complex. That is, unless the distributor decides to raise the bar, create separation from competitors and leave them behind.

My experience in distribution is that some distributors and their salespeople earn their business by offering the lowest price to the customer. This strategy is a loser. It is a race to the bottom. Winning orders by being the lowest bidder results in slimmer margins and slimmer sales commissions. Is that really a win? Winners strive to make money and not to give products and services away.

A solid strategy to hold margins and separate yourself from price cutting competitors is to provide added value to your customers. If you are in distribution, consulting, manufacturing or any other business you can button down your revenue and profits by being better, providing more value.

My client runs a relatively small operation in a world of big box distributors. He can’t compete on price. But the big boxes can’t provide the comprehensive services that his organization delivers on a day-to-day basis. His customers get expert advice. His team helps the customer make the correct product purchase every time and guarantees it. He maintains a repair shop that fixes broken equipment, configures new equipment before shipping and can reverse engineer and fabricate parts for older equipment, keeping those oldies but goodies in service. When you call his company you talk to a seasoned product engineer. When you talk to the big box order desk you had better have a product number because, for the most part, there is little product knowledge at the other end. My client  delivers added value to his customers and earns their loyalty.

By pushing the differential advantage message, “We’re not a catalog, we are engineers” my client has kept his competition at bay and maintained profit margins in a business world racing to be the low price option.

My own experience as a salesman for a medical supply distributor is another example of how to maintain profit margins by providing added value. The tactic was simple. It wasn’t my original idea. I had a once in a lifetime sales manager who ate our competitions lunch and taught me how to do it.

As I called on doctor after doctor I asked for a moment of the doctor’s time…not easy to get. My reason was that I had something new to show him/her. I made sure to have something new and interesting in my bag every day. Since I called on the doctors twice a month, I just needed to come up with twenty-four cool things a year to maintain my access to the doctor, his office staff and their medical supply orders. After a while my greeting when I arrived at the offices became “Hi Dave, What’s new?” Mission accomplished. I did have to offer competitive prices, but I did not have to be the low bidder to earn business. And, my margins were solid on the new and innovative things I detailed to the doctors.

The easy way to do business is to sell on price. When you earn little in profit you can make it up in volume…I guess. That is nowhere I want to be.

If you want to maintain fair margins for yourself and your company and endear yourself to your customers, it takes a strategic value added plan and a little more effort.

Are you an order taker or an order maker? The choice is up to you.

Good selling.

Sell More - Make More

What a concept. Sell more and make more money.

My first real sales job was selling medical supplies to doctors. It was a straight commission job that offered a salary for 90 days and then a draw against commission. That suited me just fine. In fact, when I received the offer I went home and told my wife “You won’t believe this. If I sell more I make more money!” Holy cow. I couldn’t wait to get in the territory and earn. I hit the ground running and made a great living.

Most companies that I deal with have some form of performance incentive in their sales compensation plans.

The primary two companies that I regularly consult with have different, but effective, commission plans.

The first offers a base salary and commission on every sale. The base is enough to get by on but the combination of the base plus commissions make the performing salespeople very well compensated. The catch is that the salespeople have to sell more to earn more. The irony of it is that their job is to sell. That is why there are employed. If they do their job they are well paid. If not, not so much.

So, sure enough, one of the salesmen just wasn’t performing and complained about his income. When we tried to work with him and help him close more business he abruptly quit for a “better job” and more money. I am guessing that his job search began when we took notice of his poor performance, kindly confronted him and thus triggered his exit decision.

Now, fast forward two months. He decided that he had made a bad decision. He realized that he had walked away from a great opportunity and asked to come back. Bringing him back didn’t make sense. He couldn’t close business. He completed a lot of sales activities resulting in few sales for the company.

A lesson to be learned is that not every salesperson is created the same. Some “get it” while others do not, and all points in between. Selling is not for everyone. The man I have mentioned has a great personality, has a good work ethic, is intelligent and has all of the tools to succeed but probably needs to get out of sales and get into something more aligned with his abilities.

I have never heard of a company telling a salesperson to “slow down, you are booking too much business”. That will never happen. I also know that companies are delighted to cut big commission checks to honor sales accomplishments. As sales and profits grow, so does the company.

The bottom line is that salespeople have dominion over their income. Compensation plans vary but one thing is certain. If you sell more you will earn more. It is fair to employee and employer alike and it is the truth.

Happy Sales to You - With a Little Help From Your Government

After polling some of my colleagues, the business climate seems to be improving overall. I have 2.5 active clients as of this posting and they are all tracking upward. Some of the reasons include, but are not limited to:

Focus: An understanding of who buys and why and sticking to the knitting

Effort: More activity, constant activity attracts more sales and revenue
Pent-up demand: Demand for products and services caused by the recession
Business support: I know that it seems like an oxymoron, but the Michigan government is a friend of business (for the most part). We need to get to know the agencies and programs for business development and support services.

Matchmaking

A good example of the government helping small business is the Pure Michigan Business Connect program that matches small business with big buyers. I have been trying like the dickens to get in front of a major corporation to pitch my clients. Two of the clients have been invited to and event that includes education, private matchmaking meetings with buyers and networking with the crowd. The event is organized by the state and is free to attend. Upcoming events feature the big three, Consumer’s Energy, Whirlpool and Meijer’s. This is an example of the state helping make things happen.

The MEDC – Michigan Economic Development Corporation – For Business

Talk about a helping hand to business…MEDC has programs that can help you in many ways. There are MEDC representatives in every part of Michigan whose job it is to meet with you and explain current business support programs. They are waiting for your call. My clients have benefited substantially over the years from the MEDC programs.

And, MEDC for People

I have spoken in the past about the MEDC’s Shifting Gears program. Shifting Gears helps people transition careers and secure employment. It is a wonderful program. One of my good friends, John B. was part of the first cohort quite a while ago. The current cohort is number 22. I am privileged to serve as a program mentor. As a part of completing the program, participants are obligated to perform an eighty hour, pro bono, internship. Most of them sign up for multiple internships. The internships help them get back into the business/employee groove and many times results in employment for them.

While You Are at It

Your City and County have economic development agencies and more people and programs to help you. And don’t forget Ann Arbor Spark, Tech Town, Macomb Oakland Incubator (Velocity), MMTC – Michigan Manufacturer’s Technology Center, SBT-DC – Small Business Technology Development Center and Automation Alley. They want to help. Check them all out and find a fit if you need to accelerate your business.

 

Is The Recession Over?

Is the recession over?

How’s the recession going for you? Officially it was over a few years ago. Word from the government and media is that we’re good. Are we?

I had a chat with the President of a company based in South Carolina the other day. He told me that his business has flat lined. He has not grown sales in a couple of years. He asked me if the economy had recovered in my world. My answer was “not really.”

As we talked we came to agreement on a couple of points. First of all, there are fewer opportunities for business now than in better times. The pie is smaller. Secondly, the best salespeople and companies are doing pretty good. They are just beating the competition with superior product knowledge, sales skills and lots of quality sales activities. We used to say that the fast eat the slow. This is still true.

I met with executives of a nonprofit manufacturing industry support organization a couple of weeks ago. They told me that a lot of regional manufacturers are really struggling because much of their legacy business has gone away and they don’t know what to do about it. The phone and fax have gotten quiet. Outside salespeople used to go on their milk runs and collect purchase orders. That has gotten a lot harder to do. Doughnuts aren’t the answer anymore.

What is the answer?

The answer is training. Ongoing training of you and your employees will empower you with an advantage over your competition. Sure, there is a lot of competition. I agree that the potential in many markets is smaller and tougher than it used to be. But I know, first hand, that companies can grow and prosper under difficult circumstances. That is if they work at gaining and maintaining a competitive edge.

How am I keeping my staff on the leading edge? We meet every week. They learn something at our meetings. They get regular infusions of sales techniques, product knowledge, industry knowledge and more. Sometimes I make the presentations, other times someone from engineering or production tackles a topic. I invite our suppliers to join our meetings. They teach us the details of their products, their competitive and differential advantages. They teach us who buys and why. This knowledge is power. My team just has to add a bunch of quality sales activities to win the day and make their numbers.

Me? I’m reading business and sales books in my free time. I have dusted off a handful of oldies, but goodies. The message of these great books is often remarkably similar. Once in a while there is a new idea or two…tasty nuggets of sales goodness. In reality, the truth is the truth, always has been and always will be. The fast eat the slow, the strong eat the weak.

What recession?

Dedicate yourself to learning and earning in 2014. It will work out for you. Let others deal with their recession? I don’t have a recession and you don’t have to either.