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.

Don't Get Burned

Getting burned because of putting too much faith in a buyer is a recurring problem for many business and sales people (same thing).

Here is how it works: You (we) put a lot of time and faith in landing a big fish and it never happens. Unfortunately, many of us are faced with this too often.

We are, by nature, a positive and upbeat breed. We believe what people (buyers) tell us and tend to count on the things they tell us. When they don’t give us the promised or assumed order we are set back. Are the buyers liars? Not necessarily. A lot of things can happen to make your deal go south. The net result is that you don’t make your numbers or your commissions. If this happens to you often can lose your job or your business. When you forecast orders and profits that don’t materialize, at the very least, you lose credibility.

Let’s fix the problem. Getting let down by buyers won’t go away. We live in a word of rejection and have to deal with many crafty buyers. (Read Negotiate to Close by Gary Karrass) The answer is to work smarter. By taking control of the sales process you can mitigate the damage from losing orders that you depended on.

Ask more qualifying questions. Be very specific when talking to your buyer. There is nothing wrong with asking when the order will be released. Make sure you are working with a decision maker before going through the sales process. Understand their problem(s) and make sure that your proposal aces their needs. If your buyer can’t afford your solution you have just wasted you valuable time. If you qualify the customer and ask the right questions you will be able to correctly evaluate your chances of landing the business.

The next solution, the best solution, is to have more things cooking in your sales funnel. More sales calls equal more sales (Mark Thelen). If you are depending on one or two big deals to close, and they don’t, you are screwed. If you are sitting on ten or twelve big deals, and lose a couple, so what?

My advice is not to depend on a few pending sales to make your numbers. Work smarter and continue to prospect for new business while closing others. Using the word “funnel” to describe your sales pipeline is easy to imagine. You should follow the funnel strategy to keep your career moving. By putting many prospects in the top of the funnel you will have a strong and steady stream of sales to prevent you from getting burned by a deal that goes south.

Do Not Give it Away

Why in the world would you give away something for free when you could charge for it? I am talking specifically about giving away your time. Your time is a most valuable asset.

Any of your time that is not used wisely reduces your earnings potential.

I will take the way back machine to the years that I sold medical supplies. My customers were individual doctors in private practice, clinics and some hospitals. I learned important career changing lessons from  the experience and from my colleagues.

Start with the undisputable truth that more sales calls equal more sales. There are some underlying qualifying rules. You have to know what you are talking about and you must not spend time with non-decision makers or customers who do not have a need. Follow those three simple rules and you will validate the fact that more sales calls equal more sales.

I worked with some great salespeople during that time. They sold a lot of stuff and made a lot of money. In order to do that, they made it their business not to waste their selling time. They didn’t waste their time and they did not let others waste their time either. They kept small talk to a minimum and honored prime selling hours. Prime selling hours are defined as the time that your customers are available to buy.

Day after day we made sales calls took orders for medical supplies and then wrote up the orders for our employer to process. It was a manual system. Order pads and pencils were our order entry tools. This was before we had computer systems to input orders. The top producers never wrote up their orders during the day. It was customary for them to write up their orders in the evening and hand them in every morning. Anything else interfered with their selling time. These boys knew how to make money. They earned more because they optimized their time and honored prime selling time.

Another lesson that I learned is that hospital purchasing departments are open from 7:00 AM until 3:30 PM. If you tried to make a sales call on them after 3:30 PM there would not be anyone to talk to.  On the other hand, if you made your calls early in the morning there were few competitors in the room. Not everyone follows the rules of time optimization.

In the 1980’s I sold computer billing systems to doctors. Doctors are very busy people. If I wanted the undivided attention of a doctor the very best time to get it was at the hospital in the morning. We would meet in the doctor’s lounge for coffee early in the morning before they made rounds or did surgery. By the way, there were never competitors hanging around then either.

The smart salespeople who are top producers and earners make the best use of their time. They don’t waste their own time and they do not let others waste their time.

This brings me to a friend of mine who started a business selling safety equipment. His systems needed to be engineered properly to work right. Early in his launch he learned his valuable lesson the hard way. In order to quote equipment and installation services he had to spend hours at the client site determining their needs. After his consultation he prepared a quote and waited for the order that didn’t come. He finally called and learned that his customer purchased the equipment on the Internet for less money. His consulting and documentation gave them everything they needed to cut him out of the business. Needless to say, he now charges for the consultation. His customer stole his time. That will never happen again.

Be aware of your time and how to optimize it for the greatest return. Do not give away something that is essential for your success.

Another One Bites The Dust

A pretty good salesman was terminated by his company recently. It took me by surprise.

I had met with this fellow a number of times and found him to be friendly, knowledgeable, a good listener and a hard worker. His sales skills were (are) top notch. He was terminated for lack of sales.
If someone can’t sell and won’t make an effort to learn to sell, they probably should be doing something else for a living. On the other hand, I tend to defend those who make an effort and work to grow as a professional salesperson.

Something Doesn’t Add-up

When a consummate sales pro gets canned for lack of sales it causes me to think that something else contributed to his poor performance. There are often critical success factors that are company issues and out of the control of the sales rep that weight negatively on results. Let’s explore some of those potential job killing factors.

Factors

Bad Marketing/Image

It is easier to open doors, book meetings and land business if the company, products and services are promoted to prospective customers. Going on sales calls stone cold is measurable harder than approaching someone who is aware of the company and is interested in learning more.

Bad Messaging

If marketing campaigns, materials and messaging are not good they can work against salespeople in the field. If they are real good they will help create interest. Bad messaging works against field salespeople.

Bad Products

If there is something better out there from competitors it puts good salespeople at a disadvantage. It is an uphill battle to overcome competitive disadvantages, particularly if the competition presents a plausible case. Representing out dated products, technologies, services, etc. can dampen results.

Bad Services

If the company isn’t responsive, misses key dates, ships defective merchandise and makes other fundamental customer service mistakes it sends a clear message to customers that the company doesn’t care about their business. Sustaining customers under less than stellar recurring circumstances is difficult at best for any sales professional.

High Prices

No one can be proud of being consistently the lowest bidder. Selling on price is not selling. What skill is involved with giving away profit dollars and working at low margins  for no good reason? That said, it is tough to prosper when your prices are always the highest. You can justify a premium price point if the value proposition is solid and substantial. If not, forget it.

Bad Company

Image, marketing, messaging, competitive products, good service and fair pricing are all the responsibility of the company. Salespeople fighting these and other factors have to fight extra hard to win. The truth is that there are some pretty bad companies out there. If you represent one of them you could be terminated for lack of sales in spite of yourself.

Conflicted Company

What seems to have happened to this skilled salesman was a result of mergers, acquisitions and organizational dithering. Administration of conflicting products, territories and salespeople created instability and a bad sales environment.

The Whole Wide World – It is Still Out There

The good news for my friend is that there are a lot of excellent companies out there who deliver quality products and services for competitive prices. Great companies value professional sales representation. He will find the right company to represent and be back on his feet in no time.