Adjusting to change

Adjusting to change

Information technology is at the root of so many alterations in the way we do business, both internally and externally. We all need to learn, and continually be adjusting to change.

Study the customer

I was reminded of the importance of this at a workshop I recently attended on software trends. The software developer hosting the event specializes in providing independent gas distributors with customized, integrated ERP software solutions. Their products help streamline the many internal processes essential to running a gas distribution business.

The developers carefully studied their customer’s business in order to create software applications that met their specific needs. This brings to light the importance of recognizing business pattern changes and making adjustments accordingly. The innovations provided by the software developers will keep internal business functions up to date. Likewise, we must be ready to make adaptations to our sales process to keep it functional in the digital age.

Sales Channels Shift

The impact of online sales to the distributor channel is being felt. In their February 23, 2021, podcast, the Distribution Strategy Group  predicted a 5-year revenue channel shift in commercial sales. The group sees distributor revenues potentially dropping an additional 14%, from 66% to 52% of all commercial sales. Manufacturers direct sales, on the other hand, are expected to rise by 7%, moving from 22% of the total to 29%. Gains in other channel sales are also projected to be up 7%, rising from 12% to 19% of total sales. This analysis serves as a wakeup call for distributors. The distribution channel must realign its outside salesforce practices to meet the challenge of the shifts created by digitization.

Get Ready– Adjusting to Change

Is your organization prepared to meet the new demands in the field sales process? Get ready to adjust to the changing sales landscape by studying your customers shifting buying habits. Fine tune your sales process to meet customer need.

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Engage in Your Mission

Engage in Your Mission

A focused mission yields results. The most effective leaders of the 20th century all had a razor sharp focus on a cause. Fully engaging in a mission is essential to success. Consider how these individuals approached their goals: John F. Kennedy, Nelson Mandela, Mao Tse-tung, Winston Churchill, Franklin D. Roosevelt, Martin Luther King, Jr., and Gandhi.

Make a Difference– Engage Your Mission

Like the leaders above, you must be committed to making a difference to succeed. Consider these two characteristics when engaging in your mission.

  • Significance – According to Stephen Covey (franklincovey.com/the-7-habits), a landmark study done by the Harris Polling Group found that only 15% of the employees in an organization could identify their company’s most important goals. Only 19% were passionate about helping them achieve those goals. Are you clear about what is significant to you? When you understand your significance, you act accordingly. Ifpeople have intrinsic satisfaction in your work, they will affirm you. Both Martin Luther King and Gandhi believed that individual equality and worth was significant and people joined in following their example.
  • PurposePurpose is significance in action. John F. Kennedy spoke of this when he said: “Ask not what your country can do for you, but what you can do for your country.” (jfklibrary.org). Your purpose should include a strategy with specific measurables for what you expect to achieve. Most people never decide what matters to them or the steps they need to take to get there. Find your purpose and make a plan. Keep moving forward despite setbacks. Stretch your gift and take it a step at a time.

Implement your mission

Examine and define what is most significant to you. Implement those findings by developing a meaningful plan that includes the steps to activate your purpose. Win business by being fully engaged in your commitment to your mission and success.

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The Transition to “Commercial Insight” Selling

The Transition to “Commercial Insight” Selling

Know your customer

So much has changed with the pandemic, including in sales. Commercial Insight Selling is on the rise! What do I mean by that? Read on…

As we edge our way back into a post-pandemic world, we find that customers’ buying habits have changed. The arms- length sales transactions enabled by digital platforms have enabled us to do business when an arms-length (and then some) was required. To keep the doors open during lockdown, distributors were forced to find ways to move customers to eCommerce buying platforms on their websites. Fortunately, these have been largely successful and customers have embraced them. However, making a sale using digital tools and techniques is quite different from traditional methods. Sales managers and reps alike need to find ways to adapt. We have seen historical transitions in ways to sell before. The late 20th century saw a move from transactional sales to relationship selling. In the early 21st century we saw a focus on solution selling. I believe the next sales model is commercial insight—knowing what your customers need.

Win customer loyalty

In their seminal 2011 work, The Challenger, Taking Control of the Customer Conversation, Matthew Dixon and Brent Adamson, set the stage for the sales strategies needed for this digital transition. “Customer loyalty is won out in the field, in the trenches during the sales call. Over half of customer loyalty is not what you sell, but how you sell.”  

Education leads to commercial wins

A company’s outside sales force feels the impact of digitalization most acutely. While the inside sales team continues to operate from their computers and phones, many of the ways the outside team sold through personal contact with the customer are no longer in play. However, one of the major drawbacks of eCommerce is its lack of the very thing it has eliminated — personal interaction, and somewhat with that, insight to serve the customer. If you have a question or problem, getting someone to respond when there is an urgent need is near impossible. This puts the distributor’s field sales force at a distinct advantage. With their product know–how, they have an opportunity to teach the customer something new and valuable about their business. Using commercial insight reliably leads to contract wins for the distributor and the supplier.

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Sales Strategies for the Digital Age

Sales Strategies for the Digital Age

Develop commercial insight

In their seminal 2011 work, The Challenger, Taking Control of the Customer Conversation, Matthew Dixon and Brent Adamson set the stage for the sales strategies needed in the digital age. They focus on developing commercial insight as a way to sell and present four key rules for using it effectively.

Four rules

  1. Lead with your strengths – “The sweet spot of customer loyalty is outperforming your competitors on those things you’ve taught your customers,” according to Dixon and Adamson. The well-trained distributor will lead with their unique strengths. Those strengths are added-value tools such as Vendor Managed Inventory (VMI), AI (artificial intelligence), predictive analytics, Kanban manufacturing strategies, system engineering, ‘customized’ containers and delivery equipment, etc. In the atmospheric gas industry (oxygen, nitrogen, argon, etc.) where I worked, innovative telemetry systems to measure and report gas change in volume, pressure and temperature, were added-value selling tools. Offering resources that help the customer create a better return on investment differentiates the distributor from other channels and direct supplier selling.
  2. Challenge customers’ assumptions – Help your customer reframe the way he thinks about his business. Spend time learning about your customer so you are able to offer a path to a complete solution, even if it involves bringing in another vendor. For example, if your customer might benefit from an AI program, introduce a vendor who can explain how to integrate that technology into his manufacturing process. This will strengthen your sales position.
  3. Catalyze action – For a successful sale, you need to get the customer to act. Build a compelling business case for why action matters. “Unless you can convince your customer they’ll get incremental value for that premium price, your solution strategy is doomed to fail,” write Dixon and Adamson.
  4. Scale across customers – Once you have successfully used commercial insight with your added-value tools to gain a customer, use that sales process with your other customers.  Develop a set of well-scripted insights along with two or three easy-to-remember diagnostic questions, and you are ready to go.

Be an educator

Dixon and Adamson urge sales teams in this new era of digital selling to use commercial insight, “to teach customers what they really need by challenging the way they think about their business altogether, providing them with new means to address their toughest problems in ways they would have never identified on their own. Customers are looking to their distributors to challenge their thinking and teach them something they don’t know.”

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Adapting to Change in a Distribution Model

Adapting to Change in a Distribution Model

Declining revenues force change

The world is rapidly changing and we must adapt to change in order to compete. One example of this is how the Distributor Strategy Group reported on February 23, 2021, that due to channel shift, distributor revenues in the US will decline from 66% to 52% over the next five years. Taking the bite out of the distributor pie are direct manufacturers whose revenues will increase from 12% to 19% and online shopping platforms, where revenues will rise from 22% to 29%. These statistics signal the need for distributors to adapt to change, and shift their business model in a new marketplace marketplace.

Staying relevant

The COVID-19 pandemic supercharged the technology disrupters that were already in play along the supply chain. It brought us rapid change in technology deployment, workforce considerations, customer service, and selling methodology. All of these factors impact the future of distribution.

Four important areas

The traditional distribution model needs to adapt to these changes. To be relevant in five years, you must pay attention to these four areas.

  • Customer purchasing – While the distributor still needs a “show and tell,” store location to differentiate itself from other channels, it must up its game in other categories. For example, today’s distributor needs to provide “just in time” products and services in order to compete with online next-day delivery offerings. As customer purchases are increasingly managed through computerized inventory systems, distributors need to reframe the way those accounts are managed on their end.
  • Manufacturer’s expectation – Today’s producer has three routes to the customer ­— through direct-to-customer sales, via online suppliers, or with a distributor. To remain relevant to the manufacturer, the distributor must provide good customer product/service training in-house. LEAN cost reduction methods must also be deployed, and same-day repair assistance offered.
  • Distributor sales effort – The pandemic has changed the way we approach sales. Distributor reps have face-to-face calls with customers that can be “virtual” (on screen) or “in-person” (on site). The former puts distance between reps and their clients. To offset that disconnect and adapt to change, it is important for reps to gain customer trust and to be seen as well-informed partners to decision makers. Rapid response to inquiries with the right information is crucial to success. This requires good organizational and communication skills.
  • Distributor collaboration – As end-user markets continue to expand with the internet, distributors need larger platforms from which they can offer products and services. Collaboration and the formation of distributor network cooperatives is a good way to pool resources. In this way, independent distributors can offer comprehensive fast and local assistance to customers that may be outside their geographic reach or offerings base.

Poised to offset loss

With the continued threat of erosion in Distributor revenues, the application of the above principles will ensure that your business model is poised to offset losses. Make sure you are adapting your distribution model to today’s changing marketplace.

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