by Art Waskey | Jun 7, 2022 | Art of Sales Weekly, Featured
Digitization is altering the way people sell. Sales professionals must now look at how to personalize their processes. A great way to do this is through Enterprise Selling.
Outside Sales
The outside sales process is significantly changing. Larry Davis of AgoNow explains in a recent Modern Distribution Management podcast, “Outside salespeople no longer handle orders, stock checks, backorders, and pricing errors, as they are no longer the quarterback. Alternatively, these tasks could be handled by a computer system. Moreover, today’s salesperson must act like a scout, adapting to creating relationships with customers. Where they can share insights from suppliers, technology integrators, consultants, and other information providers.”
Understand Business Objectives
In Enterprise Selling both outside and inside distributor sales processes must work with the customer’s CEO and leading executives to understand their business objectives. This is called personalization — “the act of tailoring an experience or communication based on information a distributor has learned about their customer.” Which means, the goal of personalization is to educate and train customers about new added-value propositions related to eCommerce and vendor-managed inventory. Also, another way is to offer internal and external expertise using your employees and vendors.
Get Close to the Customer
Additionally, Fastenal is a company that is working hard on personalization to increase its share of the digital market. The company just reported, “Sales through its digital footprint comprised 47.0% of total 1Q sales, up from 46.4% in 4Q 2021; 39.1% in 1Q 2022 and 34.9% in 1Q 2020. Indeed, that is a jump of 12.1 percentage points in just two years, and the company said its goal is to hit 55% within 2022, which would be yet another hefty increase over the next nine months.” Fastenal’s first quarter total revenue was $1.7 billion, which is up 24.6% for the same quarter in 2020! Fastenal CFO, Holden Lewis said, “We spend more on getting closer to our customers than our peers do. We should invest more in the tools that allow us to move product where the customer needs it.”.
Prepare to Personalize
Lastly, selling is entering into an exciting new era of methodology. Which makes, the hallmark of this new paradigm is the personalization of your approach to the customer through Enterprise Selling. In conclusion, Make sure you are taking a good look at how to personalize your sales processes. You should tailor your sales based on the information you have about your customers’ needs.
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by Art Waskey | May 30, 2022 | Art of Sales Weekly, Featured
The Advent of Distribution Networks
As we know it today, distribution sales began in the United States in the late 19th and early 20th centuries. Due to the mass production of goods, a nationwide network of distribution centers became necessary. Furthermore, wholesalers began storing inventory for local distribution and new sales strategies emerged to move products. Here is a recap of the best sales strategies over time.
Presenting Products
When I started my career in the 1970s, outside sales had a focus on transactional, professional sales cycles. When I was a sales manager, I attended an IBM training course titled “Practice of Professional Selling.” However, its primary objective was to present product features and benefits. This approach to selling failed to focus on customer needs, and purchasing agents learned to avoid salespeople.
Building Partnerships
In the ‘90s, to offset this imbalance, sales strategy shifted to developing strong relationships of trust with customers. Selling became more about building meaningful partnerships.
Selling Solutions
Additionally, the transactional sales techniques were advanced. The term “solution selling” became popular as distributors put forward productivity enhancement options for their customers. Companies introduced plans like Lincoln Electric’s “Guaranteed Cost Reduction Program.”
Furthermore, came solution selling which gave way to a broader concept, consultative selling. This focused on customer needs and experience rather than selling them on product or service. And, the salesperson learned to ask questions that flushed out solutions that met customer concerns.
Enterprise Selling
Accordingly, with the digital transformation we enter yet another era of building key stakeholder relationships and the buzz words are Enterprise Selling. The enterprise sales strategy was first used by IBM to sell mainframes and micro-computers in the ‘70s and ‘80s. Its best practices have evolved over time. Today’s top salespeople have taken Enterprise Selling one step further — using it to act in a business advisory capacity with clients.
Bring Your Sales Strategies Up To Date
Lastly, a survey conducted in 2021 by the Distribution Strategy Group revealed that in the next 5-years, without a radical change in sales methodology, traditional distribution will loose 14% of their revenues: 7% from suppliers selling directly to the customer, and 7% through other online channels. History provides valuable lessons for distributor sales. Make sure you are incorporating the best selling strategies for success in today’s digital marketplace.
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by Art Waskey | May 24, 2022 | Art of Sales Weekly, Featured
A punch-card solution
I have seen how digitalization has transformed society through my long and fulfilling career. I still have my first calling card that bears the title, “Sales Engineer, North Texas, Airco Welding Products.” In that position, I called on distributors. Furthermore, as part of my training, I spent a couple of weeks in Airco’s customer service department in Houston. While there, I solved a problem the company was having with a computer routine on its IBM System/370. Having taken courses in programming Fortran for engineering applications just a year earlier, I was able to fix the issue. The punch-card solution worked like a charm; people viewed me as a computer genius. Thus began my interaction with the digital world.
Enterprise selling
Airco became BOC in 1978. After being promoted, I took a job in Texas, Oklahoma, and New Mexico. From there, I agreed to participate in the negotiations regarding an IBM minicomputer for one of our distributors. During that transaction, I learned about IBM’s sales cycle, “Enterprise Selling.” It involved getting the company’s CEO, key managers, administrators, and sales reps to agree to the purchase. I served as BOC’s representative in the transaction.
Linking to the outside world
My first computer was an Apple III, on which I saved documents on a floppy disk. I left this technology behind in 1984 when I joined the welding and gases distributor, General Air. We used a series of Macintosh computers and became connected to the world-wide-web in the ‘90s. I can still hear the squealing buzz of the dial-up internet connection that linked General Air’s first computer network to the outside world.
An online presence
The rush to establish an online presence followed. We developed websites with a collection of our products and services and began to use email. As broadband and Wi-Fi replaced dial-up connections, digital communications went into high gear. Our phones are a thousand times more powerful than our first clunky computers and storage in the Cloud.
Expand your relevance
Overall, the digital progression from floppy disks to smartphones is just one example of the scope of change we are experiencing. To make sure you grow with digitalization, get assistance from robust ERP and eCommerce consultants to expand your relevance in a rapidly changing marketplace.
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by Art Waskey | May 16, 2022 | Art of Sales Weekly, Featured
Focus on core strength
Independent distributors have been introducing Enterprise Resource Planning (ERP) platforms to their businesses over time. Further, many large distributors in this group now have robust websites and e-commerce platforms. However, smaller distributors are beginning to find favorable pricing from the growing number of eCommerce integrators at their disposal. The rise of Amazon Business, especially during the pandemic, has caused distributors to focus even more attention on digital sales techniques. The independent distributor, however, needs to be careful not to lose sight of its core strength — customer relationships. What differentiates independent distributors from alternate channels is their ability to win sales by building personal relationships with their customers.
Business is about relationships
Today’s automated eCommerce systems take care of many tasks previously handled by the sales team. When there is a sales problem or glitch, however, the internet connection proves to be a weak link. This is where relationships matter. Automation frees up time for territory sales managers and inside sales teams. Use it to build strong customer relationships that add value to your product and service offerings. Be in a position to offer a personalized solution when a client has a problem or question.
Mark Dancer writes: “The purpose of business is to help us live our lives and do our work in the digital age, as humans for humans”.
The future of distribution
Chester Collier shared these insights on the importance of relationships in a recent MDM podcast: “It doesn’t matter what you are selling, who your competition is or even the price. Business is about relationships, and when you understand this, you understand what needs to be done. Build a strong relationship with your customer and success WILL follow.”
Lastly, the future of independent distribution is being able to offer a relationship that works in collaboration with digital services and specific customer needs. Use your data to add value to relationships by customizing your offerings. This will differentiate you from competitors that can only offer simple, non-complex products.
By doing the right things, at the right time, for the right reasons, distributors will win through their relationships with their customers.
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by Art Waskey | Apr 26, 2022 | Art of Sales Weekly, Featured
Price increase alert
The Producer Price Index (PPI) climbed 10% in 12 months through February 2022. In line with economists’ expectations, the Consumer Price Index (CPI) shot up 7.9% during that same period. Further, this represents the most significant year-on-year CPI increase since January 1982. In fact, with the CPI north of 6% for five straight months, distributors, like everyone else, are feeling the pinch on profit margins. Much less, to offset higher costs, many distributors and their suppliers announced multiple price increases in 2021. Thus, as inflation continues, these price adjustments need to continue in 2022. Charging for value-added services is an excellent way to accomplish this more palatable to your customers.
Value-added services strategy
Second, I find that most distributors believe their value-added services are essential to their competitive advantage. Yet most do not adequately monetize these services. You need to develop a reasonable strategy for charging for value-added services. Examine the services you provide, especially those customers won’t receive from digital online channels. Determine which of those services are revenue producers. Put a price on your value-added services and incentivize your sales team to pitch these services to customers.
Vet your services list
A typical list of value-added services includes repairs, technical support, customer training, engineering/design, on and off-hours delivery, loaner/rental equipment, installation, assembly, and stocking.
You can prioritize these services by gaining from these three attributes:
- How important is this service to customers?
- Are customers willing to pay for this service?
- How well do we perform (or could we perform) at delivering this service versus our competitors?
Price your services
A survey was conducted in 2020 by the Distribution Strategy Group, which found that two-thirds of respondents do not pay commissions for the sale of services. Moreover, with many distributors bundling value-added services into product prices, there is no way to pay commissions on services or incentivize their sales. Consider taking value-added services out of the bundle and charging for them. Your bottom line revenues will grow faster than you think.
Furthermore, if you are not already doing so, charge all non-contract customers for added-value services. Use this to offer reduced charges for signing new contracts or renewing existing contracts.
Offset rising costs
Finally, implement or raise your charges for value-added services to offset the revenue loss. For example, these services can differentiate you from your competitors, particularly those in digital channels. To maximize the value of added benefits you provide, it is essential to price them accordingly. Charging for value-added services is an excellent way to offset inflationary pressures in a manner that is more palatable to your customers.
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by Art Waskey | Apr 12, 2022 | Art of Sales Weekly, Featured
A mentor’s objective is to identify your needs and expectations and offer creative solutions that move your business forward. In today’s distribution business there are a growing number of experienced seniors. If you believe your team would benefit from a seasoned coach, consider enlisting a mentor.
5 Steps to Take
Executive mentors can help guide your business to growth. Here are some steps you can take with a coach.
Step 1: Understand the issues
A mind map should be created to summarize all the current growth issues. The goal of a mind map is to record key ideas and look for connections between them as projects. In many cases, unrecorded projects go unnoticed because they are never brought into focus. A mentor can guide you through the mapping process so that you do not waste precious time and energy.
In “The Seven Habits of Highly Effective People,” Stephen Covey suggests you can start the mapping process by putting first things first — his Habit #3. He recommends listing projects under two categories — Important and Urgent, and, Important but not Urgent.
Step 2: Prioritize the Projects
An experienced mentor can be invaluable for prioritizing and evaluating projects. Each week, they can ask your team to list, in order of urgency, the top five projects that need to be moved forward.
Step 3: Create Next Steps
Each Top 5 Project will likely require many actions. Use a mentor to help you plan each incremental step. Having seen/solved many issues before, your mentor can help you with the chronology of actionable steps.
Step 4: Implement Solutions
A mentor comes with a network of suppliers, equipment, and software providers he has engaged with in the past. Tapping into that network can help a distributor move more efficiently through project steps. For example, a distributor in the gas and welding industry may already have bulk CO2, and now wants to produce dry ice. If your mentor was once a manufacturer of dry ice, he will know several suppliers who can provide the best equipment, installation, and cost. This expedites your start-up.
Step 5: Track Completed Projects
There is no better motivation than visualization of past accomplishments. When a project is completed it should be dated and listed on a mind map. Moreover, I suggest recording them under the corporate divisions: Executive, Operations, Sales, and Administration.
Objectives achieved
Lastly, if you are a successful distributor on the move, but need help, consider enlisting a mentor. Tapping into a trusted source with years of experience, is one of the most effective ways to move a business forward. Mentors help you achieve your objectives efficiently.
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