Wired for sales
Back in 2007, Distribution Sales Expert Dave Kahle made a statement that has lingered in my mind: “Distribution companies, by their nature, should be sales-oriented companies. But most distributors don’t do sales very well.” Dave is one of my heroes in this industry, and knows his way around selling, so the statement still bounces around in my brain nearly a decade and a half later. I can’t help but wonder if Dave’s claim still stands true.
Thinking more about this, the distribution industry is huge. There are over 200 different types of distribution companies in a wide array of industries and there is a diverse mix of distributor sizes. Market pressures have pushed some distribution industries to modify their business model. For instance, food wholesalers, because of their high turn rations and lower gross margins, far outpace our industry in logistics and the sundries industry has become the masters of processing small orders more efficiently than most. The comparisons are interesting, but let’s focus on industrial Distributors.
Industrial distributors are the reigning heavyweight champions in product and application knowledge. No one knows more about applying products than an experienced seller in the industrial sector. Sadly, our supply of experience is running short. Many of our veteran hands are already packing their bags for sunny beaches, year-round golf courses, or the rest home around the corner. Without accomplished sellers, or at least folks with equivalent experience, we aren’t exactly destined for business nirvana.
While distributors in other industries are running into this “experience drain,” they are better positioned because they use a more defined sales process. This is part of my heartburn tied to our kind of distributors.
Our industry uses the same sales methodology today as it did when the 24-year-old version of me hopped into his first gas-guzzling company car and sped out of the parking lot to go make sales calls. Think about it, we’ve added cell phones, computers, and other techno-gadgets, yet our methodology for identifying and dealing with customers has remained largely unchanged.
Here’s a machine gun blast of differences between other industries and ours:
Others: Creates detailed onboarding programs for everyone on their team.
Ours: Turns new salespeople into territories without training where they stumble their way forward without time devoted to teaching the basic skills required for success.
Others: Employee-detailed CRM system ties marketing and sales activities.
Ours: (1) Marketing teams struggle to get permission to access customer contact lists. (2) Spends the time and energy required to build detailed prospect targets. (3) Uses the term “target” often but rarely devotes energy to defining who could be our best customer type.
Others: Obtains new customers electronically.
Ours: Still instructs new sellers to make cold calls.
Others: Scientifically tracks opportunities.
Ours: Only records opportunities they feel are sure to hit.
Others: Trains and manages inside sales teams on the art of presenting customers with add-on products.
Ours: (1) Still struggles to deploy the technologies. (2) Maintain system price files which allow management to oversee pricing and consider competitive situations, (3) Allows our sellers to provide cost-up pricing that often drives down margins.
The differences defined above are all process related. Many industries have discovered they can accelerate the training time and generate efficiencies in their sales groups by building and managing against a defined sales process.
A few years ago, I worked with this publication to poll sales managers and others to determine if distributors had true processes. A few years ago, we inquired about processes used by industrial distributors. The results were eye-opening. Over 65% indicated they had a process, there’s bad news. Most defined their process as informal and/or different for each seller. Sadly, informal, and “different depending on the salesperson” are not processes we need and by most standards.
My process definition includes three characteristics:
1. A documented and closely followed methodology.
2. Metrics and measures of success exist.
3. Attention is devoted to improving the methodology across the team.
A real process allows us to accelerate the training time of newbies and make a few extra bucks for the home team.
Think about just two aspects of this process thing.
Research indicates companies with documented and formal targeting plans are 40 percent more effective at meeting their goals. This holds true in both poor and prosperous economic times. The same research points to a direct correlation between how customers think about the selling organization. Nearly all the companies described as solution-driven partners have a formalized targeting process.
Another set of research data demonstrates that distributors who adopt a sound pricing process generally add 50% more to their bottom line. Selling is about bottom-line results.
Being wired for sales requires, you guessed it, a process.
Straight talk, common sense and powerful interactions all describe Frank Hurtte. Frank speaks and consults on the new reality facing distribution. He is the author of, “Plan on Breaking Through – Strategic Planning for Accounts.” He is a new regular columnist for Industrial Supply magazine beginning January 2024. He can be reached at: frank@riverheightsconsulting.com, (563) 514-1104 or at riverheightsconsulting.com.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
