Grow With Digitalization

Grow With Digitalization

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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Winning Through Relationships

Winning Through Relationships

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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Ask the Unresponsive Customer “Why”

Ask the Unresponsive Customer “Why”

A sales manager recently brought a problem to my attention. One of his customers had called and asked why he hadn’t been by to see him. The frustrated sales manager explained that the prospect had plenty of quotes from him but never purchased. He believed making further calls was a waste of his time. He asked for my advice. My response — look for the reason why your customer is unresponsive.

Build a relationship

I suggested he call the prospect and make an appointment to see him.  During the meeting, he should allow 20 minutes of continued focused attention to build a relationship.  Let the customer talk 80% of the time. Then ask the prospect why he hadn’t followed up on previous quotes. 

Don’t assume

Too often we make assumptions about our clients. Instead of guessing, ask your customers about their actions, or lack thereof. Don’t assume that when an order isn’t placed, it’s because a final decision has been made not to purchase.

As a sales manager, I once instructed a rep to ask his customer why he hadn’t made the move to our company. The customer smiled, laughed, and said that he didn’t really have a good reason. This response indicates the relationship between the rep and the customer was weak. If the rep had invested time in building a relationship with the prospect a sale would have been more likely.

In another instance I learned a prospect was stalling on a sales decision because he did not have the time to spend with his purchasing department. When the sales rep offered to help with that transition, the business was secured.

Be proactive

Too often our assumptions about why customers hesitate are negative. Such thoughts are counterproductive and a drag on your daily activity. Successful business people are positive thinkers. Don’t let “head trash” prevent you from closing new business. Be proactive. Build relationships. Don’t be afraid to ask your unresponsive customers why they are not acting on your proposals. Be creative in leading them toward the deal.

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Make Price Increases More Palatable

Make Price Increases More Palatable

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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Adjusting to Changes in Sales Process Relationships

Adjusting to Changes in Sales Process Relationships

Digitalization has created significant changes in the space between salespeople and their clients. Sales process relationships were altered quickly during the pandemic. Thus, leaving little time for sales teams to adjust their strategies. Furthermore, to help you make the appropriate adjustments to your sales process, let’s examine the sales process relationships of today.

Critical sales processes

Outside sales – Enterprise Resource Planning (ERP) and eCommerce have automated many functions of the outside sales team.  For example, salespeople once personally handled order taking, stock checking, chasing backorders, and pricing errors. Now, these tasks can all be done electronically. Today’s sales manager needs to adjust a way of creating relationships with customers. They can, share insights from suppliers, technology integrators, consultants, and other information providers.

Be sure to involve the principal decision-makers of your client’s operations, administration, finance, marketing, and sales departments. Today’s digital transformation (DX) and artificial intelligence (AI) provide important personalization. Herein, the act of tailoring an experience or communication based on information a company has learned about an individual. Also, use the data generated from current and previous interactions to create proposals specific to your customers’ needs. Doing so is an essential adjustment toward success.

Total sales process relationship

Lastly, distributors currently face various challenges, including a labor shortage. According to a survey of 50 industrial distributors, 63% are looking to add staff in 2022.

To offset the struggle of hiring, the distributor of this decade has the opportunity of changing the landscape by integrating simple sales process relationships.

Get tips and tricks like the above in The Art of Sales books. Or subscribe to the FREE monthly articles here.