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Four Questions that demand an Answer…

Question One:  Why is McDonald’s internationally famous and Bill’s Toasty Shop still an obscure little hamburger joint?

Distributor Management

First a bit of background on Bill’s Toasty Shop; Bill’s is a century old ten stool diner located just off the town square in Taylorville, Illinois.  It fills a special place in my memory – it’s that kind of place. If you want a front row seat to the drama of small town life, it’s that kind of place too.  But Bill’s has remained largely obscure, and a similar place has blossomed into an organization that serves 47 million customers daily.  There has to be a reason.

First let’s look at the things that are not part of the McDonald’s advantage:

  • It’s not the length of time they were in business.   Both organizations sprung forth in the years leading to World War II.  Both started small; catering to the need for a fast meal for people on limited budgets.  
  • It’s probably not some innovative food.  Neither McDonald’s nor Bill’s invented the hamburger.  According to Wikipedia, that great American dish was invented in 1882 someplace in New York.
  • It definitely isn’t the educational background of the work force.  McDonald’s has built their empire with a workforce of pimply faced teenagers, retirees, recent immigrants and a myriad of “low skill” workers.
  • It’s not based around the educational background of the owners.  Ray Kroc brilliant as he was did not possess an advanced degree in Hamburger-ology.  Truth is his background pales in comparison to some of the former owners of Bill’s which has been owned by a prominent lawyer and a doctor.

Process is the answer:
The obvious difference between McDonald’s and their unknown small town competition is process.  Walk into MickeyD’s in Topeka, Tupelo or Timbuktu and the food is consistently good.  They define the steps, measure the outcome, train to the procedures and build improvements around the McDonald’s process.

So what does this mean to a distribution business?  Distributors need to understand and at least explore process as it applies to their own business. 

And, most successful distributors have built a couple of processes into their system.  Examples are typically found in A/R, A/P departments and in assorted administrative tasks.  Clearly distributors believe in process but most believe selling is different.

Question Two:  Are Sales Process and the customer’s value perception linked?

The mere mention of process in selling generates an emotional charge.  Lightning bolts fly as sales professionals take up sides.  Hackles rise as a cadre of experience sales people stamp their feet and shout in unison – do you want me selling or shuffling paper?    They pontificate on the “divine difference” between selling and most other activities.  Advocates of a selling process retell story after anecdotal story of companies who put process to work.  But proof has finally arrived.

Real research indicates there is a correlation between process and the customer’s perception of the selling organization.  Further this research points out that companies viewed as contributing and business partners – all had a well defined process in place.

Unfortunately most knowledge-based distributors lack a bona fide sales process.  And, each time distributor management decides to pursue anything relating to a process, their mental conviction is beat back with a number of reoccurring arguments.  To illustrate, allow me to a few of the most common:

  1.  Which would your rather me do, sell or fill out your paperwork?
  2. That process stuff works in other businesses but it doesn’t apply in ours.  Our product mix / customer mix / industry are different.
  3. I already have a process for handling my territory and I have been doing this for 15 years.
  4. I am a sales professional.  I don’t need someone telling me how to do things.

Plus setting up a process is no “walk in the park”.  Selling is a complex point with many steps, sidebars and detours.  Sales managers get lulled into believing a process is impossible simply because it’s complex.

In conversation, most sales managers believe they have a process.  In research for my new book Target Driven Sales, we surveyed over 500 selling professions on the topic of a targeting strategy.  Does a process exist?  In the minds of the managers responsible for sales the answer is an astounding – yes!  But the follow-up questions told a different story.

Follow-up questions asked whether the “process in place” had measures of success, documentation, training and a number of similar defining points.  The largest single group indicated their process was “informal” with no documentation, no metrics and no system for training.  Another definitive question measured the number and type of meetings used to manage the process.  When meetings took place at all, they were characterized as loosely structured with no supporting data.

Excuse me – that’s not a process.  All of these “informal processes” are nice.  And you may have achieved some level of success using them.  But they are not a process. 

A process is an all-encompassing structure for specifically defining performance standards.  They include:

  • Documentation – so they are done with repeatability and in order to bring new employees up to speed quickly
  • Tools – designed to make the activities more efficient
  • Metrics – in order to gage effectiveness of both the process and people carrying out the process
  • Continual feedback – opportunities for coaching, managing and directing the people responsible for the feedback
  • Reinforcement – because we need to reward those who follow the process and re-educate those who do not
  •  Regular review – points where we fine tune the process to changing business conditions

Test your current system (we won’t call it a process anymore) to determine which of the above mentioned points are present.  The whole concept seems just a little bit overwhelming – Sales is really a number of interrelated processes.  And this brings us to question number three.

Question Three: Which parts of the sales process should we work on first?

Many years ago I had a boss with an accounting background.  Whenever we had an issue in our business – whether past due accounts, aging inventory or open orders – he would insist that we build a spreadsheet that listed the financial impact of every item.  After the spreadsheet was put together, he sorted the data by dollar amount.  We attacked the big ticket items first.  I can remember him saying, “Don’t invest your time on the nickel and dime items until you have handled the big stuff.”

If we take that approach in the selling process, the big stuff is Targeting.  Research indicates that organizations who apply a targeted sales approach are 47% more likely to reach their financial goals than their contemporaries.  And, 47% is a big number. 

Experts tell us 80 percent of the typical distributor’s profit come from 20 percent of their accounts.  Plus, studies into customer profit contribution demonstrate the bottom half of most distributor’s customer list actually contribute negative profit. Simply stated, these customers cost distributors more money to service than the profits they contribute to the bottom line. Selecting the right kind of prospects helps us stack the deck in our favor—bringing profitable accounts into the fold sooner and more often.

In preparing for our book – Target Driven Sales – we discovered the same lack of process around identifying and capturing new business.  In fact we found sales people who consistently spent their time and company resources chasing accounts with little promise of producing a positive impact to the bottom line. 

Targeting provides an easy way to begin a process driven selling effort. Done properly, it provides room for constructing the first framework for developing a company process driven culture.  The very first level of Targeting provides:

  • A mechanism for pulling vendor partners into your efforts
  • A tool for measuring true sales effectiveness
  • A plan for developing salespeople the right way
  • A better bottom line (score one for the home team!)

Question Four: Do Distributor Specialists play a role in this process stuff?

During our research for The Distributor Specialist: Customer Champion, Profit Generator, we discovered a difference in the way Specialist were used at Upper Quartile distributors.  The people who regularly outperformed 75% of their counterparts applied Specialists to the sales process. 

Over 69% of these distributors made Specialists an integral part of their overall strategy.  The drove targeting activities, they managed the price levels of their specific product groups and they took on roles normally delegated to the sales manager.  And most of these activities took place well below the surface – at a level that is often overlooked by the distributor’s supply partners and competition.

Super Secret Bonus Question:  Why have so few distributors put this kind of process to work?

This is a complex issue with a two simple answers.

First, many distributors have lulled themselves into believing that they already have a process.  Theirs is just “informal”.  Or they earnestly believe their sales people to be professional enough to have developed their own process for going about business.  They reason, “The process in place has been good enough to carry us through the past.  Certainly, it will be good enough for the next 5 or 10 years.”

Or, they would really like to have a process, but the day to day grind of getting things done limits their ability to make and reinforce changes within their organization.  Knowing how to get started, what pitfalls to avoid and how to delegate the work becomes a key ingredient for them.

River Heights Consulting can make the change less daunting.  Our experience with other organizations and our “in the trenches” wholesale background can provide the tools for you to get your team going. We have developed expertise in Targeting, Specialists and distributor management solutions can give you a competitive advantage in a post-recession world.

Still not convinced?  Call us we will provide you with real life examples of where simple processes made a big difference to distributors across a wide range of industry.  We believe you will be convinced.

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