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Second in a continuing series

Read Part I Here


Good Times, Uncertain Times, Modern TimesGood Times, Uncertain Times, Modern Times?
Part II - Targeting

The recession is over.  According to all the rules learned in past downturns, we’re supposed to be enjoying some high-octane fun about now.  According to experts, economists and everyone’s shopping enthusiasm, we should be dancing and prancing like a couple of Santa’s reindeer.  Instead we are hunkered down, living a troubled, cautious life.  Simply put - life has no joy.

Why?  Well for one thing, we are finding ourselves facing a whole new series of competitors.  It doesn’t seem to matter what market you serve or how complex the products you sell, new people are sprouting up at your customer’s front door. 

New competition isn’t the only thing.  A quick look around reveals consolidation on our supply side as well.  Billion-dollar manufacturers are being bought and sold like hotdogs at a ball game.  Some of these companies are our customers – we have learned to deal with this phenomenon.  But some of these folks are our trusted supply partners.  Think about this, if you happened to be a Dodge/Reliance distributor, your supply partner will have changed ownership three times in the past 4 years (Rockwell to Baldor to ABB). 

Add a couple of points we discussed in earlier articles – especially the loss of our ability to confidently forecast – and we have some big worries on our hands.  It’s a wonder Maalox hasn’t replaced beer at distributor association receptions.  It’s not our job to reinforce your anxiety.  Let’s just say – these modern times have a way of trying a man’s soul. 

The good old days are long gone and now we’re living in uncertain times.  The rules have changed.  The skills necessary for survival have changed.  One of the skills necessary for the future is targeting.   Before nodding your head and saying, “yeah, we’ve got that one covered”, let’s define the word.

Everybody uses “target”.  In most companies, “target” means 20 things to 20 people - every person using the word with emphasis and bravado.  The only problem is each usage carries a different meaning – and this is concerning. 

When we say target, here is our definition:

Target - A customer selected from a much larger group for specific treatment.

This means we are going from the list of everyone who has ever crossed the threshold with a purchase order to a very small group of customers.  This means a small group we have scientifically selected (targeted) for a defined reason. 

One common mistake comes when sales teams create broad generalizations and call them targets.  For instance, I know a major manufacturer who once referred to their target list as:

  • Food Processing
  • Petro, Plastics and Chemicals
  • Automotive and Off-Road Equipment
  • Forest, Paper and Packaging
  • Discrete Consumer Goods
  • Pharma and Medical

For the life of me – I could not think of anyone not on their target list. 

I believe target lists must be small and narrowly defined.  To illustrate, allow me to describe a better target list.  Instead of Food Processing, our target descriptor will be:  “Packaged foods manufacturers who use ultra-high temperature sterilization in their packaging departments.”  If you have the right product, selling to this group is easy.  We can almost guess the outcome.

Why would we scientifically select (or target) a customer?  It allows us to better predict their actions.  With that in mind here are some potential selection criteria, in each case the customer is very likely to:

  • Purchase a specific product or service.
  • Appreciate and pay for the service we provide.
  • Grow over the next five years.
  • Pay for products within terms.
  • Select us for a symbiotic partner-type relationship.

This and a gigantic list of other predictors can be broken into three basic categories. 

  1. Product Targets – Customers very likely to purchase a specific product or service.
  2. Solution Targets – Customers very likely to appreciate the special services we provide along with our service.
  3. Company Targets – Customers most likely to form a special bond that transcends product, services and normal business practices.

For the sake of brevity, let’s spend some time on the whole Product Target thing.  One certainty of our Modern Times is this – distributors have more products to sell than time to sell them.  A very long time ago, the standard procedure was for salespeople to show the product to as many of their customers as possible and hope for results.  Some of you may remember those “product of the month” days.  Salespeople were charged with carrying around the same demo case for a month.  (It must be March – let me show you my underwater welding switch.)  Sadly, a great many companies still follow a methodology amazingly similar to this reoccurring nightmare from 1977.

What would happen if salespeople where asked to carefully select the 5 accounts most likely to purchase a specific product (like the underwater welding switch) within a very short time frame.  We call this collection of customers a product target set.  It’s not unusual for salespeople to get 4 out of 5 of these predictions right.  Typically, a single salesperson can manage as many as 60 “product target” sets simultaneously - each with a high probability of success within a defined time.  

The product target concept provides not only better predictability; it also provides an important coaching tool.  Salespeople can be coached on selecting the right customer match for a product.  This tool allows the manager to understand training needs on a by salesperson basis.  Instead of everyone parked on a conference room chair getting generic product training, we can recommend custom training to address issues on an individualized basis. 

In addition to the coaching on customer selection, the target process allows the manager to measure and grow planning skills in their team.  The ability to cycle through “product target” sets is an indication of sales planning skills.  And, unlike the ancient metric of calls made per day/week/month, closure of “product target” sets is directly correlated to success. 

In addition to the sales process improvement benefits outlined above, this brand of “targeting” facilitates meaningful conversations with vendor partners.  If you are a distributor you can delegate part of the selection process back to your manufacturing partners.  In addition, understanding your partners’ targets eliminates problems with channel conflict. 

Most importantly, target selection improves the sales team’s value to the customer.  The products opted for customer introduction are more likely to address an immediate need.  While many organizations claim to be proactive problem solvers, very few actually have a mechanism for encouraging and propagating the behavior.  Here targeting becomes (at the very least) a tool for managing the behavior of new salespeople.

Targeting intertwines with a number of other processes which I believe critical.  Specifically, targeting is closely intermeshed with pricing and forecasting.  Close matching of customer needs and product features leads to fewer price discussions.  Interviews with distributors applying pricing strategies developed by David Bauders and his team at Strategic Pricing Associates demonstrate one thing.  The sales team better understands the value they provide to the customer.  The two are interconnected. <read more>  

Before we part, let me reiterate one important point.  Not using a targeting process won’t put you out of business tomorrow.  Economists predict slow and steady growth for most segments over the next two years.  That being said; I can promise targeting will take away some of the uncertainty.  Less uncertainty equates to bolder, stronger steps forward.  Finally, less uncertainty means you’ll only need those Rolaids after your Thai Pepper Pot lunch.

A sales process results in better sales success
Research indicates that companies with well-developed sales processes are more successful in achieving their financial goals.  What’s more their customers are much more likely to view them as strategic business partners.  In my own mind, process building is done best one small piece at a time.  We at River Heights Consulting call this building action blocks. 

Give us a call or drop us an email if you would like to learn about creating action blocks in your own process.

Other Important Action Blocks in the distributor sales process

 Good Times, Uncertain Times, Modern Times 

Pricing – Companies who have well designed and reinforced pricing strategies can add 50% to their bottom line.  And once more reinforcing the notion that companies with a sales process are more successful than their brethren, companies with a price process find it spills over into other aspects of their sales effort.  {Read about it here}

Targeting – Companies who “target” enjoy a 47% advantage over their competitors who do not.  The world of sales is full of distractions.  Most distributor salespeople report they have more products to sell than time.  In a post-recession world, everyone is covering more accounts.  Even if you have the “right stuff”, important “stuff” is lost when you have too many accounts.    A target driven sales team performs better.


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