In this rapidly changing world, new sources of competition surface continually. Many manufacturers have shown an increasing tendency to take the best customers direct and compete with distribution for the largest customers. In many places, competition among distributors continues to intensify as some distributors expand geographically and others expand into new product lines in an effort to regain the growth they experienced in the past.
Add this together and it seems that pressures on price and margin don’t ever stop. In this kind of environment, the problem for a distributor salesperson is this: “How can you secure for yourself a spot that provides you with both a good income as well as some job security?”
Before we examine one powerful strategy to do so, let’s look at what won’t work.
It won’t work to skim the business by dealing superficially with a large number of customers.
There was a time, not so long ago, when this strategy was effective. You may have been the only viable option for a lot of people, so you could get by with superficial relationships. It was OK a few years ago to see ten accounts a day and ask “What do you need today?” It was OK to spend much of your time checking the bins, taking inventory, and writing orders.
But today, even the smallest buyer has other options. All your customers, regardless of size, are expecting better service and more competitive prices.
It won’t work to expect your “quality” or “state of the art” product lines to keep people buying from you.
The world is changing far too rapidly to expect that some product innovation will last for long. In the mini-computer industry, the average window of opportunity for a new product is said to be six months. In other words, if you create the latest and best product, you have six months before someone else makes the same thing a little better or a little cheaper. While that industry may be the fastest moving, the trends it exhibits are resident in this industry, too.
Today’s hot new product is tomorrow’s dinosaur. The great quality offered by your manufacturer will soon be eclipsed by someone else’s better deal. Counting on product differentiation to sustain you is like walking across quicksand. You may progress a step or two, but eventually, you’ll be overwhelmed.
It won’t work to expect your personal relationships with customers to guarantee their loyalty to you.
Yes, it’s true that personal relationships are more important today than ever. But it is just as true that your customers have tremendous pressures on them due to the changes in this economy. That means, while your personal relationships may gain you a slight temporary advantage, you must continually bring real, documented, economic value to your customers. Without that, your relationships are vestiges of days gone by.
I learned this lesson the hard way when the purchasing agents in one of my best accounts, a man with whom I had created a sincere friendship, announced to me that he could no longer buy from me. His Vice President had signed a sole-source contract with my arch competitor. While I was doing business as usual and counting on my personal relationship to ensure the business, my competitor was presenting cost-savings systems contracts to the boss. You know which approach won.
If those former strategies won’t work in the new economic condition we’re living in, what will?
Here’s the most powerful single strategy: BE IMPORTANT!
That means be important to the manufacturers whose products you represent and be important to your customers.
When you’re important to your manufacturers, you’re able to provide them the one thing they need from you. That’s access to your customers. Think about it. Many manufacturers can warehouse, ship, and bill their products almost as well as you can. One manufacturer recently consolidated his warehousing in Kentucky, made a deal with an overnight freight company to ship anywhere in the country for a flat fee of about 1/2 the going rate, and began to service all his customers direct. Customers can purchase the product direct from the manufacturer and receive it faster than from their local distributors.
Because of their lower cost of goods sold, if the manufacturer chooses to sell directly in competition with you, they can offer the customer a lower acquisition price.
But what they can’t do as effectively or efficiently as you can is regularly and personally visit your customers. The sales portion of the marketing and distribution formula will always cost them more because they have a limited number of products over which to spread their sales costs, while you can spread your costs over a much wider number of products. Thus, you should always be able to access the customer at lower costs than the manufacturers.
The smart ones know that. That’s why they need you.
When you get those calls on Monday night from the manufacturer’s rep, what is it that he asks of you? Don’t all the reps want to work with you? Don’t they want to make joint calls on your customers together? That’s because they need you to get in front of the customers.
So, your ability to be important to your manufacturers is directly dependent on your ability to provide them access to your key customers.
But, if you’re going to be able to provide them access to your customers, you’re going to have to BE IMPORTANT to your customers.
You do that by becoming, in your customer’s mind, an integral, almost indispensable part of their business. You can’t do that if you restrict your activities to quoting the lowest price, checking inventory, and picking up orders. Anyone can do that.
You must:
- systemically create relationships with the most important people within your key accounts
- invest your time in learning about their business and getting to know them better than anyone else
- provide creative solutions and systems that solve deep and systematical problems
- help them achieve their business goals
When you do that consistently and effectively, you become, in the eyes of your customer, a valued part of your customer’s business. That makes you important to them.
In order to do that, you need to see yourself differently, and you need to behave in new ways. Instead of seeing yourself as a seller of “stuff,” you must see your role as a consultant to your customer, bringing valuable information to him.
You have something that is of great value to your customers. You have broad and detailed product knowledge coupled with the understanding of how those products can be applied to solve your customer’s problems and provide him an advantage in his market. That’s something he can’t get anywhere else. No cataloger’s phone salesperson can take the time to discuss various product applications with your customer. No warehouse club can provide that knowledge. No manufacturer has the breadth of a product line or the objective perspective to be a trusted source of such information. In the Information Age, you have the information that is of great value to the customer.
In order to bring this information to your customers in a way that causes them to see the economic value of it, you must first get to know your customers more deeply and in more detail than ever before.
That requires you to spend more time with each of your high potential customers. It requires you to meet and understand more people inside each account. It means that you systemically ask detailed questions about their processes and problems instead of just responding to their technical specifications. It means that you identify their business goals and strategies, that you understand what their customers want from them, and that you work to help them use your products to meet their customers’ demands.
When you begin to more completely understand your customer, you’re equipped to bring your information to them in creative combinations of proposals that make you important to them.
That’s the strategy that will make you IMPORTANT to both your customers as well as your manufacturers.