HVACRDB

Product Knowledge Won't Sell Tomorrow

In 1968, when I was a teenager, Weatherman and radical Jerry Rubin said never trust anyone over 30. All of a sudden, I have a hard time finding anyone under 30. Shifts in the economy — the up and down cycles — have pushed and squeezed our industry in strange ways. When I launched my career and the quest for fame and fortune in 1978, the selling world was chock full of guys like me — neophyte kids. We were as green as the grass Jerry was probably smoking, but most of us were anxious to learn and move forward. Today, things have changed. Our sales departments are brimming with seasoned pros. These are folks that have 10, 15, maybe even 20 years of experience.

With this kind of veteran bench strength, one would expect that our selling troubles would be over, with easy street right around the corner. Sadly, for those of us who have made company leadership our stock in trade, it's not all that easy.

Our world has continued to twist, turn and morph into something our business forefathers a generation ago would struggle to understand. Case in point: I just learned of a study on customer buying preferences. According to this work, the typical customer would rather gather information on the Web than deal with a live salesperson. This means they would rather gawk at Google than talk to Willy, the account manager.

When the Web first appeared, a very successful salesperson friend was fond of calling himself the human search engine. Customers told him what they were interested in learning about, and soon thereafter, he brought them the information. This seemed cutting edge 10 years ago — but in sales, it's what the customer wants that counts. And, when customers want to gather their first blast of new product information via the Web, that “human search engine” routine is as obsolete as plaid pants and white shoes.

Now let's get our minds around a couple of things most of us know to be true.

  • If selling turns into a purely Web-oriented thing — most small, independent distributors will lose. The big boys have a lot more money to throw at the problem. And a Web-only selling world plays to their strength.

  • Improvements in shipping and logistics make our local inventories less of a calling card for most big projects. UPS, FedEx and others continue to stretch the size of their next-day shipment area. If the customer can wait until the next day, our advantage is lost.

  • Our customers are continuing to operate their businesses with as few people as possible — lean and mean. Jobless recovery will probably turn this into the permanent reality.

Customer relationships are still important, but the “right stuff” for building the relationship is shifting. Our jobs are to create an environment where our salespeople provide the things a customer values in today's environment. The question is: What can we provide that will endear us to them into the future?

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Customers need us to know their business. In the past, we knew the products side of the business — focusing in on “the nuts and bolts” capabilities, compatibilities, configurations and assorted new gizmos. But today, this product knowledge is becoming a commodity — and a pretty low-cost commodity at that. To expand, grow and thrive into the future, we've got to demonstrate capacity to provide more than product expertise — and not in some loosely defined general way. It's our role to understand specific processes, procedures and components of their business better than their in-house staff. We become experts on them.

We need to understand the interworking mechanics and value drivers of their business — shifting from what they buy to how they operate. The post-recession account strategy focuses on a set of questions most of us have yet to explore. Let's examine a few of the areas we better pay attention to in the future.

Market Position Questions

If we're going to be experts in our customer's business, we need to understand a bit about how they make their money. Remember, specifics rock; we can't rely on generalities. Customers are similar, but if you assume every contractor, institution or end user is the same, you're sunk. You need to train sales types to fetch up the answers to these questions:

  • Who are their customers?

  • What market area do they serve?

  • Why do these people buy from them?

  • Are they the high-cost, high-quality guy or the down and dirty speculator?

  • How do they find new customers, and how important is growing this base?

  • What do they feel are their competitive strengths and weaknesses in the marketplace?

  • Where do their profits come from? Projects, MRO, service work or something else?

Did you notice the over abundant use of the words, they, them and their? We didn't ask this type of question when selling products.

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People and Process Questions

In order to understand our customers, we must comprehend their people situation. In a product-selling world, we've probably focused on establishing relationships and understanding some of their personality quirks. We need to ramp up our act and analyze the people drivers inside their business. A few starter questions might look like this:

  • What is their burdened cost of labor? (by function and job description)

  • Are they a union shop? What is the relationship with the union?

  • Do they have issues with turnover or other management headaches?

  • How difficult is it for them to find new workers?

  • How do workforce demographics affect their future hiring?

  • Do they have a process for getting tasks accomplished? Does it contain documentation, metrics and management points?

Operations and Efficiency

Understanding the customer's internal operations gives us an opportunity to shine. As distributors, we typically have inherent strengths in logistics, warehousing and marketing. Yet, we have developed skills in dozens of other areas as our own business needed them.

For example, I know of one company that developed strategic planning skills so highly advanced that other organizations came to think of them as the go-to guys for planning. They started assisting charities and community organizations and soon found customers and vendors asking for their help. Here are some operational questions to get your motor running:

  • How do they track customers?

  • What does their business system look like?

  • How many people must approve an invoice between receiving and accounts payable in their business?

  • How advanced is their inventory management and logistics?

  • How do they handle technology, accounting and other “back end” tasks?

  • Do they use activity-based costing to measure customers, projects or other activities?

In 99.8 percent of the cases, a purchasing agent or technical person could not answer any of these questions.

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And Now Back to the Reality of our Sales Force

If my list of questions flashed through your mind with something like, “Wait a minute, Frank, our customer contacts don't know the answers to those questions…” salespeople definitely don't know the answers, either. Remember, for the past decade or so, they've been busy playing human search engine. It's nothing to be ashamed of — our customers wanted a source of product information and we provided it. Most of us added a heaping helping of Value-Add services along the way.

However, times are changing — heck, the train's already starting to pull out of the station. New times require new strategies. It's time to insist that your veteran team pick up some new tools. Without the ability to match the value of your organization with the needs of the customer, these journeymen salespeople are going to lose their competitive edge. It won't happen overnight — but it will happen.

I've peppered this article with questions but indulge me — just three more and a final thought.

  • Do you understand the value you provide to your customers?

  • Do they place a value on the service you provide?

  • Do you remember Montgomery Ward?

My guess is the leaders of that once-famous American retailer didn't think they needed to respond to new times either.


Frank Hurtte provides Strategic Insight for New Times. He speaks and consults on the new reality facing distribution in a post-recession world. Contact Frank at River Heights Consulting at[email protected]or 563/514-1104.

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