Sales is more than just a numbers game...

Channel Management is more than just pushing product

One of the topics I am asked about most is Channel Management. Distributing products through a third-party is not just another sales channel. It requires a different mindset and often a separate sales team. Done well, it can become a very good outlet for your company, and your products. Poorly managed, it can easily become a burden and one that returns little on investment.

In place of a direct sales force, companies will often turn to manufacturers’ representatives as their primary (or secondary) sales arm. Manufacturers’ reps will normally represent a range of manufacturers, companies, or products, but usually stay within a line of distribution or sale, i.e., a vertical or horizontal market, or industry (specific).

It’s not unusual for the manufacturers’ rep to represent products for the manufacturer to wholesale distributors and other retail channels. This multi-tiered approach could get unwieldy if it wasn’t managed well. The key to success comes from the way in which communication happens between the various parties.

A case in point surfaced this week as I looked into some specifics surrounding an AC disconnect box manufactured by Midwest Electric Products – founded in 1945 and became a part of GE as a wholly owned subsidiary in 1975. From their Web site, I could get some idea of layout and capability, but not the specifics I needed surrounding the installation and basic construction of the box. For these types of questions, they direct you to the “local area Manufacturing Representative”.

Here’s where Farmer Electrical Sales enters the picture. With nearly the same number of years in business as Midwest Electric, they cover the Carolinas for a number of manufacturers in the electrical industry. Typical of a manufacturers’ rep firm, they maintain an inside and outside sales and support staff that is broken down into product lines or manufacturers.

From my initial call, I had a good feeling about this experience. They were prompt in routing my call to the person responsible for Midwest Electric. I left a voice mail with some detail about the reason for the call, and sent a follow-up email – putting the unsolicited email risk aside, that’s the benefit to having an individual’s email address available from the Web site. In less than 24 hours, not only did I have the information I sought, I could also bear witness to the high quality of communication between Midwest and Farmer.

Working in partnership, Midwest and Farmer demonstrated the key to Channel Management is more than just pushing product. In our current competitive and volatile economic climate, especially for those who sell to the building and construction trade, this reaffirms my belief that high quality customer service can go a long way toward success. With their long-standing service to the industry, and the markets they serve, I am confident these two firms will be around for some time to come.

Co-opetition lessons from the antiques and collectibles business

In my never-ending search for better business models, I was surprised to find an example from the collectibles business. Not long ago, my wife and I attended a visiting author event at Gresham Lake Antique Mall’s 15th anniversary celebration. The husband and wife authors, Barbara and Jim Mauzy, came to display and discuss antiques, as well as sign and sell books. 

While walking around the mall, I was intrigued by the presentation of items from a range of sellers (dealers) under one roof.  Where I was accustomed to a more eclectic display in settings such as this, items were arranged more along the lines of color, or similarity.

It’s important to note that in this consignment (mall) arrangement, individual sellers are allocated (rented) “booth space” to display their wares. Normally, each seller would have their items contained within the borders of their space and although they may have complimentary items to another booth, they would normally not be displayed together.

Barbara had seized the opportunity of this special occasion to bring individual items together as complimentary pieces for display, much like an antique dealer would present in their own shop. She was leveraging the power of the items to the benefit of all sellers. This unified effort would lead to larger sales opportunities.

This example of co-opetition was built on the experience, knowledge, and expertise that Barbara and Jim acquired from their business, and as authors of numerous books on related collectibles. In our conversation, Barbara explained that by putting collectibles together in smart settings, individual buyers would find it easier to select their favorites as well as the likelihood they would buy more items from the display.

A form of channel management, collectibles follow a number of routes to the eventual sale. I learned that Jim's practice of being “one dealer away from the final sale” was an important business approach in the collectibles market. These better displays make it easier for dealers to find and purchase specific items for their business, or their individual clients.

I walked away thinking about why more businesses, especially those in retail or hospitality, don’t seem to  follow this example more often. I saw some degree of this in previous Posts like “Co-opetition – A “David and Goliath” retailer story” and “Finding the Right Customer: Motivation is key.” However, I don’t see it on a large scale or as a common practice; some of the earlier efforts may have fizzled-out as well, e.g., Raleigh Un-chained and the Raleigh (NC) Independent Business Alliance may no longer be active.

To me, co-opetition is one of those “one plus one equals three” gains for business. From what I could see on this day, Barbara and Jim helped many sellers of Gresham Lake Antique Mall reap the benefits in an otherwise standalone retail atmosphere.

How many is too much? “over 120 coffeemakers – Visit Lowes.com”

As I went through the Lowe’s advertising supplement in this morning’s newspaper, I came across a page with five coffeemakers that were priced from $49.99 to $169.99 USD. As for me, I recently purchased one from another store that was $16 after store coupons, sale pricing, and a manufacturer’s rebate. I’m not sure I could justify spending $169.99 just for making coffee.

But, it wasn’t the pricing that caught my attention. It was the notion that you could go online at Lowes.com/SmallAppliances and (attempt to) select from 120 choices in coffeemakers. If you selected an in-stock item from the store, they were offering a limited time 20% discount. So, what’s a consumer to do? Go to the store - gas consumed and time lost – or forego the discount and shop a wider selection online?

Is it any wonder our Economy, so heavily dependent on consumer spending, is in trouble? In this simple example, where does the consumer begin. Really, how many choices does one need in the way of a coffeemaker? I wouldn’t use a built-in clock as a choice since there are now five clocks in my kitchen across various appliances; I guess there is no excuse for being late anymore.

With each model claiming features, capacity, capability, and appearance that are different than another, where would you start? My guess is, you’d probably begin with a price range. Ah, but if you have brand preference in mind, then you’d go another direction to narrow your choices. Assuming you are a savvy shopper, and have been watching other ads for models and price, the choice in retailer may come to bear in your decision. In today’s retrenchment (in spending by consumers), how would you attempt to capture today’s buyer as a retailer?

Getting back to Lowe’s, how do you capture this sale? Using this Web address in the circular does not directly go to coffeemakers. Does this impact the buyer’s experience in a negative way (by adding additional steps to get started)? Once you do choose coffeemakers, Lowe’s helps you by offering sort options like: Price Low - High | Brand A - Z | Name A – Z.

When you, as the consumer, go about the process of purchasing a small appliance like this, what are the steps you follow to be happy with your decision? Where do you start; is it with the notion of a coffeemaker (purchase), or do you begin with the idea of buying a small appliance, and the ad or Web site takes you to coffeemakers?

As a manufacturer, assuming you are in many retail (or wholesale) channels of sale and distribution, how do you come to the forefront and separate your product or model from the rest of the pack? Do rebates work (in the buyer’s mind)? Is the retailer’s own brand important to getting your products in the hands of consumers?

Google Docs for client management is like using a Webcam to monitor your child’s nanny

Collaboration software and services is one of my favorite topics with clients. I am a proponent of the technology and encourage all to put it to use. As an early adopter of JotSpot, I appreciate the value and ease of use associated with browser-based collaboration.

Years ago, I worked with a client and their 800-member sales force on using the subscribe feature for Microsoft Office documents. At the time, we maintained price sheets that would help the sales team configure the pricing of various components and modules into a finished assembly. We wanted to be sure the sales reps used the most current prices, or take advantage of new modules. The subscribe feature would alert them to access the new version of the price sheet.

Today we employ collaboration with clients using online tools that can reduce the amount of replicated documents, or offer a discussion forum during online meetings. I am confident you have favorites of your own. Much like using the record feature in GoToMeeting, we continue to discover new features and enhancements the more we use these tools.

However, even the best software and online services can’t replace phone or in-person conversation when it comes to high-quality client management. Two recent experiences have made me draw into question whether companies (and independent groups) are losing sight of the customer (or members) in the desire to find more productivity through online software and services.

In one case, the communication needs of the group quickly matured from email and attachments to a member-only blog. At first, it seemed to work well. However, it rested upon the notion that people would access the blog on a regular basis. The group quickly reverted back to email, but sought a solution for sharing documents and notes from the in-person meetings. They chose to transition from the member-only blog to Google Sites.

This new platform gave them a collaborative foundation, and storage of documents, with the ability to notify members (via email) of changes and additions. It appeared to be the best of both worlds, but soon fell short as the group participation began to wane. “Out of sight, out of mind” took hold, and soon the responses fell to a trickle, or not at all. In an effort to reclaim lost ground, some of the group members proposed getting together in-person, more often.

My most recent experience brought this to light even brighter than before. In this example, we are acting in a role in-between our client and their vendor. We are monitoring the rollout of a new product and service. Initially, the client and vendor used Zoho Projects as a collaborative solution. It appeared to offer a level of communication and project management on a 24/7 basis. The attempt was to minimize phone calls and emails while offering up-to-date information on the progress of application development.

When this began to fall-short of expectations, the vendor proposed a move to use Google Docs. Here, all of us could review the progress in a more familiar way, i.e., a simple document presentation of the information. But, as each document was changed, it was like using a Webcam to monitor your child’s nanny; in order to find out what was going on, you needed to login from time to time.

The end result of the Google Docs experience was a loss of communication compounded by a feeling of not knowing what was going on, and fearing the worst. Here’s where the notification in Google Sites would be an advantage; I believe only the spreadsheets in Google Docs supports notification – from what I read in the Help and Support section, that has its own set of problems.

We have found that although online collaboration tools and services can add benefits to your business, if not carefully monitored by the users, they can quickly fall short of the goal and jeopardize an otherwise sound relationship. To overcome this potential pitfall, I would encourage you to add the dimension of phone or in-person communication to supplement collaboration technologies such as those mentioned here. Using these tools can reduce travel, meeting time, and unnecessary email exchanges; but don’t forget to introduce the personal touch along the way.

The other concern that has begun to materialize for us as an outside consulting firm – or N2tech’s software development business – is the proliferation of these tools across our many clients (and their vendors, or customers). It’s like having a dozen word processing applications on your desktop, each with its own set of taskbars and features. The mental adjustment you have to make when you are familiar with one and not another can be painful. Sometimes, picking up the telephone is the best solution.

I would be interested in hearing about your experiences and what you have found using collaborative software and services. For those of you who use these tools outside your organization, i.e., with customers or vendors, what has been the biggest benefit in doing so? What is lacking, or failed to meet your expectations?

Podcast: Managing a multi location purchase process

Many companies have more than one location that uses your goods or services. Often the location assigned to you is required to submit their request for purchase to a division or headquarters location that is out of your area, or sales assignment. How can you best manage the opportunity from outside your sales responsibility? In this episode of the One Goal - Revenue Generation ® series, Peter Kusterer of NvestNtech brings forward the need to understand the customer’s purchasing process and how your order will be approved for purchase. Download this episode - “Managing a multi location purchase process.”

Click on this link for the Podcast directory that includes the One Goal - Revenue Generation ® series, as well as additional Podcast episodes and related topics. Our podcasts are featured on iTunes, Odeo, and Podcast Alley.

As Starbucks retreats, it’s full speed ahead for Port City Java

As Starbucks begins closing stores, and fans grumble about their new Pike Place Roast, you may be left wondering if they have lost touch with their loyal customers. Messing with someone’s daily ritual could be hazardous to your business health. One company in the “cup of java” business that understands this all too well is Port City Java.

In talking to Don Reynolds, Chief Operating Officer of Port City Java, the gourmet (or specialty) coffee business breaks down into three primary segments: 1) The volume end of better coffee by the likes of McDonald’s, and Dunkin Donuts, 2) The global specialty coffee segment owned by Starbucks, alone, and 3) The regional specialty coffee segment known as “coffeehouses, cafes, and roasters” like Port City Java, and Peet’s Coffee & Tea.

Starbucks, amongst the more publicized anxiety surrounding the store closings, has been quick to say that the Pike Place Roast has helped increase sales in the drip coffee segment of their business. But, one wonders if the success in one area will be to the detriment of customer loyalty and send Starbucks fans looking for new destinations for their daily grind.

In the case of Port City Java – and others like them – they are in a market segment all their own. And, where Starbucks is in retreat, Port City Java continues to grow and expand – they are even going International with locations in Costa Rica, Saudi Arabia, a new location in Jordan, and possibly Kuwait in the future.

What accounts for Port City’s success? What I found in talking to Don was their success is built on an emphasis to see the patrons as “guests”. When asked about what has fueled their growth, he said, "operations and execution at the unit level is everything; the guests are paying 100% of the bills." As he speaks, you can feel his commitment to a better customer experience.

But, it wasn’t always that way. I asked Don about the proverbial kick in the gut that most growing businesses feel at one time or another. It’s that moment when you realize what you are doing isn’t working and that you have to make a change. He reflected on their franchise operations in 2005 and how they learned the lesson that franchisee selection is very important to long-term success. Don stressed the idea that as a business, you must “differentiate your concept and organization; find YOUR niche and execute better than anyone in the world to create YOUR concept and value for your guest." Today, they manage a very successful franchise operation, which helps fuel their expansion.

Recognizing that coffee is often a daily ritual for an individual, Port City Java emphasizes the hospitality aspect to their business. They want to provide exceptional products served in a special way. They spent 18 months developing their breakfast sandwiches, which included a significant investment in equipment – they use a turbo oven that allows them to bake their own products inside each store.

To continue their growth, the spotlight will remain on the customer experience. Beyond the “Give Us A Holla” campaign on the Web site – for customer suggestions, experiences, or questions – managers and staff are in constant chatter with everyday patrons and visitors.

Since coffee falls into the discretionary spending category, in today’s Economy the amount to be spent is fixed. The variable is how it can be spent. The decision of where to spend, and what to spend it on, will ultimately rest with the customer experience. It sounds like Port City Java understands this and knows how to navigate market swings; there is a business lesson in this for all of us.

BuilderLink™ puts material control and inventory into the hands of the building contractor

Much has been written about the creative and innovative talent of today’s CIOs. For some, their in-house work can turn into a commercialized application for sale to others. So it is with BuilderLink™; the exception here is that the driving force behind this launch was a seasoned lumberyard manager with a penchant for computer systems and software.

What began years ago as an in-house ‘green screen’ software application called M2L – short for “Modem to Load ‘em” – has evolved into a more robust, browser-based commercial application called BuilderLink™. Having been familiar with the initial launch of its predecessor, M2L, I welcomed the invitation to experience a new-user training session, and the offer to feature a product review here in the blog.

Some History

M2L offered a simple, character-based means for building contractors, architects, and other commercial builders to access the inventory at a local wholesale lumber and building materials dealer, Truitt & White Lumber Company (Berkeley, CA). Early PC and Mac users could use their modem to login to the Truitt & White Lumber database and perform a lookup of items and pricing. They could even build an order, and in most cases, fax it in for shipment or pickup, thus bypassing the traditional phone inquiries, or visits.

With the early success of M2L, Mark Pearsall, General Manager of Truitt & White Lumber, recognized that the underlying architecture of their custom in-house systems could help other wholesale building materials dealers. The sale and support of these systems and software would necessitate a spin-off company. Soon thereafter, Softwood, Inc. enters the picture with Mark assuming a dual-role with Truitt & White and Softwood, Inc.

"Having been a lumber dealer for decades, I kept my ears and eyes open to changes that have been happening in our industry," says Pearsall, a lumberyard manager for twenty years "The new generation of builders and contractors want immediate, accurate information at their fingertips whether they’re on the job site or at home in their living room.” With the growing interest in Internet applications, Softwood embarked on a migration path to take M2L into a browser-based application and additional functionality. Renamed BuilderLink™, the new graphical interface simplified use and added an opportunity to incorporate pictures and graphics into the otherwise plain-vanilla text, previously available in M2L.

Fast Forward to Today

In addition to the new graphical interface and platform independent nature of BuilderLink™, additional features and functionality have been incorporated from the user community wish list. Contractors can now build an “assembly”, or an “estimate”, as well as export their work into other business software applications like Sage Master Builder. The previous inventory lookup mnemonics have been replaced with a combination pull-down and free-form text search box. Many of the products incorporate additional material detail, pictures and graphics, with some incorporating hyperlinks to the manufacturer’s Web site.

Building an assembly in BuilderLink™ is a simple, yet powerful feature of the software application. Here a builder or architect can assemble common materials into a named “Assembly” and save it for later use. It can be modified over time, or adjusted for individual jobs or estimates. A good example of this would be a common deck project on a home. Various assemblies would make up the average job and individual projects could be adjusted accordingly.

Referral or Reseller – what’s my role?

Leveraging resources to expand your reach of sales outside your own company can be a wise and mutually beneficial experience. But, often it can fall short of expectations due to a simple misunderstanding of what role each party plays in the business. These relationships commonly fall into two groups: Referrals of potential business, or becoming a Reseller of someone else’s products or services.

Having served on both sides of the table, in a variety of sales positions, it’s not uncommon for me to hear the term “partner” at some point. Another similar reference is “affiliate”. Nonetheless, the goals of both parties are the same; increasing sales or selling opportunities.

In the case of a referral relationship, the primary goal is often as simple as (sales) lead generation. Using other people to make introductions or offer insight to acquire new business can be an inexpensive means to grow revenue. The common practice is to offer the referring party some nominal compensation for helping make the introductions. In the early days of this practice, it was often a flat percentage of the initial sale, e.g., 10% on the first order, or first six month’s revenue. Today you may find that it is a flat amount, e.g., $10-$100, and possibly an additional amount of future sales.

In contrast, a reseller relationship is built around another company or individual physically (re)selling your products or services. In some cases they are a ‘stocking distributor’ (i.e., physically stock/store and reship), or they may not handle the physical product at all and merely have it ‘drop-shipped’ to the destination. Compensation is usually more than a referral relationship and is built around a discount from the direct selling price (or MSRP) of the product.

When resellers compete in the same account against the manufacturer or service provider’s direct sales force, “channel conflict” becomes an issue, i.e., who will get credit for the sale. This can be a challenge and is often best served by a formal policy of ‘conflict resolution’. If you don’t have such a policy in place, I would encourage you to get one.

Getting back to the roles, resellers often take on the posture of adding value over and above the base product, hence the term, “Value-added Reseller” (or VAR). A referral’s value comes forth in the quality of the introduction to the potential sales opportunity.

Going back to my own experience, and bringing it forward to our work at NvestNtech, I am beginning to see a trend of frustration and disagreement (sometimes drawn to anger) in both these roles.

In the case of referral relationships, I find that the selling party seems to expect a nearly imminent and complete sale as the contact (lead) information is exchanged. They are prompting and prodding the referral party for more information, introductions to key executives, and making demands for mutual participation through the entire course of the sale.

For resellers, more channel conflict is present as companies take desperate steps to ensure a sale. As a result, resellers are becoming more protective of their accounts and keep their ‘partner’ away from their customer.

In both these cases, it appears to me that rather than gaining market share and increased sales, valuable selling time is being consumed/wasted by trying to sidestep the partner. Is it just me, or do you feel the same way? Tension between parties serves no useful purpose. Sitting down and working to understand the other party’s needs can be time well spent. In the end, you may find that it’s time to sever the relationship in lieu of more distress.

Which salesperson sells more; well organized or clutter bug?

The heading on many of our materials (including the subheading for our monthly newsletter) makes the claim, “It takes a disciplined process to produce an accelerated sales cycle.” It’s our belief that by developing a selling discipline, one that builds repetitive success, you will accelerate the rate of sales closure and deliver better overall results.

Part of the discipline we recommend in our sales training requires a systematic and organized approach to selling and closing business. We talk about “Selling to the Grid”, developing an organized contact management system, and keeping a journal of your work, along with ways to better develop your sales approach with individual accounts and contacts.

While conducting one of our sales training programs last week, a participant brought forward the fact he knew many disorganized salespeople that were top performers. He was wondering why we focused so much on organization.

My response acknowledged the validity of his comment, as I have seen similar results. However, where this profile may work with individuals, I have seen it less effective in teams or groups of salespeople. And, in those cases where we work with individual salespeople who operate as independent subcontractors, e.g., a manufacturers’ representative, we see better results with a more balanced and organized approach.

The more I thought about this on the airplane enroute home, I began to wonder if it related more to the diversity of business and customers, than whether it was someone who operates independently, or as part of a larger group.

If you were in the residential real estate market, you would be selling a variety of homes, but for the most part, your sales approach would be fairly consistent. But, if you were in the semiconductor business, highly customized software, or in the corrugated container and packaging business, you may be calling on a wide range of vertical markets, and individual account requirements.

Could it be as simple as, the more diverse the business, the greater the need for organization? Think about your own situation. Or, as a sales manager (or VP of Sales), what have you found with regard to those salespeople who appear organized versus those that you perceive to be a clutter bug?

Hot Buttons: Honeywell contact form flies through Cyberspace, then turns into stardust

I was trying to “size” a space heater for an adjoining room to supplement the heat from a fireplace insert. Since the insert will draw cold air from other rooms, by preheating the air with the space heater, the overall heat should be more efficient. Certainly more so than the multiple heat pump zones we have in the home.

Being familiar with Honeywell’s home heating solutions, and knowing a couple of units were available at the local home improvement center, I chose to begin with their Web site for information. I could not determine a good fit from either their support knowledge base, or the related “heat savings” Web site. So, I turned to the Contact Us page on Honeywell’s Web site and found a form to complete for more information or assistance.

I diligently filled out all the boxes, including part numbers and product names, and I used the pull-down menus to further refine my inquiry detail. I wrote a rather complete and detailed explanation of what I was looking for, and pressed the Submit button to send it on its way. A confirmation page told me that it had been received and to expect a reply, soon.

After some time passed, I received a generic auto-response email that told me another company handles all support information for home units. The email outlined the contact process for support would be a phone call, or send an email. Bottomline: I would need to start all over again.

It seemed to me that Honeywell could have retained some of the information from my inquiry and passed it directly to the authorized service center. If the business logic on the contact form can offer me the alternative of an email or phone call, then it should be able to pass it along without my intervention. I was left wondering how many companies actually test the customer experience on their Web site.

Since the handoff was less than optimal, I chose to contact a competitor. Lasko Products has a complete line of heaters and other products for “home comfort”. Product detail could be found on their Web site, and an email address or phone number were the choices for support. I chose the phone number route and left a message on the voice mail system for someone to call me.

It wasn’t long before I received a call from their product support department. We reviewed the requirements over the phone, and after some brief Q&A, we determined the unit that might meet the need. The product specialist volunteered some usage tips to ensure better all-around performance by suggesting the best location for the unit and direction of airflow. I purchased the recommended unit and have now become an advocate for their products.

Would you have pursued the second tier contact route from Honeywell by contacting the authorized support center? Or, would you have acted like I did and looked elsewhere without giving Honeywell a second chance. How many potential orders turn into ‘stardust’ as a direct result of a poor Web site customer support experience? Take some time to experience your own Web site. Doing so may guarantee more business for you in the future.