Specialists in a Down Economy
Unless you happen to be a scraggly bearded hermit holed up in a mountain cave, you have heard the latest economic report. Some say, “Never mind the economy, just keep your nose to the grindstone and everything will work out.” The mantra of the old-time sales experts went – sales down; work harder. I don’t believe it. Neil Rackham, the author of Spin Selling, researched the sales habits of successful and not so successful salespeople during the unstable economic times of the past.
He found that salespeople whose companies took the approach of blindly chasing every single order regardless of size, quality or origin failed miserably during an economic downturn. This was especially true when the products being sold were complex. Electrical Distributors sell complex products. Specialists are responsible for the most complex of the mix.
We face some tough sledding ahead, so let’s modify our approach to maximize our outcome. In the next few minutes we will look into a half dozen ways we can improve the way we operate as Specialists.
Understand the buying cycle
It’s important to understand the nature of our customer base. Rackham’s research indicates that companies facing economic downturn extend their buying cycles. Simply stated, it takes longer for them to budget and allocate moneys for new projects. We need to build this into our equation. Projects may appear on the horizon then seemingly linger for months. Salespeople often loose interest or do a poor job of continuing to position for the order. Sometimes an organization will miss a step along the way to find they are out of the game. By maintaining a list of known projects and carefully tracking them, a Specialist continually assesses the current status. Tweaks along the way improve their company’s position. If you don’t have a spreadsheet or CRM system that tracks projects, ties them to actions and measures progress, I suggest you create one.
Safety and elimination of risk
Companies facing severe economic conditions migrate to safe solutions. In days gone by it was said, “Nobody gets fired for buying IBM.” Do you have an IBM-esque line? As a Specialist, your job involves leading the charge for product groups or technologies. Provide your sales team with references of how and where your products worked well. This allows them to begin developing a confidence building story for their customer base.
You can provide a safety net in other ways. Customer training eliminates risk. If you can provide back-up for scarce engineering or maintenance resources you are removing the risk associated with the purchase. Providing information useful in selecting experienced systems integrators or contracting firms adds to your company’s safety proposition.
Every customer presentation needs to include a bit about the security you and your company provides to insure that no purchase is risky. Specialists serve as the mouthpiece of the organization – tell the story.
Build a strong value statement
In bad times the strong get stronger and the weak chop their margins. Trust me – somewhere in your territory is a competitor willing to cut the price. Now is the time to develop a strong value statement. Specialists are all about creating value. They assist with troubleshooting; provide ideas to improve the customer’s process. They look for ways to trim the spare parts required for the customer storeroom. Don’t take these activities for granted. In the July 2007 edition of TED magazine (A measure of value), we outlined the best ways to measure and present your value. If you didn’t take heed then, start now or risk keeping the business at a substantially lower margin.
Examine your customer base
If you reflect on your existing customer base you can probably make a pretty good guess as to who will be experiencing major slumps in their own business. As sad as it is to say, a few of these companies might not weather the storm. Identify these accounts early. Establish a plan to control the resources devoted to these accounts.
Specialists responsible for PLC’s, Drives and other automation products are often called upon to assist with troubleshooting and engineering issues. During bleak times, struggling customers cut back on qualified staff. This generates additional work for the Specialist with little room for future growth. Your time is better spent with those companies with a potential for growth. When ever possible turn these events into paid service calls or reference the calls back to a local Systems Integrator. Your time needs to be freed up to invest in customers with a future.
Many of us in the Specialist community are used to present new products or technologies to our accounts. Rather than not presenting new technology to accounts with a limited future, consider putting on public presentation at your branch or some other central location. Invite the customer to come to you, rather than the other way around. This simple move allows you to keep options open and still maximize time for new business.
To keep your business growing, you need to find new accounts with the ability to replace the shortfall. This is pure targeting. Even in the worst of times, some accounts grow. In the near term future any company tied to oil, alternative-power or bio-fuels will continue to prosper. Why not stack the deck in your favor for the future. Determine accounts where economic conditions provide the chance for gain and begin zeroing in on opportunities.
Accounts with a stable future offer room for marketshare growth. Positioning yourself to capture additional business through innovative sales efforts will offset drops in sales at companies who suffer most from the economy. Here gains are planned one product at a time. For instance: this newly released drive has features which will allow us to capture the drive business. The future sales will account for about $10,000 per year.
Work with your sales team to grow your contact list. During a down economy, knowing and maintaining a relationship with the upper management of these accounts “pays in spades”. Production managers, safety coordinators and quality control people often have their own budget – independent of maintenance and engineering departments. Consider safety, unlike the buying cycle of the typical project, safety projects are fast tracked even during poor times.
Targeting accounts isn’t enough
Understand how the economy might affect your competition. In a downturn some companies close locations, lay off employees and sometimes jettison entire business units. These present golden opportunities for Specialists. I remember the story of one wholesaler who decided to abandon the automation business during the last economic cycle. A quick thinking Specialist developed “recovery plans” for all of the competitor’ major accounts. The results of these plans brought his company double-digit growth for his product group.
Manage your time and resources
Distributors must manage their cost of sale ratio during slow times. While this is normally a topic for management discussion, Specialists serve a unique function in many wholesalers and often control the financial outlay for their product. To help get your creative juices flowing, let’s explore one of these.
Use a tank full of technology: With today’s gas prices soaring and the cost of a single sales call hovering around $400 dollars, it makes good sense to utilize the power of the internet. Over time many of us have gotten complacent about “just dropping by later” to show a proposed solution. If possible, use internet meeting software to present without making the trip. This achieves two things: 1) eliminates the travel expense and 2) frees your commuting time for other potentially profitable work.
A parting thought
It’s not all about doom and gloom. These downturns come and go with time. But, success comes from positioning. The right moves now turn into growth later. All of these thoughts work in good times as well as bad but your results will seem just the more spectacular when others are down.