Beyond Selling Products

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Beyond Selling Products

• Pushing Value and Harvesting Dollars
• in an
• Integrated-Solutions Model

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River Heights Consulting

• Questions?
• Comments?
• Discussion?

River Heights Consulting 226 Hillcrest Davenport,
Iowa 52803 563-514-1104 www.riverheightsconsulting
.com frank_at_riverheightsconsulting.com
Frank Hurtte
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Blatant Self Promotion
Frank E. Hurtte is a nationally recognized
speaker, trainer, executive coach and founding
partner of River Heights Consulting, a consulting
firm specializing in knowledge-based channel
systems for manufacturers, distributors and
customers. He is a leading expert in Distributor
Specialists, Measuring Value and Targeting
Customers. As the former senior leader of a
regional distribution company, past president of
a national distribution association and executive
coach, Frank brings valuable insight to the
distribution business. Frank is the author of
Lets Target Some Accounts and Telesales
Prospecting in the 21st Century. He is
currently working on a book laying out a strategy
for engaging Distributor Product
Specialists. Franks articles appearing in HVAC-R
Distribution Business, Progressive Distributor,
The Electrical Advocate, TED-The Electrical
Distributor, Transmissions and scores of on-line
publications and newsletters.
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This Morning

• Benchmarking our Model
• The Customer Picture
• The Supplier Picture
• Charging Ahead

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Benchmarking our Model
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Benchmarking our Model
Control Council
Most Distributors
Catalog only
UPS Fed-Ex
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Expertise for Sale
Solutions Zone
Products Expertise
Value-Add Zone
Commodity Zone
Logistics
Customer Expertise
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Product Centric Sales Trajectory
Start with Product Knowledge Morph in to
Customer Expertise
Opening Opportunity
Products Expertise
Long - Term Relationship
Customer Expertise
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Customer Centric Sales Trajectory
Start with customer industry info Morph in to
Customer Specific Expertise
Long - Term Relationship
Products Expertise
Opening Opportunity
Customer Expertise
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Transferable Knowledge
Products Technologies
Take what you know from one customer and apply it
to another.
Customer Segments
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Transferable Knowledge
Metal Parts Heat Treat Process Control
Industrial Bakery Tunnel Oven Control
Intellectual
Flame Safety System Air Flow Control Pressure
Control
Advantage
Bakery Jargon, Domain Expertise
Metal Parts Terminology
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Who do you work for
Manufacturer
Traditional
Value Add
Int-Sol Distributor
Systems Integrator
Customer
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Are you CompetingProduct Lines or Service?

• Service

Product

• Integrated-Solutions
• Product Knowledge
• Customer Knowledge
• Ongoing Services

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If knowledge is money, how well do we account for
it?
Counter Questions
Ft. Knox
Sales Calls
Product Tests
Phone Calls
Training
Manuals
Technical Proposals
Test Equipment
Trouble Shooting
Demos
Who has the keys?
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(Knowledge) Support
Phone Log
Time Consumed Product Customer / Contact How
Resolved
Report to Sales Report to Customer Mgmt
Info Charge vs. Free
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(Knowledge) TrainingProfit Center vs. Cost
Avoidance
No!
Yes
Training vs. Sales Pitch
Raise the Bar
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(Knowledge) TrainingProfit Center vs. Cost
Avoidance

• Procedure for Technical Training 1994
• Assemble Training Units
• Announce Dates
• Send Announcement to Customers
• Sign Up 25 Customers
• Confirm 25 Customers
• Train 10

• Cost to Customer Zip! Nada! None!

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(Knowledge) TrainingProfit Center vs. Cost
Avoidance
No!
Yes
Topics

• Average Cost per Day
  295-395
• Measure Value
• no travel costs
• customized
• savings in the field

• Free Training?
• You can still make concessions
• Manufacturers can help!
• Materials offer choices
• Curriculum
• Raise the bar on your own people

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Integrated-Solution Model
Projects A sale made that pushes as many parts
from our line card as possible
Integrated Solutions Sales of integration
of parts, labor knowledge
Parts Distributor Sales made that consist of
parts from our line card
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The dreaded leak
Sales Effort
Sales Effort
Natural Migration
Natural Migration
To Another Distributor
The Bad Guys
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Ideas for plugging the leak..

• Custom Catalog Numbers
• Ala Carte Pricing tied to product sales
• Repair Parts Contracts
• Long-term Support Contracts

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Case Study

• Electrical Distributor
• Put in place a program to put an order
  replacement tag on outgoing equipment
• Tags applied to products sold by many sources
• It has been 5 years and they get calls from end
  users across the country
• Priced at book
• Shipped with freight charged

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Customer Story

• Targeting
• The customer has to appreciate your value,
  andNot everybody does!
• Understand your value
• There is a 4,000 year old method of describing
  value in business MONEY
• Remind customers of your value regularly
• Build on your value.

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TargetingWhy worry about it?
When we look at companies that report being
world class in their ability to accurately
target prospects, CSO Insights' latest survey
finds that their quota attainment is 81.7 versus
55.7 for everyone else..
Barry Trailer speaking on CRMGuru.com
Thats 47 more effective!
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And, you dont have time to do all this for
everybody
Company Level
Salesperson Level
Product Level
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Targeting

• Do they match your companys values?
• Do they appreciate what you do?
• Can you fill a need for them?

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Activity Based Costing

• In your business
• Service and resources play a huge role
• The wrong customer eats your ability to build
  future competitive advantage
• Gross Margin doesnt tell the story!

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You cant be more profitable unless you are more
valuable

• Easier to do business
• Processes
• Customer service
• More available
• Right inventory
• Right information
• 24x7
• Quick response
• Lower costs
• Inside the customer
• In their product
• Increased output
• Products
• Services
• People

Everybody adds valueYou just need to provide
more Malcolm Mills Purchasing Guru
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The Increasing Importance of Value
Company Value
Financial Statement Impact
Management Issues
Measured Value / TCO
Operational Issues
Process Improvement
Components (needs)
Features and Benefits
Shopped Commodity (need)
Lowest Price
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Measuring Value
Your Service
Improved Productivity
More Business
Profit
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Measuring Value

• Your Service - Easy
• Hours of free service
• After hours calls
• Emergency delivery
• Returns/Exchanges
• Warranty claims
• Expedites
• Schools
• With Discipline

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Measuring Value

• Improved productivity
• Lost hours
• Waste / Scrap
• Energy
• Transactions
• Inventory
• Dollars tied up

• Need to know customers
• Labor cost
• Material cost
• Energy rate
• Back office
• Money cost
• Interest

Learn measure
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Measure Value

• New business opportunities
• Enhanced profit areas
• Acquisition candidates
• Owner benefits

Very Hard - but worth it!
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Lets push on this one.

• What do many customers lack?

Customer Strategic Needs
Your Expertise as Distributors
Real Marketing Programs Sales Intelligence
Leads Ideas for Selling Ability to Leverage
Vendors Qualified People
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Case Study 1

• Distributor in Automation World
• Developed a plan for co-marketing with their
  contractors
• Established a detailed set of expectations
• Monthly reviews of potential projects
• Started with a specific group of end users
• Project end reviews
• Value engineering
• Future expansion opportunities
• Products / Service purchased outside agreement

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Whats good for your customers customer?

• Value of hiring you?
• Value of renting right equipment?
• Value of fast troubleshooting?
• Value to no wait pick-up?

The root of total Endearment! (and Profit Making)
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Case Study 2

• Mechanical Distributor
• Contractor complained about the emergency
  delivery charge on plant down operations
• The Contractor ate the costs rather than pass
  them along to the customer even on time and
  materials jobs
• Distributor put together a marketing piece which
  explains why paying the charge is of value to the
  end-user customer

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Manufacturer Story
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We need to understand Manufacturer Profit Model
Number one on every manufacturers hit parade
is Factory Utilization There is a gigantic
difference between 75- 85 percent usage!
Also Very Important
Quickly Funding New Products Creating New Demand
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Most Manufacturers are Product Guys
Building on the Brand
Manufacturing Efficiencies
Market Share
Add-on Products
Recognition
Price Leadership
Leadership
Future Sales
Repairs MRO
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Where do we fit in?
Demand Creation
New Customers
New Products Applied
New Applications
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So, who is doing the work?
Manufacturer Sales Effort
Percentage done by Mfg
Solutions
Logistics
Product
Value Add
Market Creation Application Non-Price
Proposal Technical Troubleshooting Local
Inventory
- - - - - -
50 50 50 50-60 60 x
100 100 90 90 100 100
100 100 100 100 100 ?
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Sell your value - backwards

• Measure
• New products launched
• Customers trained
• New customers sold
• New applications
• Information provided

Increasingly, manufacturers are entering into
pay for performance agreements, that are not
volume driven.
Measure and Record w/o data base like
information, none of this has much impact
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Lets think about..Communications w/
Manufacturers

• Needs to happen at higher levels
• POS - most distributors hate it.. but it has its
  place
• Association based POS Guidelines
• Planning - annual planning meetings give you a
  chance to jump over layers of bureaucracy
• Planning Template
• Association based Vendor Scorecard
• Scorecard - widfyr presented in a horse pony
  show structure.

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Now lets ask for a raise..

• Marketing funds
• Rebates
• Better pricing (select products)
• Fund new people
• Pay for activities
• Schools
• Promotions
• Proposals
• Specifications

Demand Creation is much different than Demand
Fulfillment
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Pushing Forward
65 of CEOs expect significant change in the
next two-five years Harvard Business Review
2006
What are some of the trends that may affect our
world?
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Business Trends

• Expectation of mass customization
• We are positioned well.. but, expect others to
  join the fray
• Leasing vs. Buying
• Tax benefits, costs of money, depreciation
  cycles
• Extended warranties / service plans
• Best Buy, Car Dealers, Whole House Maintenance
  Plans

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Demographic Trends

• People
• Skilled position shortages
• Drop in entry-level positions
• Changes in North American Manufacturing
• Generational expectations
• How old is your customer?
• Succession planning in your business

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Technology Trends

• Drop in digital prices
• People expect Open Architecture
• Manufacturers will scramble
• Greater connectivity
• Internet capabilities allow remote monitoring
• Wireless think internet out wondering around
• World is flat?

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Other Stuff

• Energy prices with go up.
• Green is in
• Private Label Brands

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RecapRe-Rant

• Completely Understand the Model
• Think process
• Customer Supplier Picture
• The right ones
• Measure value
• Restate your value
• Push Forward
• You are in a good place

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Thanks
River Heights Consulting 226 Hillcrest Davenport,
Iowa 52803 563-514-11104 frank_at_riverheightsconsult
ing.com