21st Century Professional Manufacturers Representatives

1
21st Century Professional Manufacturers
Representatives

• Customer Focused Sales and Marketing
• CPMR 201

2
Session Objectives

• Revisit the major trends reshaping the
  competitive environment.
• Explore the difference between being truly
  customer driven and being sales driven.
• Share a profile of a Professional Manufacturers
  Representative firm.
• Provide an approach to segmenting your customer
  base that allows you to focus your most valuable
  resource on high payoff activities.
• Apply lean thinking principles to managing (how
  you spend your time on) your core customers.

3
Desired Outcomes

• We can declare victory if YOU
• Have a better understanding of the big picture
  trends that are transforming the world of
  business.
• Complete the Professional Manufacturers
  Representative Profile for your firm.
• Take a hard look at how you invest your time and
  how you segment your customer base.
• Get a couple of ideas you can take home and
  implement.
• Leave challenged and energized to take your
  game to the next level.

4
Whats Turning the World Upside Down
Flat World Effect
Innovate or else
Wal-Mart Effect
China Effect
5
The Wal-Mart Juggernaut

• Largest company in the history of the world
• Larger than Home Depot, Kroger, Target, Costco,
  Sears, and Kmart combined
• 1.6 million associates worldwide
• 3811 stores in the USA
• Largest retailer in USA, Mexico, Canada second
  largest in Britain
• 7.2 billion visitors per year

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Wal-Mart Effect
7
Wal-Mart Effect

• Always low prices
• Looking for every penny of cost savings from
  packaging, design, materials, labor,
  transportation, stocking stores
• Re-shaping consumers shopping habits
• Suburbanization of shopping
• Consolidation of consumer products companies
• Jobs for Wal-Mart suppliers that offer low wages,
  miserly benefits, boring work, no respect, and no
  future

8
Wal-Mart Effect

• They had the lure of Wal-Mart volume. Once you
  get hooked on the volume, its like getting
  hooked on cocaine. Youve created a monster for
  yourself.
• Jim Wier, Former CEO, Snapper, Inc.

9
ChinaEffect
10
China Effect
11
China Effect

• Worlds fastest growing economy it may be the
  worlds largest as early as 2030.
• Low wage structure has made it the Factory to
  the World and a nation of commodity enterprises.
• But they dont really want to race us to the
  bottom
• Past ten years of the China Effect may NOT be a
  very good predictor of the next ten years

12
China Effect 2015

• Incredible entrepreneurial spirit driven by Why
  Not Us?
• Rapid-fire approach to RD will make it fertile
  ground for original products and services
• Chinas brain drain is becoming a brain gain
• High-quality management and transparent
  governance starting to count more
• Chinas overseas ambition especially as a
  catalyst for economic growth in emerging markets
  in the developing world

13
Flat World Effect

• The global playing field for business has been
  flattened.
• China, India, Russia, Eastern bloc countries and
  many more now have the same access to business
  opportunities as European and North American
  enterprises
• Due to ten forces that have re-shaped the world
  of business

14
Forces Flattening the World

• Fall of the Berlin Wall, victory of market
  capitalism and democracy.
• Emergence of Netscape and open access to the
  internet.
• Work flow software that allowed people to work
  together online.
• Open-sourcing, collaborative innovation of many
  people working in gifted communities.
• Y2K and outsourcing of software programming.
• Offshoring production.
• Supply chain management.
• Insourcing services.
• In-forming via online web search engines.
• Digital, mobile, virtual and personal
  accessibility

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So Whats Next

• Theres good news and bad news.
• Past 25 years has only been the warm-up.
• Now we are going into the main event and by the
  main event I mean an era in which technology will
  literally transform every aspect of business,
  every aspect of life and every aspect of society.
  
• Carly Fiorina

16
The Squeeze is On!

• Era of customer power
• Commoditization of products and services
• Cost containment, spend reduction, and supply
  chain management

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Implications for Reps

• These trends and the staggering rate of change
  will dramatically alter how Reps conduct business
  and how they add value.
• Dont believe that it will be the death of
  Manufacturers Representatives.
• Reps are survivors, but not all are going to
  survive.
• Success ? (E)

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Whats the Antidote?

• Customer focus in all that you do
• Expand your range of possibilities.
• Anticipate and innovate.
• Connect and collaborate.
• Be professional.

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Focus on the Customer and Add Value

• Always start with Whos the customer and what
  do they want?
• Make certain you contribute more than you cost.
• Make a real and perceived difference to your
  customer quantify your EVA -- economic value
  added.
• Profit-takers will be extinct.

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Sales Driven or Customer Driven

• Sales Driven
• Inside-out thinking
• Doing something to the customer
• Quota driven
• Trying to be all things to all customers

• Customer Driven
• Outside-in thinking
• Doing something for the customer
• Needs driven
• Focusing on where you can add most value

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Expand Your Range of Possibilities

• Business you are in
• Professional outsourced sales and marketing
  services.
• Your firms products and services
• Sales and marketing services.
• Extensive working knowledge of local markets.
• Deep understanding of customer needs in those
  markets.
• Established relationships with customers in those
  markets.
• How you add value
• Optimizing the supply chains in the industries in
  which you operate.

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Anticipate and Innovate

• Requires profound understanding of your
  customers current and future needs.
• Either come up with the new, new thing,
  orchestrate the supply chain or commit to
  unrelenting innovation in everything you do so
  that you are constantly adding additional value
  in everything you do.
• Strengthen your relationship with your core
  Customers.

23
Connect and Collaborate

• Shift from vertical (command and control)
  relationships to much more horizontal (connect
  and collaborate)
• Examples abound Supply chain management
• One of the core competencies for success in
  business today is partnering
• Across town, across the country, across the globe
• You dont have to do it all yourself!

24
Be Professional

• Pervasive commitment to operational excellence
  (and continuous innovation) in all areas
• Competitive edge today survival strategy for
  the 21st century Manufacturers Representative.

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Manufacturers PMR Profile
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Actual
Ideal
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Manufacturers PMR Data
According to one respondent the scores should
all be 100!
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Disciplined Customer Focus
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Renewed interest in The Customer

• Putting the Customer first, Customer focus were
  hot issues 10-15 years ago.
• Its déjà vu all over again except on steroids.
• Ten years ago, a disgruntled Customer told an
  average of 10 other people. Today ???
• In your business, Customers are one of your two
  most valuable assets, especially loyal Customers.

29
But Are Things Any Better?

• Products have gotten better, more plentiful, and
  cheaper
• More and more choices for the consumer more
  decisions and more time
• Shifting from a service to a self-service economy
• More reliance on help and support desks which
  usually provide neither
• Internet and information technology have blurred
  the distinction between production and
  consumption requiring more of the Customers
  (unpaid) time
• Busier and busier Customers

30
Impact on the Supplier Side

• Increasing spending on product features that fail
  to attract new customers
• Unrealistic delivery promises
• High levels of out-of-stocks
• Increased spending to retain customer loyalty
• Larger investments in bigger assets
• Spiraling spending on help desks
• Chronic employee dissatisfaction in almost every
  activity with intensive customer interaction
• Womack and Jones, 2005

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Products are Not Really the Problem

• They (manufacturers) offer ever more brilliant
  products in splendid isolation at steadily lower
  process, even as consumers signal they really
  want something else.
• One of the greatest problems we see with
  traditional business practices -- and it is a
  problem for society as well -- is that jobs
  directly touching customers are being
  decontented, contracted out, and remotely
  located. (The widespread resort to part time and
  temporary workers is another manifestation of
  this trend.) These expedients reduce the value
  employees can create and the degree to which
  consumer problems can be truly solved.
• Womack and Jones, 2005

32
Being Truly Customer Driven

• Starts with thinking and working from the
  outside-in looking at what you do from the
  Customers point of view.
• And from the end user Customers point of view
• What process(es) do you participate in?
• What is the purpose of these processes?
• What are most businesses trying to do to their
  business processes?

33
Consumption Process

• Consumption is a continuing process -- a set of
  actions over an extended period -- to solve a
  problem.
• It involves
• Searching for
• Acquiring
• Installing
• Maintaining, repairing, and upgrading,
• Disposing of the goods and services.

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Provisioning Process

• The provisioning process mirrors the consumption
  process.
• It is also a continuing process -- a set of
  actions over an extended period -- to solve the
  Customers problem
• Most provisioning processes involve a set of
  independent companies that work together to
  manage the flow of goods and services from the
  point of production to the point of consumption.
• Provisioning is also known as supply chain
  management. And the drive in supply chain
  management is to provide maximum value while
  minimizing waste (non-value-adding activities)
  through seamless transactions, operating as if
  there is a single, yet extremely agile, producer.

35
Adding Value in the Consumption/ Provisioning
Processes

• Its ALL about adding value!
• Two distinct ways to create value in the
  consumption/provisioning process
• Create additional benefits within the process
  itself.
• Reduce the cost of the benefits you already
  provide.
• If you can not add value by increasing the
  benefits, then reducing the cost of the
  provisioning/consumption processes is the only
  way to create added value.
• This inevitably means finding cheaper ways to
  reach the market and to sell -- inside sales,
  catalogs, telemarketing, outsourcing, e-commerce.

36
Lean Thinking Principles

• Provide the value actually desired by Customers.
• Identify and streamline the value stream for each
  product.
• Line up the steps in a continuous flow
  eliminating waiting and inventories between
  steps.
• Let the Customer pull value from the firm.
• Once value, the value stream, flow, and pull are
  established start over from the beginning in an
  endless search for perfection.

37
Principles of Lean Solutions

• Voice of the Customer
• Solve my problem completely.
• Dont waste my time (minimize my total cost of
  consumption which includes the price paid plus my
  time and hassle).
• Provide exactly what I want.
• Deliver value where I want it.
• Supply value when I want it.
• Reduce the number of decisions I have to make to
  solve my problems.

38
Lean Solutions-Based Customer-Focus

• Choose your core franchise Customers wisely.
• Know your core Customers businesses.
• Develop key account plans for your core
  Customers.
• Really listen to your core Customers.
• Establish an Intelligent Feedback System.
• Solve your core Customers problems completely.
• Track the value-added results you provide.

39
Choose Your Core Franchise Customers

• Your most precious resource is your time.
• Here are some suggestions for segmenting your
  Customer base  and prioritizing how you spend
  your time.
• Conduct a Customer profitability analysis.
• Assess your Customers value orientations.
• Use the 80-20 Pareto Principle.

And your customers most precious resource too!
40
Value-Based Segmentation

• In an era where products are increasingly
  interchangeable (i.e., substitutable
  commodities), value shifts from the product
  itself to how the product is acquired.
• Some Customers are looking for value in other
  areas beyond the product including placing
  greater value on how the product is acquired and
  sold to them.
• The acquisition/consumption process itself can
  play a role in creating tangible value for the
  Customer.

41
Customer Value Orientations

• Intrinsic Value
• Perceive that the value is solely in the product
• Define value in the acquisition/consumption
  process as the cheapest, easiest way to obtain
  the product believe that sales adds little value
  for them
• Requires transactional selling

• Extrinsic Value
• Want more than just the product
• Define value in the acquisition/consumption
  process in terms of advice, problem-solving,
  unique solutions
• Requires consultative, bottom-line selling

42
Heres an Example

• The products that a supplier offers are only a
  small part of the equation. Generally we could
  get what we need from several places, so its not
  unique. These suppliers who try to sell us the
  product -- who try to show us their stuff is
  better -- are missing the point. What were
  looking for goes beyond the product. Were
  looking for business understanding, were looking
  for whether they can adapt to our special needs
  or whether they can advise us and help us. We
  want their sales people to add something
  worthwhile on their own account.
• Dennis Courtney, CIO, Dunlop Tire Corporation

43
Choosing Your Core Franchise Customers

• Spend 80 of your time on the 20 of your
  Customers -- current and future -- who will
  account for 80 of your profitability (not just
  revenue and sales volume).
• These are or will be your vital few franchise
  Customers.
• Spend 20 of your time on the 80 of your
  Customers who account for 20 of your actual
  profitability (not just revenue and sales
  volume).
• These are your important many.

44
Choosing Your Core Franchise Customers

• Can be key accounts or a market segment
• May not be a Customer today
• May be any player in your supply chain or
  provisioning process
• Who are the players in your provisioning process
  (supply chain)?

45
Choosing Your Core Franchise Customers

• May be your most demanding Customers
• Not just in terms of price constantly looking
  for best total value/cost solutions
• Tend to be the voice of the future
• Industry trend-setters their needs often
  foreshadow the market.
• Can usually perceive and express their needs more
  clearly.
• May have prototype solutions to the problem.
• Have a vested interest in the solution.

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Choosing Core CustomersAn Important Consideration
High
Allies
Bedfellows
Fencesitters
AGREEMENT
Adversaries
Opponents

• TRUST

High
Low
47
Know Your Customers Business

• In this type of selling, its not product
  knowledge that is important its Customer
  knowledge. You must know enough about your
  Customers business operations to credibly make
  the connection between your product and
  measurable business impact. You must also know
  enough about business and financial concepts and
  terminology to speak the language of high level
  decision makers. The value does not rest in
  your product it rests in your ability to
  relate the application of your product to
  improvements in your Customers business.
• Jack Malcolm, Bottom-Line Selling

48
Know Your Customers Business

• Your core franchise Customers will require deep
  knowledge of their businesses
• Do you have copies of their annual report,
  mission and vision statements, organization
  charts, and so on?
• Do you know their position in the industry?
• What threats and opportunities do they face?
• What is their long-term direction mission,
  vision, and strategic objectives?
• What are their short-term goals?
• How could you help them be more succesful? More
  competitive? More profitable?

49
Know Your Customers Decision-Making Network

• Get to know your Franchise Customers decision
  making network
• Who are the key influencers and decision makers?
• What is the the nature of their influence?
• Where do they enter the consumption (sales)
  cycle?
• What are their needs, wants, hopes, fears, and
  concerns?
• What challenges do you face in accessing the
  decision network?

50
Decision-Makers and Influencers

• Users
• Make judgments about the potential impact of your
  product or service on their job performance.
• Economic influencers
• Make or veto the purchase decision
• Establish purchasing guidelines or set budgets
• Technical expert
• Screens possible suppliers and makes
  recommendations based on a variety of objective,
  technical specifications.
• Coach
• Someone within the Customers organization who is
  willing to provide you with contacts and
  information

51
Typical Consumption Cycle

• Recognize problem.
• Explore alternative solutions.
• Choose solution.
• Select vendor.
• Purchase product or service.
• Use product or service.
• Maintain, repair or upgrade product.
• Dispose of product.

52
Key Account Plans

• Develop Key Account Plans for current and future
  franchise Customers end users as well as
  distributors/dealers, principals and any other
  players in your supply chain who could be
  potential Customers.
• Several benefits
• Prioritize and focus your efforts on high payoff
  activities.
• Facilitate planning your sales calls.
• Uncover the real buyer.
• Serve as a consistent way to track changing
  Customer needs.
• Provide early warning signals.

53
Developing Key Account Plans

• Break it up into manageable pieces
• Develop one as an example for your Reps
• Have each Sale Rep pick a franchise customer each
  quarter
• First 30 days Gather business data
• Next 30 days Map the decision-maker influencer
  network
• Last 30 days Identify account goals and develop
  your plans
• Repeat the process.

54
Really Listen to Your Customers

• In successful sales calls, who does most of the
  talking?
• Buyer
• Seller

55
Old Habits are Hard to Change

• Most salespeople
• Talk more than they listen
• Are more comfortable selling by telling than
  listening.
• Telling is quicker and easier.
• Telling is safer because the teller controls the
  discussion.
• Jump to solutions too quickly.

56
Really Listen to Your Customers

• Ask current and potential franchise Customers
• What are your greatest problems?
• What is costing you the most time?
• What is keeping you awake at night?
• What is your greatest untapped opportunity?
• Listen, just listen!!! Focus on your franchise
  Customers broader or underlying needs and
  problems.

57
An Example of Really Listening

• Telecom rep firm has significantly improved its
  bottom line by really listening to its Customer.
  They found a profitable opportunity in standby
  power batteries
• Conduct surveys for their Customers and have
  generated over 250,000 in straight revenues
• Have a wealth of data and they have leveraged it
  to increase sales 900
• Market share has risen from 40 to 90.
• Now installing the batteries often using laid-off
  telecommunications workers.

58
Intelligent Feedback Systems

• Challenge is to install intelligent feedback
  loops that progressively reduce provisioning
  failures while providing new customer insights
• How By systematically taking advantage of the
  interactions you already have with your Customers
  to generate actionable information
• Set up a user-friendly (electronic) system so
  that all of your employees can gather and record
  Customer feedback.
• Use every interaction your employees have with
  your Customers to gather input -- telephone
  inquiries, complaints, problems, whatever.
• Regularly review this data to look for changing
  needs and emerging trends.
• Create linkages across the key players in the
  provisioning process so that they can quickly
  remedy the Customers problem AND devise
  permanent fixes.

59
Gathering Intelligent Feedback

• Make sure your point of contact employees are
  equipped to generate intelligent feedback
  (hiring, training, compensation, etc.)
• Ask the customers to say more about the nature of
  the problem to determine what the real problem is
  and what they are trying to accomplish
• Track time and effort required to fix the
  problem, how much it costs, how much of the
  Customers time it wastes, and how it impacts the
  Customers business.
• Try to determine the root cause of the problem.
• Look for positive ways to increase the number of
  interactions with your Customers. The more often
  Customers talk to you (willingly) the less likely
  they are to defect.

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Provide Complete Solutions

• (Some) Customers are willing to pay for solutions
  that provide benefits in addition to the products
  and that positively impact results!
• Role of the sales force is to
• Help Customers understand their problems, issues,
  and opportunities in new ways
• Help Customers find better solutions
• Act as the Customers advocate inside the
  supplier organization in order to provide unique
  or customized solutions
• Requires considerable knowledge of the Customers
  needs,their operations and their processes.

61
Provide Complete Solutions

• In addition to selling products, start developing
  proposals, projects, programs, and solutions that
  will have a positive and measurable impact on
  your Customers profitability
• Where are the failure points in the Customers
  consumption process, especially things that waste
  their time
• Which of your Customers business processes can
  you improve?
• How can your solutions either speed up these
  processes, make them more cost efficient, or
  increase their effectiveness?
• What do you need to know about these processes to
  credibly demonstrate the bottom line value of
  your solutions?
• What proof do you have that you can deliver the
  promised results?
• You dont have to do it alone. Partner with
  other firms to deliver an integrated and
  coordinated business solution the whole package.

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Principles of a Lean Consumption Process

• Voice of the Customer
• Solve my problem completely.
• Dont waste my time (minimize my total cost of
  consumption which includes the price paid plus my
  time and hassle).
• Provide exactly what I want.
• Deliver value where I want it.
• Supply value when I want it.
• Reduce the number of decisions I have to make to
  solve my problems.

63
Mapping the Consumption Process

• Create a chart and list all of the steps and
  activities (Col.1) your Customer performs to
  research, acquire, install, integrate, maintain,
  repair, upgrade and recycle the goods and
  services needed to solve their problem.
• Determine how much time the Customer spends on
  each step (Col.2). Analyze how much of the time
  is value-creating (Col.3) or wasted (Col.4)
  due to waiting time, delays, unnecessary calls,
  mistakes, etc.
• Using Post-it notes, flow chart these steps.
• Assess the value of each step where value is
  defined as an activity that is necessary to solve
  the Customers problem and for which the Customer
  expects to pay.
• Challenge all non-value-adding activities and
  brainstorm ways to eliminate or prevent them.

64
Mapping the Provisioning Process

• Create a chart and list all of the steps and
  activities (Col.1) performed by the players in
  the provisioning process who help the Customers
  solve their problem.
• Determine how much time and effort is spent on
  each step (Col.2). Analyze how much of the time
  is value-creating (Col.3) or wasted (Col.4)
  due to waiting time, queues, delays, unnecessary
  calls, mistakes, etc.
• Using Post-it notes, flow chart these steps.
• Assess the value of each step where value is
  defined as an activity that is necessary to solve
  the Customers problem and for which the Customer
  expects to pay.
• Challenge all non-value-adding activities and
  brainstorm ways to eliminate or prevent them

65
Connecting the Two Maps

• Lay out the map of the consumption process in
  parallel with the map of the provisioning
  process.
• This is the consumption/production value stream.
• The points of maximum frustration are usually
  located where the Customer and the producer (or
  their representative) deal directly with each
  other.
• As Womack and Jones (2005) observe
• The root cause of the problem is a bad process
  that no one can clearly see or manage. The
  prize is very large if costly waste can be
  removed along with the unpaid work of consumers,
  the unfulfilling work of employees, and the
  high-cost activities of business.

66
Track Your Value-Added Results

• You add value by maximizing business outcomes
  --RESULTS -- for your Customers through the
  solutions you provide.
• Your outcomes -- or measurable results -- are
  your real product.
• Identify important measures that are linked to
  your Customers bottom line.
• Track these results on a regular basis.
• Communicate the value you have added -- to your
  Customers and your Principals
• These value-added outcomes will become the engine
  that drives your sales in the future.

67
Manufacturers PMR Profile
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Actual
Ideal
68
Clear Strategic Direction

• Start with your value proposition
• Promise you make to your Customers
• What you provide to your Customers
• How you deliver your products/services
• What you are known for
• How you differentiate yourself in the eyes of
  your Customers -- both manufacturers and buyers
  -- to foster Customer loyalty

69
Sample Value Propositions

• To strengthen the social fabric by continually
  democratizing home ownership. Fannie Mae
• To solve unsolved problems innovatively. 3M
• To improve the standard of living around the
  world. Cargill
• To make technical contributions for the
  advancement and welfare of humanity. Hewlitt
  Packard
• To give ordinary folk the chance to buy the same
  things as rich people. Wal-Mart
• To make people happy. Walt Disney

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Defining Your Value Proposition

• No formula and no cookbook.
• Requires deep and profound knowledge of your key
  customers and their needs/problems as well as
  your product/services and solutions.
• Some starting questions
• What can you be the best at?
• What are you deeply passionate about? What
  deeper sense of purpose would motivate you to
  continue working for your your firm even if you
  were independently wealthy?
• Why does your firm exist?
• How do you add value?
• Why is that important? Repeat this question 3-4
  times.

71
Positive Principal Relationships

• Relationships between manufacturers and
  representatives have to be seamless.
• Stop bickering!!!
• You absolutely need to be partners!!!
• Partnering is the wave of the present because it
  leverages the core competencies of complementary
  firms.
• Its all about teamwork across your
  organizational boundaries.

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Successful Partnerships

• Genuine respect for each other.
• Mutually beneficial relationship with shared risk
  and shared resources.
• Shared commitment to common mission, vision, and
  goals.
• Joint planning.
• Mutual accountability for success.
• Clear roles, responsibilities, and expectations.
• Close linkages at many levels.
• Regular multi-channel communication.

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Service is Job 1

• Critical to create a pervasive service ethic.
• Simple, but not easy, to do  what YOU say and
  what YOU do is what really counts.
• Every interaction with the customer
  (face-to-face, by telephone, in writing, your
  principals products in use, etc.) is a service
  moment of truth for your company.
• Only hire people who want to be of service.

74
High Payoff References

• Collins, Jim. From Good to Great. New York
  Harper and Row, 2001.
• Friedman, Thomas. The World is Flat. New York
  Farrar, Straus, and Giroux, 2005.
• Rackham, Neil and De Vincentis, John. Rethinking
  the Sales Force Redefining Selling to Create and
  Capture Customer Value. New York, NY
  McGraw-Hill, 1999.
• Wilson, Larry. Changing the Game The New Way to
  Sell. New York, NY Simon Schuster, 1987.
• Womack, James and Jones, Daniel. Lean Solutions
  How Companies and Customers Can Create Value and
  Wealth Together. New York, NY Free Press, 2005.

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Getting in Touch

• www.tpaconsulting.com
• daustrom_at_tpaconsulting.com
• 317-439-0906 (cell)

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Study Guide for 201

• Combine
• A healthy dose of common sense
• A little extra attention to SLIDES