March 17, 2014
As people costs continue to rise, jobs in which there is no offsetting productivity or value improvement are replaced by more efficient service options. Old-fashion service is nice, most of just don’t want to pay for it. Live symphony orchestras are, for example, great to listen to, but iPods are winning today.
We’re not the first to proclaim the untimely passing of Willy Loman … or that the days of the ‘donut patrol’ are officially over.
With good net-profit, per-customer analytics, many in the supply chain are discovering that they have accumulated too many sales reps calling on too many net-profit-losing small accounts.
How to serve the small accounts profitably is the still the Holy Grail.
Rep Relationship Economics
The fully-loaded, average cost of an outside sales call for a distributor or supplier sales person continues to rise well past $100/call. Calculate your average cost per call and then answer these questions:
What results could you imagine if you:
Reps Must Increase Their Value with Supply-Chain Benefit Solutions
The cost of supplier reps is typically about 5 percent built into WD buying price. Would you prefer 5 percent lower prices and to pay for the rep on an hourly basis as needed just as you do for professional services? Why should some of your biggest customers feel any different about your reps one day?
Before this slow-growing, compensation-value mismatch trend creates a problem with a key account, why not embrace the “supply chain solution” trend? Whenever a customer asks us to “be a bit more competitive,” counter with a variation of the patented Bruce Merrifield “Price-shopping Judo” speech: “Glad you asked. Why shop just for 1-2 percent less when we might also be able to co-create much greater, supply-chain-cost dollar savings! IF we can do a quick audit of the buy-sell, inter-business processes that have grown up between us, we’ll find inefficiencies.” Neither of us has yet thought of re-tuning and/or re-designing these processes, we may find ways to:
“Besides, playing a few ‘good’ suppliers off one another for immediate, measurable ‘price savings’ while we try to sneak up our margins is a zero-sum, win-lose, activity-cost struggle. We’ve been distracting ourselves from finding and co-creating bigger, win-win, supply chain benefits. When shall we schedule the audit?”
The Vision/Planning Gap
How do you get from arms-length, price haggling to delivering and following through on the “Price Judo Speech”?
Be the first amongst your competitive peers to embrace sales force changes that meet best-customer’s changing needs.
This article was co-authored by Bill Wade and Bruce Merrifield. Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at firstname.lastname@example.org. Bruce Merrifield is a professional consultant known for his work in distribution. For more information on Merrifield, go to www.merrifield.com.