Tips from the pros on how to manage your biggest resource in this economy: your employees.
You already know your employees are your most important resource. No mystery there. But how do you manage them during these trying economic times? The three articles in this feature package will give you some ideas. The first article, starting below, explores how some sales managers are solving common challenges in the sales game that get exaceR/Bated in a down market: price cutting; providing customers and salespeople with quality training; and motivating your sales force. Next, we will take a look at hiring in a down market. Many if not most managers of distributors, reps and manufacturers have had to make gut-wrenching decisions to cut staff during this recession. But what if you actually were able to hire right now? It's a great time to hire because so much good talent is available. “How to Win the War for Talent” (page 20) by Mike Dandridge offers five easy steps to making better hiring decisions, and “Oldie, Not Moldie” (page 24), by Ted Konnerth will give you some ideas on what types of potential employees to consider. The editors of Electrical Wholesaling believe you will be able to pull a bunch of new ideas out of these articles that can help you manage your company through this recession. Enjoy!
Price Cutting: the Perpetual Problem
Sales managers in the electrical market have had to make tough decisions on pricing for more than 100 years. The decision to offer a pricing concession or to stand firm doesn't get any easier in a recession, when field salespeople are scrambling around for every scrap of business. Chris Caramela, sales manager, Johnson & McGill, North Abington, Mass., agrees that price wars are inevitable in this economic climate. Anytime two different manufacturers make the same item, it's a price war, he says. “We have quite a few lines where we have developed some outstanding relationships. We find working in a partnership where we win and lose together benefits our customers, our manufacturers and ourselves. Line loyalty is a two-way street. We need to be as loyal to our stocking distributors as they are to us. No real salesperson enjoys walking away from an order because of low margin, but we do. You cannot survive on bad business.”
Don Long, director of sales, Milbank Manufacturing says the company's network of independent sales reps is its “eyes and ears in the field.” “We count on them to provide us with feedback to ensure we're not out of line with market pricing, he says. “Nobody wins a price war. You strive to differentiate your company and products with features and benefits and local inventory. But at the end of the day, you've got to keep your distributors competitive with market levels.”
Garry O'Leary, sales manager for R/B Sales Corp., a rep firm in Marion, Iowa, agrees that focusing on features and benefits can take the emphasis off of price but says the company sometimes must use its market knowledge to determine if a price concession is warranted. “We do have to make sure we are competitive to give our manufacturers the best opportunity to grow and be profitable,” he says. “We try not to put ourselves in price wars. We listen to customers and try to separate facts from hearsay in price negotiations. From our training and line card options we do our best to be aware of features and benefits that go beyond price. Based on that we try to negotiate intelligently. ”
The Importance of New Products
There's still one sure-fire strategy that can get the salespeople on their customers' appointment calendars: new products that help electrical contractors and other end users do their jobs faster, better, more safely and more profitably. Arlington Industries Inc., Scranton, Pa., is well-known in the electrical market for its innovative new products. Ray Kennedy, national sales manager, says new product development is every bit as important in this economic climate. “We have more contractor customers who are willing to look at new products now because they have more time to review labor-saving products when business is slow. That is how Tom Stark and Tom Gretz built our business — developing patented labor-saving products at competitive prices for contractors.
“We continue to develop new products during slow economic times. More than 50 percent of our sales are from products that are patent-pending products, which allows us and our distributors to maintain prices levels in spite of contractor pressure to lower levels. We compensate, in many cases, more commissions to our reps to sell these products. It's important to motivate our reps even more with new innovative products at higher commission levels during a tough economy….We keep our sales force motivated by opening new markets with our products. For example, Arlington has now entered the audio/visual market with low-voltage mounting brackets, T.V. boxes and scoops.”
Johnson & McGill's Caramela says the most aggressive distributors in his metropolitan Boston market area always have the time to learn about the labor-saving products that his company represents. “Proactive, aggressive distributors will always listen because they are continually looking for the edge to stay in front of their competition,” he said. “There are a handful of distributors who take the lead in time- and labor-saving products. They are not content to just field a phone call from a contractor who wants to do it like his father did it before him. They get in front of him and coach him on being profitable.”
Don Long of Milbank Manufacturing says customers still want to learn about new products, but because many of them have had staff cutbacks their time is at a premium. “Since it's sometimes a challenge to get their time to evaluate new products, it's more important than ever to concisely show the labor and/or cost saving benefits of your products.”
O'Leary of R/B Sales said his sales team is very busy right now training end users on labor-saving and cost-effective products.
O'Leary said that while educating customers on new products takes more time than selling traditional electrical products, it will be worth the selling time they are investing now when these products become part of the solution when projects are bid, purchased and built.
Training: In-person or On-line?
Training is one of the most important value-added services any sales force can offer customers and one of the most valuable tools sales managers can use to keep their sales forces sharp. Providing consistent high-quality external and internal training is critical in any economic climate, and all the more important in today's economy. Most of the sources contacted for this article said since customers aren't as busy right now, they have more time for training — as long as the content is top-quality. Another challenge for sales managers is to decide what type of training will work best. Certainly, the traditional lunch-and-learn format where salespeople bring in pizza or sandwiches to a customers' facility and give a 30-minute product talk still has legs because it provides good face-to-face contact and is relatively inexpensive. Many companies don't have the budget right now for off-site, full-day or overnight training sessions, which have the big advantage of the opportunity for total immersion into the technical features of specific products.
That's obviously one of the reasons Web-based training has become so popular, and distributors, reps and manufacturers are using it more frequently. While the sales managers contacted for this article appreciated the convenience and cost savings of Web-based training, some had concerns about the loss of in-person contact with customers and the lack of depth or content in some of the online training now available.
Caramela says Johnson and McGill uses Web training for its own salespeople and to train customers. “We can train a distributor's entire sales team across six states with just a few time slots in a morning,” he says.
He says joint calls with manufacturers and distributors provide the most effective training for Johnson & McGill's sales force. His salespeople learn quite a bit from manufacturer selling partners on these calls. When they hit the road with distributors to call on end users, Caramela says they really have to “get their game face on.” “Disappoint a distributor in front of his customer and it's game over,” he says.
Milbank Manufacturing has made a big investment in online training. Don Long says the company recently launched the ninth module in the Milbank eInstitute covering industrial enclosures, so training for its entire product offering is now available online. Says Long, “The biggest advantage of this type of training is that it is available 24/7/365. Our representatives and customers can get quality product training whenever it is convenient for their busy schedule. It's also very cost-effective to utilize this type of training tool to cut down on travel and time away from the office for Milbank, our representatives and our customers.”
R/B Sales relies on a mix of online and in-person training. Garry O'Leary says his sales force gets together every four-to-six weeks for in-person training. Depending on the topic, either he, Bill Devereaux, the company's president, or manufacturers do the training. R/B Sales does quite a bit of in-person training for customers, too. Continuing Education Units (CEU) are required in the company's Iowa and Nebraska sales territory, and R/B Sales is approved to provide CEU training on certain topics, so R/B Sales' training sessions are often in high demand.
O'Leary says online training has its pluses and minuses. It offers R/B Sales some important time- and cost-saving benefits because it cuts down on the windshield time needed to train customers scattered throughout a two-state sales territory from the Mississippi River to the Colorado border. “Online meetings also allow us to obtain the resources at our disposal, typically other professionals, we would not normally have,” he says. “However, you don't have the one-on-one interaction online, and knowing and understanding body language is so important to adjusting the presentation to the need of the moment. Without eye contact, you really don't know if you have the attention of everyone who is sitting in on the training and/or self study. Online is fine for some applications, but we still believe that direct interaction is so much more valuable and cannot be abandoned. Sometimes, the small talk after the meeting is as important to people as the business itself.”
Motivating Sales People in A Down Economy
Johnson & McGill's Caramela says motivation comes in many forms for different people, and that his own personal triggers are fear of failure, self preservation, and the financial reward that comes along with success. He believes the best salespeople are actually pretty easy to motivate, so Johnson & McGill screens all new salesperson hires very carefully. “Salespeople are most times self-starters and highly motivated on their own, which is usually why they select sales as a profession,” he says. “Lack of sales is torture for a salesperson. Professional salespeople adapt to hard times. If we represent 20 different manufacturers, that literally gives us tens of thousands opportunities to sell. No line is a one-trick pony. Pros will learn more about the lines they represent, dig deeper into product knowledge and sharpen their skills to isolate sales opportunities and ultimately capitalize on them.”
He says motivation gets down to basic selling skills. The salespeople that just take no for an answer will always be beat out by the salespeople who take the time to find out how to get the customer all the information they need to “generate the proper need, want and desire to purchase from you.” “Do your job better and you will close the tougher deals,” he says.
Don Long of Milbank Manufacturing believes markets always exist where it's possible to grow the company's business, even in difficult economic times, and Milbank has re-focused its selling efforts in areas where they see opportunities to either grow market share or capitalize on expanding markets.
“We are promoting commercial meter pedestals for traffic signal and roadway lighting control, with the anticipation that stimulus funds for infrastructure will keep these markets active,” he said. “We're also increasing our sales and marketing efforts in other areas, such as the industrial enclosure market, where we do not have significant share, and the stand-by generator market, a new venture for Milbank.”
To help motivate his sales team, R/B Sales Corp.'s O'Leary says he tells his salespeople it's important to “enjoy the small wins” now, but that the real motivation is to be ready for the future.
“The economy will recover and my team is motivated by simply knowing that the economy will come back,” he says. “We are not sure when, but it will come back. During these down times, R/B Sales is focused on capturing market share with our manufacturers while others cut back. We know we have a strong line card and that conversions are key for us today and tomorrow.”
Prime Device's Charley Cohon of Prime Devices on the Power of Persistence
Charley Cohon, president, Prime Device, Glenview, Ill., has a different take on the sales game. It's not just because he graduated with honors from the University of Chicago's prestigious graduate program with concentrations in entrepreneurship and strategic management, or because he is the author of a book called The Sales Force. It's the simple sales philosophy he uses to manage his seven-person sales force that differentiates his rep agency: Let someone else handle the stuff they don't like to do or aren't good at, like paperwork and filling out sales reports, so they have more time to focus on what they are good at — making massive amounts of sales calls (combined, an average of 100 per week) to sell industrial OEM product to customers in the company's Illinois market.
“We have taken a lean perspective toward managing the office and have a specific person doing a specific job and doing it well, and not be scattered over a little bit of this and a little bit of that,” he says, “We launched our Customer Relationship Management (CRM) system in 2000. That system is based on having salespeople do nothing but make sales calls and not filling out any call reports. They do it all by voice mail. They call in their call reports and someone in the office transcribes them and puts them in Goldmine.
“Customers are available to us between about 8 a.m. and 5 p.m. at night. We want our guys to be doing nothing but taking the best advantage of those ‘golden hours.' As far as preparing quotes, fulfilling literature requests, and doing expedites, that is what the office staff is here for and they can do a much better job at it. They are sitting at a desk with a robust internet connection, powerful desktop computers with 24-inch screens and they can do the things that the guy in the field couldn't do. The manufacturers expect us to do most of our expediting and order checking online, anyway. They don't really want to take calls from us, and that is really about all a guy sitting in his car can do.
“We have put these systems in place and they have positioned us very well for an economy like this where there is no room for sloppy management. We have been very rigorous about this. We made the conversion over the Christmas of 2000 and launched it Jan. 1, 2001. It's prepared us to weather some pretty tough economic times. CRM is not additional software as much as it is a set of additional business practices for how we use Goldmine.”
On each sales call, the salespeople follow the same routine. Before leaving his car, the salesman hits the speed dial button on his phone to go directly to the agency's dedicated voice mail. He calls in his mileage so he can be reimbursed. When he leaves that account, he hits that same button and dictates into voice mail who he saw, what they talked about, what he needs in terms of samples or catalogs or quotations, and any follow-up items.
After he hangs up, the support staff at the Prime Devices office transcribes his voice mail, puts it into a Word document, and cuts and pastes that into Goldmine contact management database. Goldmine is synchronized to each salesperson's PDA. Usually within a day, information from that day's sales calls has been entered into this database, and the salespeople receive an e-mail detailing the calls they made the previous day. “The salesperson can look over who he talked to, what he needs to do, and what things the office is doing for him, whether it's sending out a catalog or sending out a sample, so when he gets home he is done,” says Cohon.
The PDAs save the last seven to 10 contacts the salesperson has made with each person at an account. This allows the salespeople to refresh their memory on where they stand with each customer contact for their next visit with them.
He says a discussion with a salesperson at an electrical distributor on that person's typical selling day first made him think about developing this CRM system. That salesperson told Cohon that on typical day, he worked on quotes and literature requests and responded to voice mails until about noon. He didn't make his first sales call until around 1 p.m. “If the company you work for does not provide you with any inside support, salespeople are going to fall into that kind of a routine,” he says. “The morning is devoted to taking care of all the stuff that has happened the previous day, and maybe you get two sales calls out of a guy.
“Knowing that if you don't give people adequate technical support you are not going to get your full measure of sales calls out of them, it was a no-brainer and a real obvious cost-benefit decision to make sure that nobody who worked for Prime Devices in outside sales ever needs to sit at their house and work on a quote or put stamps on envelopes and mail out literature.”