Your customer answers on the first ring. Brimming with confidence, you ask if her company has made a decision yet.
“Yes, we have. I''m sorry, but this morning we decided to go with ABC Supply.”
You can''t believe it. ABC again! You really wanted this business; and to make sure you got it, you had quoted a great price. There''s no way ABC could have come in lower. They''re always high. But what else could it be but price? After all, there''s little difference between your products and their products. It has to be price. Maybe the customer''s just trying to get you to sharpen your pencil. You decide to find out.
“June, I''d like to come in and see you about this. If you haven''t issued the purchase orders yet, I think I can put together…”
“There''s really no need. The decision is firm. Your offer was very attractive, but it just didn''t go your way.”
“I worked hard to get you that price, June. I can''t believe ABC came in with something…”
“We appreciate the effort you made and, as I have said, you were very competitive. But when we considered all the factors involved, ABC simply came out on top. I''ll let you know when we have other business up for bid. Look, I really have to run. I have a meeting in a few minutes.”
End of conversation. Discouraged, you slump in your chair. You''re sure the customer gave ABC Supply a last look so they could beat your price. How else could they get the business?
Sound familiar? Why does it happen? Did you misread the customer that badly? Did they just string you along, getting your best price so they could send it on to your competitor? Or did they actually pay a higher price to your competitor for comparable products? Why would they do that?
The first thing to understand is that customers don''t base their purchasing decisions solely on the “objective” criteria of product and price. If they did, then each market segment would be completely dominated by the one supplier who offered the best products at the best price. And that rarely seems to happen, at least for long. Obviously, other factors come into play and alter customer''s perceptions of the values they will receive from your company and your competition.
Quality, delivery, product availability, technical assistance, service response, advertising and promotion, financing and terms, training, personal service and follow-up, past experience, even friendship — these and other factors separate one supplier from another, assuming the customer has been sold on the values each represents.
By dismissing the importance of these values and viewing everything solely in terms of product and price, the salesperson in the example portrayed his products as bare-bones commodities. Even worse, he neglected to sell the strengths of his company and what it can do for the customer. In effect, he was saying that the customer should be concerned with only one thing — price.
When times are tough and customers have their backs to the financial wall, price certainly becomes a prime consideration. In fact, for a competent buyer, price is always a major concern — and rightly so. A free market demands competitive prices, and you must occasionally make short-term price concessions to deal with competitive situations. But when you allow a customer to focus solely on price, you have failed to do your job.
Why did ABC Supply get the business? To find out, let''s listen in on an earlier conversation, one between the customer, June Cummings, and Bob Duross, the ABC sales representative.
“Bob, this is June Cummings. Congratulations! You did it again. We had our final meeting this morning and decided to award you the entire supply business for the Central Plaza project. It was nearly unanimous.”
“That''s great news, June. We had some tough competition on this one, so I''m sure your decision wasn''t easy. Please thank the committee for me and tell them that they can count on us to come through across the board.”
“We know, and that''s what made the difference. Price was important, but remember those tough penalty clauses I told you about? Any delays on this job could kill us. Your willingness to guarantee the delivery dates and warehouse those materials for us put you over the top. You should have heard Phil Hudson. He really likes you guys. He turned a couple of people around single-handedly, including the VP. All I had to do was agree.”
“Phil knows from experience what we can do. Managing a major construction job isn''t easy, and I try to help him out whenever I can. Say, June, you said ‘nearly unanimous.’ It sounds like I haven''t done my job as well as I could have. Who didn''t I convince?”
“Oh. Well, I guess it''s no secret around here. It was Chuck DeLuca, the assistant controller. Chuck''s a real bottom-line type and tends to do everything by the numbers. He''s a hard sell when it comes to anything but price. We never did convince him.
“Chuck DeLuca? I''ve never heard of him. I thought Marge was the financial person on the committee.”
“Normally she is. But her husband had emergency bypass surgery on Monday. Chuck was filling in for her.”
“Oh, I didn''t know. I hope the surgery went well.”
“No problem at last report. Matt''s still in intensive care, but apparently that''s normal. According to Marge, he''s doing really well.
“That''s good news. I imagine she''ll be out for a while.”
“Probably a few weeks, until Matt''s back on his feet. But I think she''s seriously considering retirement after the first of the year. You know, you might want to touch base with Chuck. I probably shouldn''t tell you this, but he and the owner''s daughter just got engaged.”
“Thanks for the tip. I''ll do that. Oh, I''d also like to confirm those delivery schedules with you. When''s a good time?
“The sooner the better. How about tomorrow morning? I can give you a half-hour at ten.”
“Fine. I''ll be there. Thanks again, June.”
As soon as Bob Duross hung up the phone, he opened his planner and added several items to his schedule and “to do” list:
Friday, 10 a.m.: June Cummings, purchasing. Review and confirm delivery schedules for Central Plaza job. Follow up with letter. Copy Phil Hudson and other committee members. Add Chuck DeLuca to list.
Friday, 10:30 a.m.: Chuck DeLuca, assistant controller. Stop by and make appointment to discuss cost savings ABC will generate for his bottom line. Hard sell. Numbers must be accurate and supportable.
ASAP: Call Phil Hudson. Thank him for support.
He considered sending flowers to Matt Kelly, Marge''s husband. But since he had never met the man, it seemed inappropriate. Perhaps a simple get-well card…then he remembered the book his mother had read after his father''s surgery. She had said it really helped. What was it? Something about coping after bypass surgery…
Tonight: Call Mom. Get title and author of book. Send paperback copy to Marge along with personal note.
Bob then opened the account''s file and turned to the profiles he had prepared. He reviewed his notes of the conversation and added the business information he had learned to the customer''s major account profile. He then added several items of personal information to the individual profiles of June Cummings, Marge Kelly and Phil Hudson. Lastly, he started a new personal profile on Chuck DeLuca.
The entire process took about 10 minutes. When he was through, Bob smiled, picked up the phone and dialed his boss''s number. He would enjoy the next conversation almost as much as the last.
Why did Bob Duross succeed in the face of tough price competition? Quite simply, his entire approach was directed toward becoming and remaining his customer''s favorite supplier. And except in rare circumstances, most customers will always buy from their favorite supplier.
How would a customer define his or her favorite supplier? When I asked this question of an experienced purchasing manager for one of our larger clients, he responded by saying, “My favorite supplier is the company that first comes to mind when I see the specification or requirements for a product or service. Usually my first thought is, ‘I bet they can do this.’” He then added with a smile, “You know, it''s amazing how often they''re the ones who end up getting the business.”
Perhaps, surprisingly, this attitude expressed by a seasoned purchasing professional is not far removed from the attitudes that govern typical consumers'' buying decisions. In other words, regardless of the type of selling — field, inside or counter sales — or the type of customer — consumer, contractor or professional buyer — the basic thinking that drives most purchasing decisions is remarkably similar.
The favorite supplier, then, is the supplier with whom the customer wants to do business; that is, the one he believes can best do the job and with whom he feels most comfortable. Most often, this belief will stem from past experiences, but it can also result from expectations. Based on what the customer has heard or seen, he will lean toward the supplier whom he believes will provide the greatest value with the fewest problems.
Whatever the reasons, you can be sure they don''t derive solely from the customer''s regard for a particular salesperson. Also entering the picture will be his perception of overall quality, as well as the responsiveness of the service and other support he will receive. As an individual, you can make a difference, but you must also be backed by quality products, real value and dedicated support. For you to achieve consistent success, your entire company must focus on the customer''s satisfaction.
Causing your customers to view you as their favorite supplier should then, be one of your primary goals. And one of the best means to this goal is through positive differentiation.
Creating a difference involves your ability to separate yourself from your competition in a positive and meaningful way in the mind of the customer. What is meaningful and positive, however, can vary greatly among customers.
Because no two customers will share the same problems, needs, concerns or personality, you must tailor your approach to address these unique factors. In other words, because customers are different, you must be different in your approach to them. This is a tall order and demands good listening skills and powers of observation, a strong sense of empathy and a dose of creativity.
Note how Bob Duross applied these skills and attitudes during the brief scenario described above. Take a lesson from him and show your customers how you and your company can make a difference.
The satisfaction of your customers'' unique personal needs is an important element of differentiation, but no savvy customer will buy from you simply because you''re a nice person, at least not twice. Your must first satisfy his or her business needs — needs that most often show up as problems. To do this, you must sell value. By definition, a value is worth something. If a particular value is meaningful to the customer and worth enough in terms of money, time, effort or freedom from worry, he or she will pay for it.
Bob Duross, while not ignoring the importance of price, expanded his customers'' view of the price by selling specific values that meant something to them. Told of their concern about construction delays and the potential for severe late penalties, he took on the role of problem-solver and found a way to ease this concern. In doing so, he likely had to sell his own management on the approach he developed.
But that, too, is part of the professional salesperson''s job. Not only do you represent your company within the customer''s organization, but you also must act as a lobbyist for the customer within your own company. This demands that you sell the value of your customer to your distributorship.
Remember, in a competitive environment many of the values you can offer your competitors can offer as well. To think otherwise is to fool yourself.
Differentiation, therefore, is as much a matter of changing or reinforcing customer perception as it is highlighting the real differences that exist. This effort requires more than simply talking about all the wonderful things you can do.
You must sell your customers on the value they will receive as a result. You must come through after the sale by doing everything you promised. And, finally, you must be sure your customers know what you have done so they will remember it the next time they buy.
WHY IT PAYS TO BE A FAVORED SUPPLIER
The more business you do with an account, the more you learn about their people and their problems, needs, wants and satisfactions. There is no substitute for good, solid information when deciding how to approach a particular customer or account.
Your established track record puts you in position for new business related to the original sale, as well as for future unrelated business.
You will generally have more freedom with the customer — freedom to ask questions, to penetrate the account and to get to know customer personnel on a more personal level. It''s a way to establish yourself as a professional friend to your customers.
Favorite suppliers get referrals and strong recommendations, perhaps the best source of new business.