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Distributor Do’s & Don’ts When Suppliers are Downsizing
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Those of us with a background in sales lean toward “yes” as an automatic answer. But is “yes” always the right answer? No. It is not.
Every time we say yes to a customer, a project or an initiative, we are taking time away from something else we could or should be saying “yes” to. That dilutes our ability to focus and have an impact. Often, we are not pausing and reflecting to ask ourselves if the “yes” aligns with our strategy and our priorities.
Let me provide a couple examples to illustrate my point.
Many years ago as a territory account manager, a.k.a. a sales rep, I had three large contractors in my territory. One was a professional outfit that valued not just price, but service. This was a perfect fit. The second was an ethical organization, with many projects that valued quality, and some that were price-sensitive. A good fit. The third had a track record of shopping numbers, shading the truth, and other behaviors akin to that of your average weasel — NOT a good fit. After three bad experiences with them, I simply stopped calling on them. I spent more time with the other two. The result was that I grew our business, built strong partnerships and didn’t have to constantly watch my back. The two contractors I chose to focus on learned I didn’t even darken the doorstep of the third large contractor in town (It’s a small town and a small industry). That sent a message to them about my priorities.
When I worked for a small manufacturer, we were very interested in an OEM reverse auction that represented A LOT of volume for our company. This business would help with our absorption rate and would do other beneficial things for our balance sheet. We cranked the numbers and decided where our lowest price tolerance was in order to bid on the business. Well, in the heat of the competitive bidding, my boss bid lower than that. And, the business turned out to be very high-maintenance and time consuming. The prints didn’t match the parts on the bid, for example. It didn’t take too long to realize we needed to extricate ourselves from the situation and say no the business, which did not align with our overall strategy. Frankly, we shouldn’t have pursued it in the first place, and had we known the other aspects of the situation, we wouldn’t have. Walking away from this business freed up resources to focus on more profitable opportunities.
Your sales brain may be shocked. Walk away from a customer, you say? Did I read that right? Yes, you did.
Here is an example where saying “no” and walking away paid off in a big way. Midwestern Distribution won a storeroom contract with a large manufacturer we will call “The Not-So-Jolly Green Giant.” Green had a habit of negotiating hard and being high-maintenance. The distributor declined to bid on a renewal of the contract. Using activity-based costing, the wise Midwesterners had concluded they barely broke even on the business. Green, after getting over the shock of Midwestern walking away, went with Plan B. Plan B did not execute to the level of their predecessor, and, after multiple internal complaints, Green fired Plan B and went back to Midwestern with a novel approach — “What would it take to make this a win-win?” Like all businesses, Midwestern knew it needed to make a profit on their work. The final result was a much more favorable contract and more respect for the distributor.
It’s important to validate that what you are doing is in alignment with your strategies and priorities. Customers change. Business models change. Leaders change.
It is a best practice to evaluate your business on a semi-annual or annual basis, or when circumstances change. You may find that you need to adjust your approach. Maybe that old customer who was friends with your retired boss isn’t paying their bills on time. Maybe that other old customer is going after business that doesn’t offer a solid profit. Maybe a non-customer bought a good customer. These changes should be a trigger for a reevaluation.
Executing your strategy successfully is saying “yes” to the right things and, equally important, saying “no” to the things that are wrong for your business.
Get comfortable saying “no,” and you’ll have a greater ability to say “yes” when you really should. Your customers will respect you, and your owners will be pleased with the higher profits. That’s the value of saying “no” when the opportunity isn’t right.
Desirée Grace is currently VP, Strategic Distribution, North America, for Panduit. Prior to that she was VP, Channel Development and Operations, for Eaton; VP of Sales and Marketing at Anamet Electrical, Inc.; and a District Sales Manager at Panduit. She started her career with WESCO, beginning in inside sales and ending as Branch Manager, before moving to Panduit. Grace earned her MBA from the University of Iowa, with concentrations in marketing and operations and has an undergraduate degree is in accounting from Augustana College. She is also an adjunct faculty member in the business departments of Augustana College and St. Ambrose University. You can reach her by e-mail at [email protected].