salesproskansascity NEWSFLASH
Speaker for Friday May 16 is set - Shane Brethowr, Chief Operating Officer, Lockton Financial Advisors, LLC
Invite friends and guests - let's rock the house! He will be forwarding topic - good stuff - finishing his book called "Overflow".............
More later, Pat
We provide support, education, inspiration, networking and fun to sales professionals, entrepreneurs, and other interested individuals in the Kansas City Metro Area.
Writing to the Top
The video featured Deborah Dumaine author of Writing to the Top. She has some excellent suggestions on presenting you and you product to your customers.
· A subject line for each paragraph
· A letter designed for speed reading
· Using bullets in each paragraph
· Include a call to action at the close of the letter or email
Take time to read and use these suggestions to close a current customer
Good Selling
Mel Carney
Sales Pro Edumacational guy
A book by Deborah Dumaine
Writing may be on
the way back. Today I watched the
Selling Power Video and rediscovered writing to help my sales career. Deborah recommends a new writing style to
capture a busy executive’s attention.
She suggests a subject line for each paragraph of an email or a letter.
Subject: Choosing
an financial partner who’s right for you
Talking with you
yesterday was a pleasure-Thank you for taking the time to meet with me. I am really impressed with ABC Funding
Corporation and hope that we can be financial partners
You asked
about our new loan program
·
I am enclosing
information about that program and you will be able to see how our product can
have a positive impact on your company and
your bottom line, including improvements in your handling of:
o
|
International bonds
o
Fixed Income
Management
o
Growth and income
equity results
Helping you reach
your goals
·
|
As part of your team we can
support ABC Funding with loans that range between 1 million and 15 million
dollars. You can get:
o
Quick Loan
Approval
o
A larger line of
credit
o
Yada Yada
Why go with Fix- it-
Quick?
·
|
The enclosed information shows
you why FIQ can serve you with expertise, dependability, and reasonably: My enclosures includes
o
Our investment
results
o
Our 20 year
history
o
An outline of our
financial history
o
Staff resumes
o
And a breakdown
of our Fees
Suggested
next steps
Once you and your
committee have reviewed our results working with other financial organizations,
I would be happy to meet with you. Thank
you again for considering FIQ.
Sincerely
Notice-
This letter is designed for speed reading – an executive can read the subjects
and know what it is about – She did not go into detail about her enclosures –
she went with just bullets – Suggested next steps is an
excellent addition.
Recommendation from Deborah: Send letters as the executive’s
are covered up with emails. A letter
they can put into their briefcase and read as they jet to the next meeting
Hey – Give
it try – It might work to capture that next contract! Mel
Come to the Thirty-Second Commercial Clinic
Laura Burmeister, Sander Training, “Creating A Killer Thirty-Second Commercial”. Come to the Thirty-Second Commercial Clinic:
The “elevator pitch” is a staple of any prospecting plan. Learn how to write and deliver an emotionally charged 30 or 60 second commercial. Your challenge is to get your prospect’s attention in 30 seconds or less, without. sounding like every other salesperson Breakfast $15 + 2nd free; meeting starts 7:20 |
Laura Burmeister
Associate & Certified Trainer,
Sandler Training by Effective Sales DevelopmentSandler Sales Training Kansas City
laura@effectivesales.net
Laura Burmeister is an associate at Sandler Training Kansas City, where she provides training and coaching on the behaviors, attitudes, and techniques of interpersonal communication needed to be more successful in management, sales and customer service. She is currently available for speaking engagements, keynotes, talks, and meeting facilitation.
Gross Margin, Gross Margin my sales are not creating enough Gross Margin
Each of us sales people live and die on our making our sales goals. How many of you have ever emphasized the Gross Margin that is connected to your goal? This article is based in reality and not on some theory from an economist. Take some time to review and start to give Gross Margin or lack of same some thought as you trek tomorrow’s bricks. If your management knows that GM is one of your considerations, they are more likely to give you a break when you need one to make a big or any sale.
Mel
Sales are for show, Gross margins are for dough
When I walk around conventions I generally hear conversations regarding how the business climate is going. I hear a lot of talk about how sales are up or sales are down. In good years, there is a bit of chest puffing and general peacock behavior.
In the down years, there is a whole lot of blame on the economy and other external forces. What I don’t hear is a whole lot of discussion about profit or profitability. Sure, you might hear some comments about dwindling margins; but when was the last time you heard someone talk about success in terms of gross margin dollars? Isn’t that what is really important? If I can draw a correlation to a golf analogy “drive for show, putt for dough”, aren’t top line sales really just for show?
At a very young age, working in my family distributorship, the importance of gross margin dollars was drilled into my head. We occasionally talked about sales when it came to an extraordinary order, but the next question out of every mouth was – how did we do on it? In other words, did we make any gross margin on it or are we nurturing our charitable side? I think this awareness of gross margin came from an open attitude regarding financials and how income worked in the company. When your team understands how we pay for the operation of the company, gross margin begins to take on a whole new meaning. My brother and I spoke about this recently and he agreed. As the president of the company, he is the only one allowed to talk about top line sales. It only becomes relevant when speaking with banking partners, accountants or legal advisors.
I am currently working with a client on changing the mindset from top line sales to gross margin dollars. Eventually, we will drive down to net profit; but for today, we need to start with the basic concept of gross margin importance. Part of the process had to begin with the owner. He freely admits that he falls into the gross sales trap. It’s a big number. It’s fun to talk about. It just doesn’t do him a whole lot of good. When you want to change the mindset of the people that work with you and for you, it is important to talk the talk.
The transformation with this client began with education. With the help of the owner, we gathered the team and discussed how the income statement worked. Although I had a basic income statement generated, based on actual year end numbers, we needed to make sure they understood the concept.
When I discuss income statements in any teaching setting, I typically use the dollar bill trick to get the point across. For those of you who haven’t seen this done, here is the quick and dirty: Hold up a dollar and tell the group that we just sold something for a dollar and we paid the supplier 75 cents for it. Tear off about ¾ of the bill and drop it on the floor. By the way, if you use a larger denomination, you will really get their attention. Holding the remaining ¼ of the bill, you explain that this represents gross margin. At this point, I ask the group if the owner of the company gets to put the gross margin in their back pocket at the end of the month. I usually see a shaking of the heads, but I would bet that there are a few that might believe this to be true. Sad but true, many people that work with you and for you believe that the owner pockets the gross margin dollars every month. Obviously, this isn’t the case. I then start asking about the expenses that come out of the gross margin before it becomes net profit. While they list off some items (wages, benefits, rent, utilities, etc), I am consistently ripping off bits of the bill and dropping it on the floor. I also make comments on each of the expense items and help them come up with a few they might have overlooked. Ultimately, you wind up with a very small chunk representing net profit. This leads to a discussion of the importance of gross and net profit. This demonstration is a great way to start changing the mindset.
Once the team understood how the income flowed, we talked about the income statement of the location. We talked about how a slight improvement in gross margin would really change the net profit picture in the company. The next step in changing the mindset was to create gross profit goals in the company. We started with the least profitable location and developed a daily gross margin goal based on the current expenses for the location. We bumped it up a bit in order to foster some downstream profitability. By creating a daily gross margin goal, we provide a constant reminder of what we want to accomplish. In this case, we came up with a goal and then created a simple feedback method designed to show the location how they were doing. Each day, the branch manager reviews the sales report from the previous day and writes the gross margin dollar total for the day on a wall calendar in his office. For those of you beginning to twitch in your seats, the number has no dollar designation or decimal points. In order to tie the number in with our goal, the number is either written in black pen (for gross margin dollars exceeding the goal) or red pen (for gross margin dollars below goal). The calendar is visible to the employees because you have to walk through the manager’s office to get to the refrigerator. It doesn’t get much simpler than this.
One of the ways to make sure that we are driving a gross margin mentality is to insure that the sales compensation methodology supports our efforts. What are you basing sales compensation on? If the commission is a percentage of gross sales dollars, you are going to have a difficult time changing the mentality.
Although many of you have created compensation plans based on gross margin, there are still a few hold outs. I often see this in companies where cost is not shared with the sales team. This type of scheme can also be found in companies where deviation from established sales pricing is rare or non-existent. I hate to say it, but both of these scenarios lead me to believe that there are some real control issues in the executive team. When you don’t empower your people to do their job, your potential is severely retarded.
When we put an emphasis on gross margin with our sales team, there may be a shift in product focus. Hopefully, we will see a greater interest in higher profit products. Even when a low profit product is sold, there will be more incentive to round out the sale with complimentary high margin products. This is a swift way to emphasize margin importance to modify sales compensation.
I recently had the opportunity to meet the CEO of Fastenal, Will Oberton. For those of you unfamiliar with the company, they are a multi-billion dollar industrial fastener and supply distributor boasting over 20 percent net profit before taxes. In the words of my father, that’s some pretty tall cotton. He was speaking at an event that I was involved with and I sat in on his presentation. He spoke about a bold program that he recently instituted with their sales compensation.
Essentially, if a sales order posted less than 20 percent gross margin, the order was not eligible for commission. As you can probably imagine, this caused a huge ruckus in the sales department. Some of his regional managers were very vocal in their opposition. Oberton held his ground. He stated, “If the company can’t make money on the sale, why am I going to pay the sales person?” The results worked in his favor. By the end of the year, their overall margins had improved and some one of the most vocal opponents said that it was the best thing they had done in years.
A gross margin mentality can also have an effect on your accounts receivable performance. I was recently discussing the benefits of moving to a gross margin focus with a different client of mine. He is in the plywood and shop supply business. There had been some recent focus on driving the sheet goods product category in order to boost sales. This is a high sales dollar, low margin category. In the past, the perceived performance of the company was tied to top line sales. He pointed out that this mentality was really making collections difficult. He explained that a $2000 sheet goods sale might generate $140 in gross margin while a $300 sand paper order might generate that same $140 in gross margin. When it came time to collect on that order, which bill is your customer more likely to pay in a timely fashion? It sure made a lot of sense to me.
In a recent article, Tips to Improve Gross Margins, I shared several ways to boost gross margin percentages without bringing the hammer down on your suppliers. I was recently reminded of another way to preserve diminishing margins. One of the regional managers in my family business used to talk about pricing strategies inside sales people could use when confronted with a price objection. The natural reaction when discounting is to think in increments of 5 – such as 5% off or 10% off. If you are forced into a discount, try to think in terms of a 3% discount or 7% discount. Those additional 2 or 3 points can really add up at the end of the month.
Once the gross margin mentality has begun to seep into the daily lexicon of your employees, you can cement the transformation by using it to measure performance. I am a huge advocate of metrics using gross margin as a basis. The first one that comes to mind is the gross margin dollars per head measurement. Once a manager has established a goal, staffing decisions become easier. The same regional manager mentioned earlier had a benchmark of $10,500 gross margin dollars per head on a monthly basis. If the gross margin dollars began to trend up, and the per head figure was rising significantly, he knew that it was time to add a body. If the gross margin dollars were diminishing, he knew when it was time to make cuts.
For those of you familiar with my work, you know that I am a huge advocate of GMROII or gross margin return on inventory investment. This metric tells us how many gross margin dollars we expect to earn for every dollar invested in inventory. By understanding where we achieve the highest returns, we can alter our sales direction. We can also use this information to identify lines where changes in pricing and replenishment should occur. Since gross margin dollars drive the operation, it is in our best interest to drive the highest return.
Adopting a gross margin state of mind is not an overnight task. It will take months of education and reform. Old habits die hard and you will find yourself falling back on the top line sales verbiage. Catch yourself and keep driving to change your own mentality. Open dialogue with your team, setting short term profit goals and establishing margin based performance standards will help you make the shift. Just remember – sales are for show, gross margins are for dough. Good luck and I am always here to help.
Why CRM Can Work
In his research for his book on customer relationship management, the author found many distributors using CRM to develop tighter bonds with their customers.
CRM (customer relationship management) has traction with
distributors because it fills a gap — the ability to manage sales organizations
with a disciplined process, using data and metrics to guide effort and measure
success. The most common applications for CRM in the distribution
industry includes dashboards of customer data, integrated contact management
and call planning tools, and pipelines for managing opportunities across a
sales process appropriate to each distributor’s business objectives.
While researching
my new book, I found almost all
distributors’ sales processes had a new emphasis on value selling — a shift
from transactional activities and personality-driven relationships — to actually
helping customers succeed and measuring results using the customer’s own
metrics. For electrical wholesalers, this means serving the diverse needs of
contractors, OEMs and end-users.
Innovative
distributors are applying CRM’s core capabilities to meet unique competitive
dynamics and business objectives. More than 60% of
distributors have adopted some form of CRM, and the majority of non-users are
actively shopping, trialing or launching an initial implementation. This
widespread and growing use of CRM was surprising, especially given strongly
held perspectives of legacy CRM systems as inflexible, hard-to-implement time
wasters hated by salespeople. However, modern CRM tools offer advantages:
innovation achieved through a universe of app developers; mobility gained by
running on tablets and smart devices; and lowered maintenance costs offered by
cloud solutions.
Distributor
executives shared many practical uses of CRM, often uniquely important for
distributors. These include integrated lead-to-opportunity management, new
products and customer education, sales metrics and supplier collaboration, call
centers and cost containment and customer needs and history. Check out the
sidebar on page 22, “Distribution Execs Sound Off on CRM” to read what some
distributors think about CRM.
Experienced CRM
users told us that successfully implementing CRM takes much more time than
expected. Salespeople are resistant to change and worry that CRM will help
manager’s micromanage their performance. Integration with ERP
is necessary to share customer data, but it’s especially hard when information
is shared in both directions. Training should begin at launch and
continue as long as needed to encourage use and drive compliance. And if
implementing CRM is part of a strategic shift towards proactive business
development or value-selling, the existing sales culture and capabilities can
be a drag on change. Said one distributor owner, “We found out that the
salespeople we have are not always the salespeople we need. It took time to
overhaul our sales force.”
Ultimately, CRM is
gaining traction because distributors must find ways to strengthen and automate
their sales processes in response to increasingly competitive market
conditions. Several key findings emerged during our research.
CRM can improve
profitability: Some examples of how CRM does this include accelerating
opportunities through the sales pipeline; increasing visibility to price and
margin pressure in key accounts; proactive response to year-over-year
variations in product purchases; and tracking customer calls associated
with marketing programs or new products.
Implementing CRM
without a plan is a formula for failure: As one distribution
company owner explained, “Strategy comes first. Figure out where to target
growth. Use CRM to give salespeople customer data for a compelling case and to
get them out of the buyer’s office and in front of decision-makers.”
CRM is fast becoming a standard practice: “Our new
salespeople expect to use electronic tools on the job,” said one wholesaler.
“They grew up with games and social media. As we proved that CRM can improve
performance, we made CRM mandatory. It became a condition of employment.”
CRM improves sales
coaching: CRM provides actual customer data for sales managers to use when
coaching salespeople. “Our managers used to tell salespeople, ‘Just do it the
way I did it,’ said one distributor. “Now, we require every coaching
interaction to include review of real-time results and real-world customer
information.”
Start small, then grow: Salespeople will
resist CRM because they fear management oversight and avoid entering contact
information and call reports. Successful implementations focus on the
situations most likely to help salespeople.
CRM can be
transformational: One distribution executive said CRM helps salespeople become
“opportunity managers.” Too many salespeople focus on responding to
customer requests and plan customer calls as a milk run. They see customers
without a plan for each meeting, tailored to each customer’s history and
business needs.
Data-Driven Collaboration
One electrical distributor
was particularly helpful in explaining the future power of CRM. “Facts and collaboration go hand-in-hand,” they said.
“Managing against metrics will help achieve higher levels of sales performance,
but salespeople can’t do it alone.”
“Serving customers
isn’t just the responsibility of salespeople,” added the president of an
industrial distributor. “Everyone in our business contributes. We are using CRM as the primary portal for everyone to access
customer data, and as we roll it out, we are emphasizing the role that each
function and individual plays in driving sales results.”
In all industries,
a trend exists for high-performing sales organizations to manage by the numbers
and leverage analytics for improved results and customer satisfaction. Distributors seeking improved profits and sales through CRM
must involve marketing, customer service, operations and finance from the
beginning. Digging deeper, we found several focus areas for leveraging
data and collaboration across the entire distributor organization.
Account profitability: Many
distributors are segmenting customers on twin dimensions of valued services and
account profitability so they can deliver the right support at the right
customers — and earn an attractive margin in return.
Marketing campaign
effectiveness: One distributor executive paraphrased a popular axiom by
management guru Peter Drucker. “We find that ‘what gets measured gets managed,
and what gets managed gets results,’” he said. “We use this philosophy to break
down barriers between sales and marketing.”
Salesperson
performance: By definition, not every salesperson can be a top
performer — but that doesn’t mean they shouldn’t try. If a distributor can
improve middle-performing salespeople from 60% of top performer results to 75%,
overall organic growth of by 15% to 20% follows.
Customer trouble
tickets: Salespeople are often blind to complaints registered with
the customer service department and fail to incorporate resolutions into the
overall value created for accounts. CRM improves visibility and can promote
teaming for better outcomes.
High-potential/high-risk
opportunities: One distributor customized its sales pipelines to track
opportunities with customers that were designated as high potential or at risk.
CRM enabled improved visibility, enabling management to proactively offer
relationship support, service level commitments and other values beyond
price-only negotiations.
Coordinating sales
efforts with suppliers: We also found that in some distribution industries commercial
teams often trip over each other at key accounts and in local territories,
delivering competing messages. CRM can improve collaboration between
manufacturer and distributors. However, examples of CRM as a tool for improving
collaboration between manufacturers and distributors are hard to come by. One
industrial manufacturer is encouraging its distributors to adopt a common CRM
tool across all markets, including global regions. The long-term goal is to
better allocate resources and improve returns on sales and marketing
investments, although progress is lagging as distributors struggle with the
difficulties of CRM implementation and earning a return on investment.
Some distributors
are using CRM to generate pipeline reports and sharing them with manufacturers,
albeit with mixed results. As one distributor explained, “We share CRM data
with our manufacturer’s channel managers, but they don’t have the freedom to
take action. They are constrained by policies and perceptions about legal safe
zones. Leaders need to get involved, but are generally skeptical about
initiatives that begin with distributors.”
Still, if the
potential for gains is real, CRM will eventually help drive collaboration as it
becomes a standard practice across the value chain. One distributor is
optimistic and found practical, immediate gains simply by comparing
relationships in key accounts with favored suppliers. “We don’t know the senior
management at our key account customers well enough. They might know that they
do a lot of business with us, but we don’t have strong relationships with
them.”
By offering to work together to improve product and supply
chain deliverables, customers pay attention and open their doors. For this
distributor, CRM helped build new customer relationships, and coordinated sales
efforts led to new business.
Mark Dancer is the
founder and president of Channelvation Inc. and author of Getting the Most Out
of CRM: Best Practices for Distributors, available from the National
Association of Wholesaler-Distributors (NAW) Institute for Distribution
Excellence atwww.naw.org/crmfordist. While researching
this book he gathered insights from hundreds of distributor executives,
including many electrical distributors. Dancer can be reached directly at mark.dancer@channelvation.com http://ewweb.com/sales/why-crm-can-work-distributors
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