Why the zombie apocalypse matters to your sales team...

For Halloween this year we decided to theme our blog around the coming zombie apocalypse. While the fact the apocalypse is actually coming may be in dispute, the concept is simple. Things would be kind of tough in a zombie apocalypse but we can learn this lesson now. 

When the Going Gets Tough, Turn to Your Best Customers.
How to focus on your long-term customers, while chasing after new ones (zombie pun intended).

Combine the high cost of new customer acquisition with the fact that your best customers are likely to stay with you for the long haul (provided your company meets and exceeds their expectations), and it's easy to see why digging deeper into your existing client base is more important than ever during uncertain economic times. Today we review and share some strategies to carry out that plan of action.

To get the most out of this strategy, here are a few tips for success. By using these tips distributors can increase revenue-per-customer by getting their sales staffs focused on up selling, marketing additional services, and increasing order sizes.

First off it's important to track revenue per customer and profit per customer. Last week a client noted that top line sales for a client were great but there were abusing the company policy of free shipping and cost more in freight then next five customers.

By using an enterprise level ERP system like the MDS-NX system you can create that all important customer profile.

To verify that can easily incorporate customer profitability into your retention strategy.

http://blog.tshinc.com/2014/10/should-your-data-be-balance-sheet-asset.html

Start with the Customer's Goals in Mind (assuming a zombie has not eaten it yet) 
Get to know your customers' business and strategic agendas: 

• What are their corporate priorities for the year?
• What are the big hurdles they are trying to overcome?
• What are their goals? 
• Who are the key players? 

Salespeople and account managers often say, 'We know our accounts' business very well" But when pressed, they often have a long way to go when it comes to what the customers business strategy is. Companies can overcome this obstacle by uncovering their customer's priorities, and then gaining a better understanding of where and how to add value. If you are selling a surgery center who has just added a new robotic surgery system , then make sure you have the supplies and tools on hand to service that product. Traditional surgery centers will use and entirely different supply setup then some of the newer robotics systems. In the pharmaceutical industry, as we enter the fall and winter season what are the drugs needed by your pharmacy customer?
And while many products may remain the same by showing your customer your supply chain is aligned with their business strategy you will also be able to better forecast new sales.

Talk to your customers as often as you can.
(it gets lonely out there in the zombie apocalypse)

"Simply by having conversations about the big picture, you're likely to uncover opportunities where you can help."
It's a balancing act between annoying and helpful, but if they are willing to set an appointment or time have them do it. Integrate a CRM or web based time tracker to make it easy for them to schedule a time to speak. If you clients purchasing team works later hours , consider shifting the sales team so you can provide coverage outside your normal business hours. The trade off in sales may make the additional operating hours worthwhile. As your sales cycle grows you can then add a second or third shift to your warehouse teams and look at automation to speed up the warehouse.


Make customers feel special 
(after all there may not be that many in a zombie apocalypse) 

The Internet may have given your customers an enormous repository of product data, pricing, and vendor options to choose from, but how many online sellers are truly making those customers feel special? By looking behind the numbers to understand your customers' pain points, business strategies, financial situations, and operational strengths, you can assist them in coming up with solutions that help them meet their business goals. Using Technology and an integrated CRM will allow you to see these pain points before the customer does. After the conversation you can then compare them to other clients and become a trusted advisor.

Comparative sales analysis and reporting can go two ways, You can see what items other customers like them are buying and what they are not. But it will also allow you to recommend items other peers in the industry are using, suggest better products and realize more sales. Utilizing our RemoteNet business intelligence tools you can offer items that often used with the products they buy as well (cross-sell) or up sell items as well if they are using the non premium product you can explain others make more money using this other item.
This comes as part of talking to your clients and customers, they have the real knowledge you are just the conduit.

 As part of this process, your company will become a valued, long-term provider of products and services.

Make your customers a part of the process
(Since we don't have that many of us left in a zombie apocalypse we need to work together) 

If you are considering adding new products or services, then give your customers the opportunity to voice their opinion about those new options. "If your existing customers feel engaged in the development of your business, they will purchase more," The good news is that making your best clients a part of the process doesn't have to take much time or effort—simply ask them for their feedback during a regular sales call, include a comments section in your company's newsletter, or introduce the product in an email to them, and ask for their suggestions. Public recommendations on a website serve as one piece but again, by gaining this information directly from your customers you will become the trusted advisor and much more then just a sales person.


Put the right people in place
(The ones who really know how to deal with zombies)

 Remember that corporate culture plays a key role in the retention of long-term customers. "It's about having values built into your company all the time, and not just as a reaction to an economic crisis," The firm that has the right people in place will likely be the one that finds, retains, and cultivates the long-term relationships over the one-time sale. Dont just make your email tagline say thank you , remember to tell them every time they are the reason you are in business and you appreciate them.



Focus on the future, and reap the dividends.
(Since its a zombie apocalypse, things kind of have to get better, they can't get any worse) 

"When times are slow, your customers buy from you because they know that they can rely on you even when they're having bad days" Focus on the future, even if the present is challenging. Hunkering down is the most common reaction to a down economy, but it's a trap that distributors should avoid. Obviously you need to be prudent and manage expenses better than ever in a weak economy, However, keep the future in mind for yourself and, especially, for your customers.

For instance, if you see that your customers are cutting back on maintenance items that can be temporarily deferred, what will be the impact after that decision?

• Will your customers experience less sales? 
• More missed opportunities? 
• What will that cost them? 

Think about what you can do now to help your clients prevent that, or respond to it quickly when it does occur. 

All of the above will allow you to change from the best price sales model to the more stable and long term Trusted advisor sales model. This creates the long term path both for your business and your employees building the long term relationship that will sustain your company as you move into the future.


Ready to build a relationship with your technology providers?

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Remember KISS – Keep It Simple, Sales.

Motivate your team to get the most from your CRM and sales department by understanding that it’s about the process as much as the product. It’s hard to recruit great salespeople. Harder still to keep them great. It’s important that you get the most out of your CRM and sales team. While CRM can do it, the product is only half the story.

To get the most from Customer Relationship Management, you have to get your salespeople not just using it, but liking it. Liking the way it delivers sales targets. Liking how it helps them succeed.

But how you ask? 

The MDS-Nx CRM module is unique in it's semi-custom nature. You get the core product and functionality and can add a business specific process layer to help move your own business and sales models along. 

Here are just some idea's that other have implemented into the MDS-CRM System.
Show them that not all old leads are cold leads when it comes to CRM and sales.

Cold doesn’t mean dead. It just means someone wasn’t ready to buy yet. 
What if:

• You know which “cold leads” still click every newsletter?
• You know it takes 21 calls to get an appointment – and 500 cold leads are on twenty?
• You know cold leads warm up after their annual trade show?

The MDS-CRM System can provide such out-of-the-box insights. 
They’ll get your salespeople warmed up as fast as those unexpected prospects.
Remember KISS – Keep It Simple, Sales.

Complexity gets in the way. 

There’s no surer way to hamper adoption than to make users think the old way was easier. 
With MDS-CRM: 

• Sales Pipeline charts and KPI are easily viewed on the MDS Dashboard and can easily be customized by user and company.
• Task integration with Email software such as Microsoft’s Outlook  or Google Mail (Gmail) for easy followup and scheduling.

Today, some of the best lessons in ease-of-use within CRM and sales come from mobile app design. Get that data to go with mobile access using the latest MDS-Nx RemoteNet Salesman Tablet Portal to view key information on all prospects such as: 

• Net Sales$ Month to Date
• Gross Profit %
• Last time they ordered
• Last time they paid an invoice
• Last amount paid
• Total open amount of invoices
• Total of Invoices over 60 Days
• Total number of pending orders and lines on back order

Salespeople are big mobile users. So a CRM application that plays well with their phones and tablets – especially those they own at home – will see greater use. It enables:
A sense of ownership. Mobile devices are all about the personal. More work hours to be put in as staff can now log in from anywhere. A sense of empowerment – you’re letting them do things their way. And maybe, just maybe, all that leads to greater sales numbers. Make sure your CRM is mobile.

A powerful application makes it easy to load up on menial tasks too. So actively look for things to automate. Here are some ideas:

Keep in touch. Set follow-up calls automatically. - The MDS-NX System allow you to batch update call days or easily view a call calendar by followup date. 

Event dates. Find the big trade days in each sector and automatically schedule appointment-setting calls a few days before. A great deal of sales can seem quite time consuming. The best CRM practices will save you a vast amount of time.

Show them opportunities in social media.

The formula for happy, successful salespeople is simple: keep them supplied with quality leads that you have found from various places. There are many opportunities for this, such as:

• Connecting to your your prospects’ with social media .
• Connecting not just to prospects, but prospects’ customers and peers.
• Looking for common denominators in what they click, post, share and follow.

Create Simple Charts and Graphs 

A good chart or graph can foster understanding in CRM and sales that drives double-digit jumps in conversions. Ask your people what information from the weekly report they use most and give it to them on-demand, in real time. Choose graphics that can be used by easily by both Team Leaders and Sales Executives. Don’t limit yourself to pie charts and bar charts – Trend lines and Line graphs clinched many a consultant’s sale too. When you need to present data, do as much as possible in graphics. A good CRM setup will give you the tools.

Demonstrate the power of all in CRM and sales.

Imagine you have ten salespeople:
If two are using CRM, those two will find it hard. Usage will drop to zero.
If five are using CRM, that five won’t get full value. They’ll use it under duress.
Once six are using CRM, it’ll persuade those who aren’t to get on board.
The outputs of a CRM system – ideas, insights, opportunities, conversions, closes – are only as good as the data you put into it. So take care to get every lead and every action where it belongs and make it easy to do so.
It’s the process, not the product.

Above all, remember CRM isn’t a product.
For the people who use it – nurturing leads, chasing closes, maxing-out conversions – CRM is a process. So when you choose your CRM partner, make sure they focus on how things are done within your organization. Match product with process and your results from CRM will be sky-high. 

Ready to look up?

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.

Selling Less to Make More? Is Too Good To Be True?

For those who have run sales organizations and are familiar with trying to tackle the sales commission model, there are no easy answers. It typically starts with something simple like paying off sales dollars and then typically as you grow, it balloons into a mess with multiple calculations, special deals and constant exceptions to the rule. 

I have always been a big proponent of paying commissions based upon profit , but that has it's pitfalls as well. So today we look at another way... 

Commissions and Activity Based Costing (ABC) 

The value a good Activity Based Costing (ABC) model can bring to a distributor cannot be underrated. A well-designed model can provide powerful insight on profitability drivers and provide useful inputs when making strategic decisions on sales resource allocations and pricing. However, tying sales incentives to the “profit” these models derive can be troublesome. In fact, tying sales incentives to net profit based on an ABC model can have unintended consequences for distributors.

All of us are familiar with net profit when it comes to a standard income statement. It’s the bottom line. It’s what’s left of the money the company takes in (revenue) after it pays its suppliers and its other expenses. Net profit as it relates to sales compensation is somewhat different. It relies on ABC-driven allocations to calculate a net profit at a transaction, customer, or, in this case, a sales territory level. Using the MDS-Nx System offers you and option to allocate that cost at an product , product class or company level. So as a percentage of the items cost you can add a "Load" to allow you to capture and review these costs. The salesman's view of Net profit would then be different from your view of true profit. 

So the question now becomes how do we arrive at that loaded amount? And what is the most fair way to allocate. 

The problem on the surface is that net profit treats every expense as if it were variable. Each order has multiple costs applied to it. Some of these costs are direct – such as the cost of an inside salesperson receiving and entering the order, or the cost of fuel, and driver labor for making a delivery. However, most of the costs that are allocated to each transaction are not direct, but indirect costs. Some of these allocations are relatively straightforward such as using deliveries to allocate delivery expense or warehouse orders to allocate warehouse expense. However, for staff functions such as IT, HR, finance and so on, allocations are often simply made as a percentage of sales.

If HR expense equates to 1 percent of a company’s sales, then everything sold receives a charge equal to 1 percent of its sale price for HR expense. And here is where the problem begins.

Many costs incurred by distribution businesses are not variable. Selling one additional widget no more increases HR cost than selling one less widget decreases it. Of course, “all costs are variable in the long run.” But many costs are not incurred in increments of $1 or $10 but instead in increments of $40,000 or $80,000 because they correspond to salaried employees. It is not unusual for between two-thirds and three-fourths of a distributor’s operating expenses to be people, many of whom are salaried.

This is the core of the issue. If salespeople are paid based on net profit, the easiest way for them to increase net profit (and thus, grow their income) is to eliminate unprofitable sales. 

Yes, reduce sales to increase profit.

Reducing sales to increase profit is a dicey strategy. Not a bad strategy, but a strategy that requires real expenses (not allocated expenses) to decline at a rate equal to or greater than the rate at which gross profit dollars are declining. After all, the unprofitable sale probably isn’t truly having any impact on the company’s IT cost or how much the CFO is paid; it’s simply absorbing an allocated charge.
Here’s how the strategy works: 

1) Sales rep abandons unprofitable business causing sales to decline
2) ABC territory net profit increases because allocated costs exceed gross profit for these sales so the sales rep makes more money
3) actual company costs remain roughly the same, and company has fewer gross profit dollars to pay its bills
4) net profit at the company level declines. 

This, in a nutshell, is the reason commissions based on profit can result in sales problems and is often abandoned.

A Better Approach Cost Per Order/Line and Load Percentages

That said, the reasons distributors are looking at net profit as a potential basis for paying salespeople are legitimate. Voodoo accounting or not, we all know that a $5 order at 30 percent gross profit delivered to a customer in the next county is a money loser. This deficit is further amplified when a salesperson is also paid a commission or gets credit toward his gross profit bonus goal.

The goal of better aligning sales rep pay with the economics of the business is an admirable one.The good news is that there are ways to incorporate key profit drivers into a sales compensation program without taking the profit plunge. One approach is to eliminate the allocation of costs that are truly unrelated to transactional volume and focus in on costs that could be justifiably incurred as a result of the transaction.

Delivery, warehousing labor and order processing costs would fit this description. It’s true that warehouse labor and order processing costs are people costs that come in increments of tens of thousands and not tens of dollars, but staffing levels for inside sales and warehouse are much more elastic than IT system administrator or CEO.

A simple analysis can quickly lead to a "cost to fulfill an order". Applying this cost to every order to arrive at a commission able gross profit or incorporating a minimum order for commission can better align sales rep rewards with company profitability. If done properly, this approach can nearly eliminate the “shrink to profitability” dynamic because actual costs would be avoided if the orders were not taken. 

Direct Warehouse Employee Costs (50K/month)
Warehouse/Office Rent                (10K/month)
Shipping and supplies                 (3K/month)
Utilities and Misc.                       (2K/month)
-------------------------------------------------
Total Orders per month            1000
Total Order Lines per month      6000

Estimated Cost per order $6.50
Estimated Cost per line  $1.08 



Furthermore, if a portion of a rep’s business were not commissionable or the amount of gross profit on which commission were paid were reduced, growth would be required to make more money (and profitable growth at that). As a result, the “sell less, make more” scenario wouldn’t exist.

One potential issue with the minimum-order or order charge approach is that inevitably the impact will vary by sales representative. For some reps, the impact will likely be miniscule, while for others the impact could be significant. In these cases, using a multiplier approach to facilitate a level playing field may make sense.

The multiplier approach can be used many different ways. Goals or budgets would be established for each sales rep showing improvement on identified key cost drivers, and performance to this goal would regulate incentives that are otherwise paid on gross profit dollar production. 

For example, if order size is identified as a key cost driver, those with the lowest average orders would be expected to show the most improvement and have a goal set to that end. Missing the goal would result in a lower commission rate than is currently being paid or a 10 or 20 percent reduction in bonus earned depending on the structure of the existing incentive program. 

Calculating and displaying this data using the MDS-Nx Dashboard is automatic and using these metrics will help drive your profitability. Technology has made it much easier for distributors to analyze and model data in ways that previously not available. With tools like the MDS-Nx Software Suite , distributors have an opportunity to analytically understand profit drivers like never before. Distributors should be proactive in using this new-found knowledge. And when it comes to sales compensation, the more you know the better you will do.. .

Ready to sell more and make more? 

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556.
 Or send a message to sales@tshinc.com

Click here and tell us how we can help you with your business solutions.