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Paper trail
by Paul Markgraff
In our last issue of
V-Mail, we again used our fictional distributor Primo Industrial Supply
to pose a question that affects many of our readers.
As usual,
Primo Industrial
Supply sales manager Kevin Fitzpatrick had a problem. His salespeople
demonstrated that they understood selling value, but they wouldn’t fill
out the standardized forms Fitzpatrick created to document value.
We asked readers how
they would address this problem. Is standardized documentation really
necessary? Would you attach a financial incentive to filling out the
paperwork? Why should salespeople spend time filling out paperwork
instead of selling product?
Normally, we take a
few of the good answers and craft a story that emphasizes the right way
to address the problems faced by Fitzpatrick and Primo. However, this
particular question received such a great response, we’d like to share
more than a few of the answers with you.
From Carl Norris, president and owner of Rogers Industrial Supply:
“I faced this
for years and finally decided a small incentive to do it and severe
repercussions NOT to do it was fair. We document customer savings,
activity reporting, dead stock sales, problem solving and other
activities on a standard form. The form is Excel-based, has drop-down
menus for choosing the correct activity and is e-mailed to HQ. I review
each form and initial it, noting approval and also for my information.
“Various activities carry points and there
are a minimum number of points
that MUST be earned each quarter. The repercussions for not reaching
minimum points for one, two and three consecutive quarters was detailed to each
sales person in writing. Plus, each can earn from $300-400 per quarter
based on points earned. We have been doing this for six quarters now. The
sales personnel that do the activities and document it have seen an
increase in their territories and have become proficient at the
documentation process.”
From Jack Enns, general manager of A. Adams Supply (1969) Ltd:
“I find this
to be an interesting question. While on the surface the question seems
straightforward, I believe that there has to be something more to this
issue. I am of the opinion that while it is never management by
committee, in this situation, I believe that the sales manager needs to
find out what the objection is to filling out the form. I have always
struggled with attaching financial incentive to something that is
defined as ’a condition of employment, or part of the job.’ Therefore,
I feel that I would not offer a financial incentive.
“I would review the
situation in its proper context, because there has to be a motive, which they
need to understand in order to fill out the paperwork. Yes, they should
find the time to fill out the forms. The need to track and the ability to
demonstrate value is critical. These same salespeople
will complain loudly when they lose the account, and their revenue is
reduced. Yet, they will have nothing to prove to their customers that they
deserve to keep the account.
“Without documentation, on what basis will they
prove they have in fact been delivering the value-added services? The
answer is this simple. Salespeople who understand their role will see
the benefit of documentation, not just the documentation on selling
value-added, but all documentation. This only makes them better sales
people, and therefore makes them money, to say nothing about the
relationship that they are building between themselves and the
customer. Positive reinforcement and aiding them in understanding the
needs should result in the salespeople feeling more than justified in
’making’ the time to do the documentation.”
From Lex Silbernagel, vice president of supply chain service for
Border
States Industries:
“Customers
need to have a sense of value, performance and areas for continuous
improvement -- either formally or informally. Documentation is essential
in order to provide this information. Not having this information
creates risk that the customer will eventually go away. Long term, it
should not be an option and needs to be tied to compensation.”
From Gerry Braasch, president of Braasch Industrial Sales Inc.:
“I can
appreciate filling out a form for a short period of time to acquire
market information. However, most successful salespeople see any
‘unnecessary’ paperwork as a limitation on their ability to earn a
greater income (commission). I would think a financial incentive would
help get them to fill out the documents. Another way, if possible, would be to
have a pre-filled-out form listing the customer's name and then make the
body of the form a check-off of various choices to get the info
you are looking for. That makes it easy and quick for the salesperson
to fill out the form.”
From Bob Smykla, sales manager for
Diamond Saw Works Inc.:
“I would have
the salesmen involved in redesigning the forms. Then I would ensure that
they have opportunity to use ‘administrative’ time every week to
complete the forms. Finally, I would attach a negative incentive, no
commissions on the item/account if the paperwork does not ‘catch up’ the
next pay cycle.”
From Roger
Junnarkar, vice president of sales for
Advantage Gases and Tools:
“If filling out the standardized form is part of their job description,
salespeople should be made aware of it during the hiring process. At
the hiring time, an explanation is necessary to support its importance as
a valuable sales tool for follow-up and its use as a business
development guide for future. It also brings the sales manager and the
salesperson an opportunity to have a one-on-one session on a regular
basis for effective communication. There should be absolutely no
financial incentive to fill the forms.”
From Shane E.
Davis, northeast region sales manager for
Dynabrade Inc.:
“The challenge has to do with mindset and habit. Flexibility, patience
and incentives come into play with sales teams. Information, and what
you do with that information, can be one of the most important factors in
long-term success. Filling out paperwork just to fill out paperwork is
unproductive. You must prove to the team that what you are requesting
will benefit them, their customers and the company. My
recommendations are: You must have a complete understanding of your
goals, present those goals to your team in a positive manner and use the
least time-infringing methods as possible. The KISS method for reporting
is best with salesmen.”
From Robert K.
Gladwish, president of
Ranson Industrial:
“If they do not keep track of cost savings, then they are likely going to
lose the contract to their competitor when it comes due. If they keep
track of the cost savings, the contract will be renewed. Then, everyone
wins!”
From R. J.
Almeida, regional manager for
Tyrolit:
“If they won’t fill out the standardized form, they don’t truly
understand selling value. Being a manufacturer, we know everything has
to be proven. Cost-per-piece produced is the future and it demands
documented facts.”
From Ron
Meisinger, owner of
Atwood Industries:
“For very successful documented savings that results in an order, we
offer a $25 bonus
at monthly meetings. Our best salespeople have at least four to
eight projects all the time. That’s why they’re the best.”
From Ray
Lombardi of Agilent Technologies:
“[Fitzpatrick] has not communicated the value to his customers or his salespeople.
He may believe in it but they do not. He needs to define the benefits
for
the salespeople in ‘their’ language, not his. One way to do this is to
take a leader within his force that others respect and get his/her input
to modify the presentation and the form itself that speaks more to the
needs of the field rep, not the management view of what is needed.
“No financial
incentive is needed if the value is true; salespeople will naturally
gravitate to tools they believe in. Salespeople should only fill
out paperwork that helps build sales or communicate problems/obstacles
or success that can be capitalized on.”
From John S. Reeder, sales representative for Meggan Sales Associates
LLC:
“His
salespeople understand selling value, but they won’t fill out the
standardized forms he created to document value. I would have to see the
form to answer this but if it shows documented cost saving for their
customer, the salespeople do not understand value selling.
“Why should
salespeople spend time filling out paperwork instead of selling product?
If they do not show the product has true monetary value to their customer they
will lose the customer when he starts looking at the product as a commodity.
“How would you
address this problem? Preach that their long term financial income from
these customers is dependent on documenting their value.
“Unfortunately a
great deal of paperwork that is requested is not necessary. It takes
away from selling time and family time. This is not that type of
paperwork!”
From Jim Murrell, vice president of business
development for Ashburn Chemical Technologies:
The process of finding cost savings for customers should be an
important part of every distributor salesperson's job description. I
have seen and administered several surveys in which industrial end users
stated they did not want, nor would they pay for, distributor sales
activities that did not provide measurable value.
The distributor salesperson has other
responsibilities (such as promoting high profit lines and supporting the
distributor's marketing plan) but their job description and part of
their compensation should be tied to providing documented cost savings
to their customers. I know of several distributors who have implemented
formal customer cost savings programs and made them part of the
salesperson's compensation. It seems the appropriate figure is around 10
percent of the salesperson's total compensation tied to documented and
customer approved cost savings.
One last point. In order for this concept to be
successful, the customer must be continually made aware of the cost
savings efforts being made on their behalf. The cost savings must be
documented, summarized, and presented to the customer's management in
periodic formal reviews.
From Eric Pfeiffer, business development
manager for Simonds International:
The first step is to help the salespeople understand that the properly
completed forms help keep the competition outside instead of letting
them in the door. Cost savings documentation is a testimonial and its
proof that has to be beaten in the real world. The competition can more
easily win when testing against undocumented "folklore."
The second step is to tie a financial reward to
the completion of the forms in order to reinforce good habits.
So, there's a minor financial gain for completing
the form as a means of securing longer-term financial gain by holding
the business.
Thanks to everyone who participated!
This
article was prepared exclusively for ValueAddedPartners.org. Copyright
2007.
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