Training that works

How one industrial distributor taught its salespeople a new way to document the value it offers customers.

When Empire Machinery & Supply Corporation lost a major customer a few years ago, company president Hank Turner decided the time had come to make a change. While it’s always upsetting to lose business, it’s especially aggravating to lose to a competitor that isn’t better than you, just cheaper. It means your company didn’t do enough to demonstrate your value for that customer.

“When we lost a major account, we realized we needed to be doing something better than what we’d been doing,” Turner says.

He decided that Norfolk, Va.-based Empire needed to do a better job of documenting the value it offers customers. Looking for a way to begin, Turner and executive vice president Jim Topping attended a seminar sponsored by the Industrial Distribution Association on value-added selling led by Tim Underhill of Underhill & Associates of Tulsa, Okla. Underhill underscored the importance of defining unique services companies provide to customers.

“I think Tim is 100 percent correct when he says, ‘If you don’t differentiate yourself and show your customers what you’re doing different or better, and show your customers the value of the services you provide them, they’ve got nothing to compare you against your competitors except your price,’” says Turner.

Turner was so impressed with the presentation that he invited Underhill to give a one-day seminar to Empire’s sales staff and management to teach them how to sell value-added services. The seminar was especially helpful to Eric House, an Empire salesman assigned to a large shipbuilding and repair facility in Newport News, Va.

“The training came at a perfect time when Eric was working on a major contract. He presented all these cost savings documents and showed people what he was doing and could do. We won one contract and then another because of it,” Turner says. In the past 3 1/2 years, House documented more than $375,000 in cost savings for the shipbuilder and won a major contract as one of only four key suppliers in the company’s automotive warehouse and vehicle maintenance facility.

“We were recently awarded this new vendor consolidation contract to take over and manage the customer’s industrial and MRO inventory in their new maintenance facilities warehouse,” Turner says. “We currently have three full-time employees on site to manage inventory and to purchase needed material.”

Hoping to build on House’s success, Turner started requiring all Empire salespeople to submit written proof of the value they bring their customers. As many distributors have found, simply ordering salespeople to comply is putting the cart before the horse.

“To be perfectly honest, we weren’t very pleased with the results we got,” says Turner.

Back to the drawing board
The salespeople supported the value-added effort; they simply didn’t know where to begin. A one-day seminar wasn’t enough to teach all of Empire’s salespeople value-added selling. They required ongoing training and support. 

“It’s OK to make this a requirement for salespeople, but you’ve got to give them tools to do it,” says House.

Because he had the most success, House agreed to become Empire’s in-house trainer. He purchased Underhill’s train-the-trainer video and scheduled another training session to teach salespeople how to document the various ways Empire benefits customers. 

“I made up templates everyone could use to document their savings. It’s something they can carry with them. They can put it on a floppy disk and show it to customers,” he says.

For example, he created a one-page form (click here) that salespeople could adapt to summarize material, freight, process and inventory savings. Additional forms (click here) and worksheets (click here) summarize other activities they performed to lower a company’s process or possession costs, reduce expenditures or improve profitability.

“I took Tim’s concepts and created templates in Microsoft Excel and Microsoft Word. I wanted a basic guideline for these guys to follow that was simple. My objective was to give them a simple set of forms where they could fill in the customer’s name, the process impacted and the result,” House says.

In the two months following the first training session, Empire salespeople recorded about $30,000 in cost savings for customers. As salespeople become more proficient, Turner believes their results will improve.

“We’re planning another training session with Eric to review some of the case studies they’ve turned in,” Turner says. “It gives them an opportunity to explain what they did and why they did it that way. But at the same time, they know they’re being inspected.”

Lessons learned
What valuable lessons can other distributors learn from Empire? 

1) Put it in writing. If distributors don’t document the various ways they benefit customers, don’t expect customers to remember what distributors did for them. If Empire started its value-added approach sooner, it might not have lost that major account.

2) Assign documentation goals to salespeople. Unless they’re given specific instructions, such as turning in one documented cost-savings project per month, don’t expect salespeople to put much effort into the program. If possible, tie the effort into their compensation package.

3) Provide training. Turner hired Tim Underhill to introduce the value-added selling concept to salespeople, then assigned additional training responsibilities to an employee. Make training a day-to-day effort if you expect to see continued improvement. The ValueAddedPartners.org Web site provides several articles, case studies and sample documentation forms that can serve as a basis for in-house training.

4) Keep it simple. Customers don’t necessarily require detailed, complex documentation, and some salespeople may not be comfortable presenting such information. Develop options to use for smaller or less sophisticated customers and templates that make it easy for salespeople to get started. Simple templates also allow the salesperson to become comfortable with the value-added selling process.

5) Offer rewards. For one major customer, House set up a commission structure to reward inside salespeople who save customers money. It provides the salesperson with an incentive to look for cost savings opportunities.

This article was prepared exclusively for ValueAddedPartners.org. Copyright 2003.

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