Gaining Market Share in a Difficult Economy
The problem with relationships
By Dave Kahle
In the B2B world, the relationship between the customer and the vendor, and more specifically, the vendor’s sales person, can be of utmost importance.
It doesn’t take long in the business to understand that if the customer dislikes you, he is rarely going to see you. And if he does know you and trust you, he is more likely to do business with you.
Creating positive business relationships with all of your customers and prospects is, then, a fundamental step in the path toward success for any B2B sales person.
Having said that, the existence of positive business relationships is one of the primary hindrances to success for the typical field sales person. I know that seems like a contradiction, but let’s dissect how this works.
See if this doesn’t sound familiar. The typical field sales person, when presented with a sales territory, naturally attempts to see as many people as possible, and sets about building relationships with some of them. Since he typically has more accounts than he can effectively handle, he naturally tends to spend time with those with whom he has some affinity. He likes those customers who like him, and he spends more and more time with those with whom the relationship is easy and natural.
Over a few years, these relationships become solidified, and the sales person is content to work with that set of people with whom he gets along. Given the choice of making a cold call on a prospect, and visiting an existing relationship, the natural inclination is to go where it is easiest. Relationships coalesce, and the sales person develops routines based on them.
For years, this mode of operation was acceptable. In a growing economy, most of the customers grew as well, and all the sales person had to do was show up and he’d expect a certain percentage of the business. Life was good, and the job was easy.
Now, however, most of the customers aren’t growing, and most sales territories are down. Many of those same customers are struggling to stay profitable. The sales person’s market, defined as the people with whom he/she has positive business relationships, has shrunk. In many sales territories, if the sales territory is going to grow, or at least gain market share, the sales person has to look outside of his current relationships.
Sales people, who became comfortable calling on the people who liked them, are now faced with an uncomfortable prospect: In order to gain market share, they must go where the market is. And, the market is bigger outside of their relationships than inside of them. If they are going to grow their sales, and their income, they must reach out beyond their current relationships, and call on people who don’t know them.
Unfortunately, many are hampered by their existing relationships. They have invested so much time in some customers, who frankly, aren’t worth it, that they can not extricate themselves and devote the time and energy to creating new relationships and new customers.
Their existing relationships are the greatest hindrance to their success.
Ultimately, there must be a change in the sales person’s routines. He has to spend less time with those of his current customers who are struggling or of smaller volume, and more time with customers who offer greater potential.
But changing established routines is an arduous task that requires, in most cases, both management intervention as well as willing sales people.
The starting point is for sales management to create specific expectations, measurements, and rewards and consequences for the sales people. It’s no longer effective to announce, “We need more new customers, guys” and think that will get results. Changed behavior requires specific expectations, something like “One new customer per month, for the next 12 months.” It requires regular measurement and mid-term corrections. Management should be meeting with every sales person, every month, and measuring progress on the expectations. There should be both rewards as well as consequences. For example, double commissions for the first six months of a new customer’s purchases will light a fire under most sales people, especially when coupled with a consequence like removing some current accounts from the sales person’s territory.
As a distributor sales person, my territory was cut every year. I started out with responsibility for 77 accounts, and ended up with a territory of just 17. My sales grew from nothing to over $5 Million a year. Each time my territory was cut, my business grew. I would not have done that on my own. I would never have volunteered to give up 80% of my customers, but, in retrospect, I’m glad my manager had the courage and conviction to do it.
Once the expectations are created, the measurements put into place, the consequences and rewards fixed and articulated, then management needs to educate the sales people in the best practices of creating new relationships. Some are absolutely unsure of how to make a cold call, and most have totally unrealistic expectations. That’s where training and education come in.
You can’t expect people to do something if they have never been educated in how to do it.
Having said all that, you cannot realistically expect every relationship-oriented sales person to change his routines and excel at the new expectations. For those who don’t seem to be able to make the transition, you’ll have to decide whether they are profitable with their base of customers and reduced sales volume, or whether it may be wiser to find someone new and more trainable.
Don’t let their relationships hinder your business.
Copyright MMX by Dave Kahle
All Rights Reserved.