8 Pointed Questions to Reignite Sales Growth

crossroads 1Congratulations – you’re the new CEO of a business that is in the red and heading the wrong direction.

Every turnaround situation is unique and is a high risk and reward scenario with the jobs of many on the line.  And every turnaround has a common theme that the status quo was pushing the business in the wrong direction – the need to change was obvious.  Another common theme?  That the current situation is someone else’s fault; another department, the past leader, the dog who ate your homework…

The reality is it doesn’t matter.  Your task is to fix the business.  To do this you need to drop the politics and focus on the future.  You need people who you can trust, who have opinions, and can engage in constructive debates.

The best way to start the debate is with pointed questions

HonestAssign these eight questions to leaders in the business and then bring the group back together for a couple of days of offsite meetings.  The hard part is getting past the finger-pointing.  A new leader has everybody jockeying for position and transparency is hard to come by.

One solution that worded behind expectation was when we brought a key customer into the strategy session.  While it was risky, it was the catalyst that brought honesty out.  We happened to pick the absolute right person, who for three days dropped his own identity and joined the team.

You need to be intensely honest in this assessment

business-devolopmentThese are the eight questions we answered over three days and led to the reversal of a share loss.  Could your business answer these today?

  1. How do our products compare?
  2. How does our price compare?
  3. How does our cost compare?
  4. How does our service compare?
  5. How does our marketing compare?
  6. How effective is our sales force?
  7. How does our sales penetration vary by region?
  8. Where should we rate in two & five years vs. competition?

The goal is to come out of the session with a clear picture of who you are, what you want to be, and where you are going to focus first.

Here is a scorecard  that we used to illustrate our intentions.Graph

This is another post written with my colleague Doug Thompson, General Manager Rockwood Manufacturing at ASSA ABLOY.

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Are You Pricing for Volume or Profit?

imagesCAMM6VP4Your costs are rising and your margins are declining.  Worse, your retail partners are demanding greater margins and it’s a scorecard measure.  You need a price increase but you run the risk of triggering a line review or losing placement.

Let’s start with a basic premise: our job in Sales and Marketing is not to merely generate volume but rather to generate gross margin.  How then can we overcome pricing issues?

Profitability without growth will only serve to create an environment with no opportunity.  Growth without profitability only serves to create a poor performing large company.  Profitability without growth will only serve to create an environment with no opportunity.  Understanding the balance between volume and price is your job!

Survey after survey of retailers, dealers, distributors, contractors and homeowners shows that price is rarely the key driver in the decision process.  In fact, it is usually 4th or 5th.

When you buy a shirt or blouse, what factors do you consider?

  • Is price the key?
  • or style, color, fit, brand, or image?

How many of you buy clothes or anything else based on price as the #1 criteria?

Let’s take another example: a motorcycle helmet.  Is price the deciding factor? Who buys the cheapest motorcycle helmet?

Business is a Game of Margin – Not Volume!

Business is a gameToo many companies believe that volume and market share are the secrets to business success.  Yet regularly billion dollar corporations file for bankruptcy in the U.S.  When financial trouble comes, companies “cut price” in an effort to drive top line sales.

Remember, it is the buyer’s job to discount your value, while simultaneously securing it.

Your goal: Implement a pricing plan that provides leadership to the industry and communicates your desire to . . .

  1. Stabilize the market
  2. Capture your value
  3. Incentivize your customers to trade up
  4. Earn a reasonable return

To maximize your pricing and profitability you must:

  • Take a leadership role
  • Understand what price is
  • Sell your value
  • Recognize that being competitive is more than just price

It starts with pricing leadership.  You must take a leadership role…

  • Price leaders generally have brand preference.
  • Price leaders generally have the largest and strongest distribution system.
  • Price leaders generally have a technological advantage or leadership that customers generally want to be associated with.
  • Price leaders generally have scale.
  • Price leaders generally have created either real or perceived value for their goods and/or services.
  • Price leaders have a competitive cost position.

Finally and most importantly,

  • Price leaders have the courage to lead.

The ultimate goal in managing price competition is to create a stable competitive environment where you can earn the best possible sustainable return on investment.

The forgotten elements of price

trade-show-specialsMost everyone thinks of the invoice price and terms.  But these are the forgotten values of price:

  • Growth rebates
  • Promotional allowances
  • Show specials
  • “Buys”
  • Advertising allowances
  • Co-op plans
  • Pallet configurations
  • Terms
  • Price protection
  • Builder rebates
  • Contractor rebates
  • Parade of Home/Model Home allowances
  • Pick-up allowances
  • Guaranteed service cycles
  • Merchandising allowances
  • Service
  • Packaging
  • Customer accommodations
  • And more that are unique to your industry

Each of these elements makes up your pricing – and your value – to the buyer.  Don’t forget them when negotiating and remember they all are eating away at your account profitability.

Sell your real value

Your real value to your customer is the incremental advantage they get from doing business with you.  This list is generic, but you can use it to start building your own:

  • Deep customer relationships
  • Intimate customer knowledge
  • Shopper Knowledge
  • Broad product lines
  • Facilities nationwide to provide service and consistency
  • Technology and innovation
  • Outstanding quality
  • Packaging leadership
  • Brand awareness
  • Retail expertise
  • Merchandising and promotional ability
  • Lead generation
  • Customer service support
  • Web-based dealer portals
  • EDI
  • Industry integrity and financial clout
  • Multi-product accessibility
  • Accessibility to senior management
  • Online consumer education and support
  • And others unique to your company and position

You should already have an idea based on the market.  YOU own the process.  Homework is critical, so ask a lot of questions…starting with what do we get for making the price move?  That’s the biggest question of all!

Being competitive is more than just price

"What's the price?"Another key question is to ask what’s the competitive situation?  Don’t just shout “we’re not competitive! to the product manager or your sales manager.  Being competitive is more than just price.  Competitiveness is in the eyes of the beholder!

  • What’s the customer’s commitment to us — 25% or 100%
  • What’s the overall volume compared to other customers in the market?
  • What’s the competitive price on “like” product?
  • Who’s the competitive manufacturer?
  • Who is the distributor involved who quoted the price?
  • Is this the price on the invoice?
  • Is freight included?
  • What’s the price after all rebates, discounts, etc.?
  • Is this one time only?  For a job?  What’s the duration of the quote?
  • How does the competitor go to market?  Do they have brand identity, service programs, marketing support etc.  What does the customer like about the competition?
  • How will the competitor respond if we make a price move?
  • Will the competitor respond by taking our new price offer to accounts we do not have positioned at this price – in other words, lateralize the offer?
  • What other of our customers will be affected by this lower price?

What added value can you offer?

  • What else can we bring to the party other than price?
  • How can we help grow the customer’s sales?
  • How can we lower their cost?
  • Can we use any of our unique capabilities to keep from cutting the price?

Marketing is all about 4 P’s, one of which is Price

Make sure you spend as much time understanding pricing as any other one of the P’s.  Pricing deserves respect, attention and creativity.  You will be rewarded with greater profitability and be more competitive in the marketplace as a result.

For other Channel Instincts posts on pricing, see What Does “Your Price Is Too High” Really Mean? or Is Pricing Making You Go Bananas?  

For a Channel Instincts post on expanding the 4 P’s of marketing to 13 P’s, see The 4 P’s of Marketing Aren’t Enough Anymore! 

Are You Earning Your Unfair Share of Business in B2B Selling?

In home pitchIn B2B selling, who’s your Gatekeeper?

Who makes the decision to buy your products?  Who’s the “economic end user?” Is it the shopper at the retail shelf? Or is it someone else like a contractor selling in-home?

Consider the power of the person who educates the shopper or homeowner on their options.

If that education is the basis for decision-making, the one offering their advice has the ability to filter information and steer the purchase information to benefit themselves. Even a sophisticated consumer will reconsider their position based on the level of trust they have in the presenter.

Influence stemming from trust defines the Gatekeeper

TrustThat disproportionate influence, the education role, and their vested interest in the outcome make this person critical to the selling process.

We call this person the Gatekeeper because of their role in walking the homeowner through their options.

You can better understand the Gatekeeper with a simple example drawn from everyday life…the roofing contractor. If you have a problem with your roof, you’ll most likely call a contractor for advice on the problem. After an inspection, your worse fears are confirmed – you need a new roof. You walk through some options, select a color and get a quote. If it all adds up, the contractor will go to work and your problem is behind you.

There’s no doubt in our story about who chose the roof and selected the color – the homeowner did. But the Gatekeeper led the homeowner to the conclusion that a new roof was needed. Most of the conversation focused on an outcome, but in the process a number of critical questions were addressed.

Indeed, those answers were designed to build up your trust that this firm was the best for the job.

In fact, the contractor had to sort out a myriad of manufacturers and suppliers. And in the course of solving the problem, subtle suggestions or even direct answers to objections carried a lot of weight.

For example, “In the years I’ve been installing XYZ brand, I’ve never had any problem the company didn’t stand behind.”  Or “This is the contractor grade product, not what you find in a home center for a dog house.”

When you sign a contract with the contractor, you expect them to deal with the details. You follow their advice and look to their experience. You trust them.

Their experiences and qualifications make them the Gatekeeper.

Who’s the Gatekeeper in your field?

GatekeeperNow that we know about the Gatekeeper and the power of their role, so what you ask. Consider where the influence point in your business is.

Better yet, consider how you are marketing to take advantage of the Gatekeeper.

Here’s why:

  • The cost of marketing to a focused, limited group is always more efficient than a broad sweep of potential audiences
  • Aiming at roofing contractors is an easily defined group
  • Targeting homeowners who might be re-roofing is group that’s far from small, almost impossible to define for marketing and too expensive to practically reach

In a sense, you are able to justify a targeted business-to-business marketing effort instead of a broad-based consumer advertising effort. Even if you still plan on spending the same amount of money as you would for the ad effort, you can create a lot more value for the Gatekeeper.

Marketing to the B2B Gatekeeper

tools to grow your businessExamine your own situation. Where in the selling cycle does the Gatekeeper appear?

Once that key constituency is identified, you need to begin the process of focusing on their needs and offer programs to help you both grow sales together.

Let’s go back to our roofing contractor to make the point. The contractor is a businessperson who brings a lot more than just products to the homeowner.

As such, the in-home selling that takes place works to build on the reputation and credibility of their firm, not on what manufacturer’s product is being installed.

Savvy building materials companies have taken advantage of this and developed tools to help the contractor organize and grow their business

These tools are geared to each step of the selling process for a contractor:

  • Lead development
  • In-home-selling
  • Closing the sale, follow-up and referral, and business-building resources
  • Blogs, social media and contractor referral sites are all making Gatekeepers even more connected – and influential — to business growth

Educate your Gatekeeper

education and trainingCreate tools that can be easily modified for their use – to keep the emphasis on the Gatekeeper, not you.

For example, the roofing contractor generally uses a pitch book in the home. A pitch book is filled with information about the company, how they work and testimonials from satisfied customers.

Because the emphasis is on their company, they rarely want to take advantage of a manufacturer binder (or template).

Creating a program that shifted the focus to who’s presenting – and not on what product is specified – has spelled success for a number of suppliers.

Gatekeepers will support those who have their interests at heart

Selling to gatekeepersWhen calling on the Gatekeeper, ask them what their objectives are. Search for the hot buttons that will allow you to show them the depth of your support.

For our roofing contractor those needs might be canvassing and direct mail, advertising, professional identification, or product training.

The winners for his business – and therefore the company supported in the sale to the homeowner – comes not just from price, quality and delivery, but from the breadth of support.

By developing a range of resources, the sales call to the B2B Gatekeeper can be on the total business proposition – and how to best grow their business.

Your business will, in turn, grow with their support.

Good Selling!

Special thanks to Mark Mitchell for co-writing this article with me.