17 May 2013 10:01 [Source: ICB]
Tom Searcy, CEO/founder of Hunt Big Sales discusses the biggest sales challenges facing chemical distributors and how to overcome them
Selling has become harder in the past decade. In all industries a number of trends have transformed the traditional models of new customer acquisition and growing accounts once you have acquired them. The usual suspects for creating this difficulty include:
Although these trends are very real and have had some effect on the chemical distributor, there are even more direct trends that have made the frontline work of adding and growing accounts harder. The three C's below represent real business trends that have not reached full-steam, but are already changing the very nature of sales in the chemical distributor space. They are:
Churn of buyer: Knowledgeable and experienced decision-makers are retiring, being eliminated or their decision authority is being shifted over to structured buying processes headed by procurement and purchasing departments. An entire generation of talent is being pushed out, and with them the ability to discern between good and bad providers. In the vacuum created by the knowledge departure, lowest price and most favorable terms are becoming the default decision criteria for the new generation of buyers.
Compliance: Inherent in the transfer of decision-making authority from the knowledgeable executive and the end-user to the buying process administrator, (purchasing and procurement), is the elimination of value-proposition selling. What makes one vendor a great partner and another a better-priced bad choice is lost on processes designed to squeeze out cost. The processes mandate arms-length communication to such a degree that understanding the real needs of a prospect and tailoring a solution to those real problems becomes almost impossible.
The frustrating element of all three of these challenges is that as a distributor, you have so little control over them. How do you build a strategy for dealing with a marketplace that is in such strong transition and chart a course for not only weathering the storm, but take advantage of it to gain market-share?
I have the privilege of speaking on this topic directly in the four regional NACD conferences this year. During those sessions I will go into depth on how to build a process for effectively selling in this changing environment. In this article, I want to focus on several key changes you need to make:
1. Target higher
2. Change your value language
3. Expand your buyer reach
Developing a strategy and process to accomplish these three objectives is critical to winning in this changing buying environment. Here are some ways to do that:
1. Target higher - A decade ago and longer, purchase authority was proportional to the position a person had. Your buying authority was relative to your level in the buying organization. Frontline managers could buy supplies; their bosses could establish purchase schedules and the highest levels could sign annual contracts. Things have changed. Middle level decision-makers have had much of their authority taken away from them and it has been given to the purchasing organization. The senior executives still have their authority of course, and frontline managers are still allowed to place orders with approved vendors with approved min-max thresholds. The executives in the middle, however, are now relegated to referring the potential new provider to purchasing or to submitting a recommendation to his or her boss. That's why so many times in your sales meetings when you ask about the status of a proposal you hear, "It's on my contact's boss' desk. I'm supposed to hear back next week." Of course, the story is the same next week and again the week after that because the boss has his or her own problems to solve and deciding on a new vendor for their subordinate is not on the "A" list.
To grow your business in this evolving world, you have three choices:
Get great at selling lots of smaller amounts to many more people. This world is epitomized by Amazon, but there are plenty of commercial and industrial examples. Creating easy and efficient purchase and delivery methods for frontline managers you can become the default solution for handling orders.
Get great at winning structured buying processes. Qualifying, bidding and winning the reverse-auction, procurement process and RFP has become the strategy for a number of very lean companies in the market. Through using a rigorous internal process for responding and participating in these processes, you can increase your win ratio. This means changing your traditional sales approach to recover some of the expenses to support this effort.
Get great at reaching the highest-level executives in order to bypass the structured buying process. This means changing the language and nature of the problem that you solve. The fact is that you get sent to whom you sound like. If your sales people sound like the executives who have lost their purchase authority, you are going to get stuck. The language has to change if you are going to reach the higher-level decision-maker.
2. Change your value language. If you want to compete in that third go-to-market strategy, you have to solve big problems for big people. In the past, often the problems that you solved were of the product, quality, service and price nature. These dimensions are still important, but if they can be enumerated in those terms, then they will be converted into an RFP or bid sheet and handled by a lower level manager than the one you need to reach to sell your bigger opportunities.
Senior executives are hired to solve problems involving time, money and risk.
Time - Speed to market, inventory cycle controls, product-development deadlines and just-in-time material inventory targets are all examples of the language of senior executives' time problems.
Money - Market share, total cost of production, total cost of ownership and supply-chain management efficiencies are all examples of the language of senior executive money problems. Money is not about price for the senior executive. If it were, he or she would delegate the discussion and a reverse-auction would be conducted. The money problem has to be in terms other than price for a senior-executive to engage.
Risk - Compliance, production consistency and end-customer complaints are examples of the language of risk problems.
3. Expand your buyer reach - The old-school sales model was mainly based on single-relationship development. The thinking was that there was one person who had the necessary authority to buy, so if you developed a relationship with that person that was all you needed. Business is more complex and organizations are more matrixed in their approach to decision-making. Even if you have the highest-level executive in the decision tree, he or she is still going to seek the counsel on packaging, formulation, logistics, technology and other contributing disciplines when deciding to buy from a new supplier. Those people often are not motivated to change. In the modern business decision, the power to say "no" or delay a decision trumps the authority to say "yes". You need to actively seek a larger audience in your prospects. By getting all of the subject matter experts in supply chain, operations, quality, packaging and so on into the conversations, you can avoid being trumped later in the sales process by one of them.
With a sponsor from a higher position supported by a broader base of influencers focusing on a significant business problem you are in a position to secure a larger sale faster. What holds up most large new sales is a lack of alignment with the most important problems coupled with organization's inherent fear of change and mistakes. For the reasons discussed in this article, the people who had the greatest knowledge to understand your value are either retiring, being reorganized or removed from the authority to make the right choices. This means that to win, you will need a new approach to relationships and a new language of value.
Tom Searcy is an expert in sales strategy and works with thousands of executives around the world each year through his workshops and keynote speaking. Through his company Hunt Big Sales, Searcy has helped clients accelerate the growth of their businesses and land more than $5bn in deals.
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