SALES STRATEGY: LEAVE THE CROWD BEHIND

What is your sales strategy? 

Does your sales strategy start with:

• a product launch at a trade show?
• followed by a motivational speech to your reps to get on the road to sell that great new collection you have?
• and finally some discount-promotions to boost your flat sales?

You probably answered yes to each of these.  That’s almost every CGTA vendor’s sales strategy.  

In this post we'll show you how some vendors are taking a new approach...and tripling their same-store sales.  Read on...

How did you choose your strategy? 

You probably started your business at a trade show 10, 15, or 20 years ago and just kept it up.  It’s what all wholesalers do, isn’t it?  Yet you expect to do better than other wholesalers by doing the same as them!

Some wholesalers have grown tired of their flat sales.  They can no longer afford the risk of tying up all their cash in slow moving inventory. They recognized the industry has changed since they started out years ago.  These vendors have re-focused on what their customers really need by doing something very simple.  They've thought about what their customers need.

These vendors have seen consistent double-digit annual sales growth. And they’ve freed up a lot of cash out of their inventory.

Vendors launch their collections at the trade show…along with every other competitor.  And according to the CGTA the average trade show order is $600.  Vendors we worked with had a very similar result, they averaged roughly $750 from the 400 to 500 orders they write at a typical trade show.

Here is what a typical trade show looked like for these vendors:

	TRADE SHOW
AVERAGE ORDER	$750
ORDER RANGE	$300 to $5000
TOTAL ORDERS WRITTEN	500
TOTAL REVENUES	$500,000

These vendors subsequently changed their strategy from trade show based to a booking (early-buy) based strategy.  Here is an approximation of their booking results compared to their trade show results:

	TRADE SHOW	BOOKING
AVERAGE ORDER	$750	$3,000
ORDER RANGE	$300 to $5000	$1500 to $15,000
TOTAL ORDERS WRITTEN	500	500
TOTAL REVENUES	$500,000	$1,500,000

It’s very clear, that a booking program gives you a tremendous edge over trade shows.  Three times the sales.  In fact this result is so good it’s hard to believe.  But if you have a sales agent who works booking programs for other vendors, just ask them about it.

IT’S NOT ONLY WHAT YOU SELL….IT’S ALSO HOW YOU SELL IT

Why is there such a drastic difference?  That is because booking represents a change in sales strategy that addresses the customers’ needs in a better way.

We’ll elaborate on how booking programs work in a future post.  But what we want to do here is explain how to understand your customers’ needs and how to align your sales strategy with these needs.

Many vendors/reps break down their customers into A,B or C accounts based on the potential of an account.  A more powerful approach is to segregate customers based on their needs as described here:

           

THREE MAIN CUSTOMER TYPES

          

Intrinsic Value Customers

These customers focus on the product itself.  They like it or they don’t.   They want a favourable cost, either in terms of the product or in the ease of its acquisition.   These customers are aware they can find very similar products from many other vendors.

Extrinsic Value Customers

For these customers, value is not intrinsic to the product itself but lies in how the product is used.  Extrinsic value customers are interested in solutions and applications. The sales force can create a great deal of new value for them. These customers put a premium on advice and help. They expect salespeople to give them new understanding of their problems and the different ways these can be satisfied.

Strategic Value Customers

They want more than the supplier’s products or its advice. They also want to deeply

leverage the supplier’s core competencies. They are prepared to make radical changes in

their own organization and its strategies to get the best from their relationship with their

chosen strategic supplier.  This is what we would often classify as “partnering”.

(For a more complete discussion see Re-thinking the Sales Force, link)

Now that we have an understanding of these customer types, let's determine which type is the closest fit to a CGTA retailer based on a few criteria:

PRODUCT CHARACTERISTICS

On the criteria of PRODUCT, the best match for a CGTA retailer would be an Intrinsic value customer.  We can quickly eliminate the other two categories because:

• our products can’t be customized, nor do our they have many capabilities.  They are simply gifts and household items for the most part.  
• our products don’t have a particularly high strategic value.  That’s because very similar product can be found from many other vendors. 

Most CGTA retailers have been purchasing the products we sell for 10 years or more.  There is not much to tell a customer about our products that they don’t already.  How much relevant information can a sales person provide to a retailer about a candleholder …they get it.

KEY BUYER CONCERNS

On the criteria of key buyer concerns, the best fit to a CGTA retailer is an Intrinsic value customer.  We can quickly eliminate the other two categories because:

• we aren’t solving any unique problems
• our products don’t have a particularly high strategic value.  That’s because very similar product can be found from many other vendors.

Price however, is very important to CGTA retailers.  As described here, wholesale pricing ranks as one of the top problems faced by our customers. And because many store owners  re-new their stores each season, they do need our products for a specific time period.   As any retailer will note, many items from trade show orders are back-ordered or not shipped due to vendor stock-outs.  Order fulfillment is a big issue.

                                   

PURCHASING TIME HORIZON

This is an easy one.  Anyone who has written a trade show order knows the CGTA retailer decides very quickly whether they will purchase or not.  They like the item or they don’t.  Clearly on this characteristic our customers are identified as an Intrinsic value customer.

NATURE OF BUYER-SELLER RELATIONSHIP
  

This is actually a harder one to determine.  Certainly sales reps can act as a client adviser on specific things that a customer would not know, such as identifying best sellers.  Keep in mind that a quick email to every customer would accomplish the same thing; so it is not a particularly unique thing which only a sales person could do.

Fundamentally our sales activity is a simple one.  For instance many orders for giftware take place off a website with no sales person involved.  Compare that to the purchase of a computer system which may affect your entire business.  In this case you would definitely use the services of a sales rep more extensively and not rely uniquely on a website for advice.

On the characteristic of BUYER-SELLER RELATIONSHIP we’ll slot our retailers as Intrinsic value customer leaning towards Extrinsic value customers.

PREREQUISITES FOR SELLING SUCCESS

This is an easy one.  Clearly we simply need access to the store owner.  Check this characteristic as Intrinsic value customer

 

NATURE OF SALE 

Another fairly easy one.  The vast majority of the transaction between the sales person and the customer revolves around taking an order.    Once again we can characterize the customer on this factor as an Intrinsic value customer.

So let’s summarize  what our customer looks like based on these characteristics:

Clearly CGTA retailers are Intrinsic Value customers, and with this we begin to have a clearer vision as to the form of our sales strategy.

WHAT DO INTRINSIC VALUE CUSTOMERS WANT

The main interests of INTRINSIC VALUE CUSTOMERS are:

·         Lower prices/costs

·         Ease of product acquisition

·         Time sensitive delivery

Now what this means is that vendors who employ  a strategy which addresses these customers concerns will be rewarded more than vendors who do not.

With a better sense of our customers’ needs, let’s look at the sales strategies available to us and determine which one best fits the needs of our CGTA retailer who is an INTRINSIC VALUE CUSTOMER.

BASIC SELLING STRATEGIES

TRANSACTION SELLING

Is a set of skills/methods used when the customer is very knowledgeable about the products they are purchasing.  This will occur with standard, common products that are purchased frequently, and with which the buyer has lots of experience acquiring the product.

                     

CONSULTATIVE SELLING

This method varies considerably from transactional selling.    This approach is effective when the buyer has a particular problem to solve or is an infrequent purchaser of the product and service.  Because they buyer is inexperienced with the problem/product they need more advice from the seller.

PARTNERSHIP SELLING 

This is a method used primarily with larger organization and as the name implies represents a merging of two entities with complimentary skills.  In the CGTA this may mean merging the in-house product development skills of a large retailer with the sourcing skill of an importer.  Most CGTA sales reps will not be involved in this type of sale.

We can see the best strategy is TRANSACTION SELLING.  So what do transaction sellers do?

They focus their sales team and their organization on:

• ·         Lowering prices and costs (for instance product and freight)
• ·         Making the purchasing experience fast and easy
• ·         Ensuring rapid and timely delivery and high order fulfillment.

BOOKING (EARLY-BUY) PROGRAMS

So how do you, as a wholesaler, accomplish this? 

• ·         How do you reduce your prices without sacrificing profit margins?
• ·         How can you have high order fulfillment without carrying lots of inventory?

A number if vendors have been able to do this.  They’ve been able to wean themselves from a reliance on trade shows and move toward “booking” or “early-buy” programs.

That’s because a booking order strategy allows the vendor to meet the needs of INTRINSIC VALUE CUSTOMERS.  Vendors are able to:

•  Reduce their own product and shipping costs which they can pass on to retailers.
• Forecast demand better so they can ship orders more quickly and with higher fill    rates
• Carry less inventory because they can predict demand more accurately due to advance customer orders.

COMPETITIVE ADVANTAGE

All CGTA wholesalers compete aggressively by attempting to bring the latest products to the market.  But its a crowded marketplace out there with very similar product offerings.

Booking programs provide wholesalers the advantage of aligning their sales teams with their core customer needs and provide a true selling advantage. Very few wholesalers have taken this opportunity.