Issue link: https://www.e-digitaleditions.com/i/873536
38 FEDA News & Views in their distribution software package to produce a category participation report by customer. This type of report will make it easier for salespeople to iden- tify opportunities within their existing relationships. I have introduced this concept to sev- eral clients over the years and, frankly, the more tech-savvy organizations have been best-suited to capitalize on the idea. The report breakdown should be fairly simple. Show the sales dollars per product category, or any other logical product breakdown, for an individual customer. This should give you a rough idea where the customer is placing the bulk of their orders. Having reviewed these reports in several companies, typi- cally it's very apparent where the oppor- tunities exist. Let's face facts: Our custom- ers rarely know all of the products that we put on the shelf. This is especially true if you have a fairly diverse product mix. Some of my clients have refi ned their reporting to use transactions, or hits, in each product category. This removes the bias toward product categories domi- nated by high-dollar items. The number of transactions seems to level the play- ing fi eld and provide a better look at buying patterns. Armed with this data, salespeople can spend time reintroduc- ing dormant categories to their existing customers. Another byproduct of this type of reporting is the evaluation of product knowledge among the team. For exam- ple, this same type of report can be gen- erated to compare the transactions per category by an individual salesperson. We are looking for patterns that sug- gest a category is particularly weak or nonexistent. As a sales manager, I would interpret this as a lack of comfort with a particular product category. Some addi- tional training effort, through the use of manufacturer resources, should help this person fi ll in the category. I will freely admit that these two strat- egies seem to be in confl ict, but they don't have to be. I want salespeople to focus on opening new accounts. This is why I'm advocating a higher compensa- tion for this activity. Once the account is established, it's in the salesperson's fi nancial best interest to drive category participation. Although there is a residu- al commission after the fi rst 12 months, I would expect that selling deeper into the account will wane. This is a perfect time for strong inside salespeople to pick up the ball and continue to drive category participation. In fact, I would encourage this behavior by implement- ing a modest bonus but that discussion is best saved for another article. Good luck and know that I am always here to help. About the Author: Jason Bader is the managing part- ner of The Distribution Team, a fi rm that specializes in helping distributors become more profi table through strate- gic planning and operating effi ciencies. The fi rst 20 years of his career were spent working as a distribution execu- tive. Today, he is a regular speaker at industry events and spends much of his time coaching individual distribu- tion companies. For more information, call (503) 282-2333 or contact him by e-mail at Jason@Distributionteam.com. Also, visit the Distribution Team's web- site at thedistributionteam.com. How Informed are Your Customers? (More importantly, how informed are you?) Is it easier to sell deeper into an existing customer or go out and fi nd new customers for our products? If you have been around the sales game for a few years, you know the former to be true. Isn't it really embarrassing when one of your best customers asks if you can get a product and you have been stocking it for the past 20 years? The fact of the matter is we don't do a great job telling customers all the categories we have invested in. It's our little secret—it's only for sale if you ask. Take a hard look at the customers who are currently producing a positive contribution to the bottom line. This group also tends to be the folks that stay within our credit terms. Since this is only about 25 percent of the total customer base, the task is far more manageable. I recently started this process with a client of mine. In a fi t of frustration, he fi red the entire outside sales team. Having realized that this might have been a bit hasty, he is slowly creating a more focused outside sales program. How do you become most effective with a limited headcount? Start with the customers in your prof- itable group. In working with his marketing manager, we have begun to look at how many categories each of these cus- tomers are touching. We actually found a canned report in the system that shows sales by product category and several of the customers were touching fewer than 30 percent of the product categories. In many instances, the dollars in a particular category were so low that it shouldn't even count. This new information gave the sales team a direction. Why is the customer not buying in certain categories? Is the category outside of their target market? Is our pricing out of line? Do they buy the product from their brother-in-law? By just asking the questions, we will naturally generate activity. The best part of this work is that we will be generating activity in products we have already invested in. Jason Bader How Informed are Your Customers? (More importantly, how informed are you?) bottom line. This group also tends to be the folks that stay within our credit terms. Since this is only about 25 percent of the total customer base, the task is far more manageable. I recently started this process with a client of mine. In a fi t of frustration, he fi red the entire outside sales team. Having realized that this might have been a bit hasty, he is slowly creating a more focused