STAFDA Technology Consultant Steve Epner

Make 'em sweat! Sales is a contact sport."The economy stinks. Business is in the tank. Margins are under greater pressure. Everyone one wants a deal - just to buy anything. Making money is near impossible. We just gotta hold on and make whatever deals are necessary until this recession is over."

Does this sound familiar? Is it real or is it just the excuse of the day?

Steve Epner, STAFDA Technology ConsultantI think you hear it mostly from those who are not doing well. The winners keep their success quiet. “Why generate competition when it is not necessary. As long as the other companies’ sales forces want to fall back on the old tried and true excuses, let them.” That is what I hear from the best companies in many different verticals.

Why the difference? There are a number of reasons. The first is attitude. The best companies recognize that excuses are like arm pits – everyone has a couple and they all stink. As long as management accepts the standard excuses, then the sales team has no worries. Just keep up the old whine and they will leave you alone.

Maybe too many of our sales forces got lazy in the golden years when the orders came to you. Selling was mostly saying thank you for sending money. You won some and you lost some. But it did not take much effort. Overall, life was very good.

Today, top performing companies require an attitude of “we can win in any economy” from their sales team. They do not give up. They do not give in to every pricing request without a fight. They do not have to give away the store just to get business in the door. Their attitude is one of success, not failure.

They know what their products are worth. They know what a customer is worth. They are willing to define a good customer as “one we make a profit on” and are willing to increase revenue on target accounts or fire customers who are not profitable.

Automated ERP systems allow every business owner to rate all customers.
Everyone can be evaluated. It is relatively easy to calculate (and apply) the cost of slow pays, returns, special requests and special services. Applications can generate a “report card” for every trading partner. Not only can you know what they bought, but what they are worth to the bottom line. It is possible to assign costs to special handling and every support activity that is provided (many at no cost – because that is good customer service).

Then it is just a matter of discipline to charge a fair price for the benefits provided. If a customer is not wiling to pay for better service, higher quality, and support, let them go elsewhere – or change the way you do business.

It is appropriate to set product pricing based on what it costs to service a customer. One of my clients took the lowest 10 percent of customers based on gross contribution to gross margin and changed the rules. They were only allowed to place orders online. They could not place a special order and could buy only what was in stock. Everyone had to pay by credit card (no invoicing), accept standard shipping, and got a 10 percent increase in price.

The sales force predicted all of those customers would leave. After six months, not one of the affected customers left for another vendor. Interviews with members of the group proved that they were not buying due to price, but due to service, availability, responsiveness, and quality.

The second biggest difference you will notice in the winners is they hold people responsible. Measure how everyone is doing. Set goals that are based on reality, but that are a stretch. Require new accounts, require greater penetration of existing accounts, and require higher gross margins. Too many people try to tell me it cannot be done in this economy. My answer is: “Believe what you want, but please get out of the way of people who are doing it.”

Every week, take the sales results for every salesperson and post them – for all to see. Not just the sales manager, but everyone that works with sales; inside and outside sales, support and customer service. Throw in purchasing, the warehouse, and accounts receivable for good measure.

It is amazing how the fire will get lit when people are held accountable – especially in public. Top performers will shine and poor performers will have no place to hide. As Mike Marks says, everyone will know who is champ of the camp and who is chump of the dump. The chumps need to be careful because if they do not improve their performance, they will be gone. Then management will have the opportunity to replace them with “A” players who will go out and fight to be on top of the list.

Third, the winners control pricing and margins. I just came back from an executive forum that looked at using statistical models to do strategic and more consistent pricing. Statistics and other analytical methods are used to consider the sensitivity of products and customers; to find where companies are giving away margin they should be keeping. It is amazing how many companies let salespeople charge a tiny customer a lower net price than a huge customer – or a lower price on a low-sensitivity product – and never get penalized or even asked why?  

Smart companies today focus discounting on the most sensitive products and customers; and develop a strategic pricing architecture to extract premiums on the less-sensitive customers and products. They know that pricing has the highest flow-through rate to earnings of any profit lever, and they manage it as such. Their profitability reflects it. They are the companies that are growing in this economy, acquiring those who can’t or won’t get it.  Which do you want to be?

Computer systems today can provide all of the data necessary to whip a sales force into shape. No matter how old and stuck in the past, given the right motivation, everyone can do better.

I can guarantee that every reader (manufacturers and distributors) who does a study of their pricing over the last 12 months will find that significant dollars have been left on the table. Sure, there are some areas and some companies that cannot make a profit because of the type of business they are in, but those companies are few and far between.

This is not a sales pitch, but I am so confident that there are profits waiting for management to wake up, that I invite you to call me about a fully contingent consulting assignment. If you are willing to provide detail sales data and consider requiring responsibility from your sales force, call me. I guarantee you will not be disappointed.

Forget the old excuses. Get into the new reality. There is plenty of opportunity out there. All you need is a willingness to change the rules of the game. If you are willing, you are guaranteed to make more money. CS

STAFDA business technology consultant Steve Epner is the founder of the Brown Smith Wallace Consulting Group and has been appointed Innovator in Residence by Saint Louis University. You can reach Steve at 314-983-1214 or by e-mail at