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Get Your Price!
In 1996, John Treat went back to the drawing board. Recognizing his jan/san distributorship mirrored every competitor in his market, he drew up a new business plan that over the last 14 years has not only helped revitalize his company, but now differentiates it from the traditional jan/san distributor — by focusing on more than just moving product.
"With the name Treat's Solutions, you have to do more than sell product," Treat says. "Everyone sells product. You need to look for ways of entertaining the customer."
Treat has transformed his sales staff from mere order takers to customer consultants.
"Our sales staff doesn't need to take an order," says Treat, president and owner of Oklahoma City-based Treat's Solutions Inc. "They're working for the customer by teaching, training and educating everyone everywhere they go. Their job isn't to sell product. And that's totally different from what we've always done."
By taking on this newfound selling approach, Treat's Solutions' focus has gone from the yesteryears of preaching products and price, to now truly identifying a customer's deeper needs and buying motives.
"Everybody's got good product. So the only way I'm going to interest a customer nowadays is by providing them with ways I can save them money in labor, time and energy, and productivity," says Treat. "You can't go in and say 'I've got a toilet bowl cleaner for $3 on sale and I can beat anybody's price.' Unfortunately, that's what a lot of distributors are doing. They're still talking price and product."
By preaching product and price, all distributors are doing is getting orders by having prices lower than their competitors. Continuing the "price and product conversation" is setting distributors up to compete in today's race to zero, where the distributor with the lowest price gets the business. In this race, however, no distributor is a true winner. That's because lower selling prices means lower profit margins.
Today's distributors can no longer focus solely on gaining business by enticing customers with price. The conversation should also go beyond talking about products themselves, too. The conversation has to be centered on the value each distributor can offer customers.
"Oftentimes when a customer is demanding a lower price it's because they don't perceive your company as bringing them value," says Clayton Anderson, vice president of A&G Supply Ltd., Vernon, British Columbia, Canada. "They don't see you as anything but product and price."
Getting customers to change their perception ofdistributors as mere box-movers and more of customer consultants starts by providing value. Selling value is not a one-size fits all proposition. In fact, each customer account is different and distributors must be prepared to demonstrate their worth to every individual client.
What Is Value?
To steer the conversation off price, jan/san distributors are quick to tout their value-added services. Most distributors offer product and procedural training, on-time delivery and "unparalleled" customer service. But because these traditional service offerings don't set distributors apart from their competition, distributors are often faced with the conversation drifting back to price.
"Every distributor I have ever worked with claims they give better service than their competition and that they have better people," says Dave Kahle, expert sales coach and the president of DaCo Corp., Comstock Park, Mich. "Now every distributor claims that. Now that tells me somebody's got it wrong. If I talk to you and I talk to your competition, he's going to say the same thing. So there has to be a realistic approach to what is value to the customer, what does this particular customer value?"
Real value is determined by first finding out what exactly a customer's needs are. The more distributors can discuss a customer's particular needs and the solutions that they offer, the less distributors will find themselves negotiating on price.
"You have to ask customers questions. What are your goals and objectives? What are you trying to achieve here? What are some of your challenges? And then, rather than taking a cookie-cutter approach, you have to customize your service offerings to meet those needs," says Anderson.
For example, A&G Supply recently had a prospective customer at a food processing plant that was looking to maintain a high system of quality — productivity and cleanliness — within the facility, but price initially stood in the way.
Knowing that price was a potential obstacle, Anderson and his sales associates used a consultative selling approach to steer the conversation in a different direction. By sitting down and having a roundtable discussion with the customer, A&G was able to pinpoint specific needs and tailor services to address them.
This particular facility needed to prove to its own customers that food was being processed in a clean and sanitary environment. A&G developed marketing materials that highlighted this "commitment to cleanliness." In addition, managers were trained on how to demonstrate cleaning procedures that helped boost worker productivity. At the end of the conversation, price was no no longer part of the discussion.
"We were really able to differentiate ourselves by demonstrating that we can help them go after their needs and the needs of their customers through the support we provide," says Anderson.
To get customers to look beyond price, distributors should be developing value-adds that their competitors aren't offering. For example, most distributors offer product training. Take this a step further by conducting follow-up audits.
At Treat's Solutions, the company currently services an account of 77 grocery stores in Oklahoma. Once every quarter, the company's sales reps visits each store and will grade them. That information then gets turned over to the CEO of the grocery store chain for review. After the audits are complete, Treat's reps determine where training and other services are needed for each store.
"It's a constant communication of what we're doing," says Treat. "We bombard them with so much information about their business. It's not about our business, it's not about what we sell, it's about how their customers perceive their stores to look and how they see them to look and how we see them to look."
Understanding each individual customer's wants and needs and then tailoring a value proposition goes a long way in not only showing a customer that the distributor truly cares about their business, more importantly it helps distributors get their price.
Relaying the value message to customers can often fall on deaf ears. If distributor salespeople are not speaking to the proper decision makers in an account, their sales pitches get cut short by customers asking 'What's your price?'
In most end user companies that jan/san distributors service, upper management such as business owners, business managers or the superintendent of schools are interested in the value and the efficiency that a distributor can offer their business, while middle management positions such as the director of purchasing are more concerned about product and price, says Lou Volpe, president of L.A. Volpe Consulting Co., Tucson, Ariz. Front line workers, too, he says, are more concerned about a distributor's price and product than anything else.
"If all you're calling on is purchasing, they're concerned with price," says Anderson. "If you penetrate the organization above that level, and you're calling on upper management depending on the size of the entity, if you're calling on the owner, then it's easier to have a different discussion because the owner or upper management isn't concerned with the price of their cleaning supplies."
Most distributor sales reps still call on the director of purchasing, whose job is to get the best price, or the frontline workers in accounts. That way of selling is still working, but the results are not exactly what distributors are looking for, especially in a time where customers have been forced to operate with strict cleaning budgets.
"Today's salespeople need to change their paradigm, says Anderson. "Salespeople not only need to change their approach, but who they're calling on in an organization."
Distributors who are able to sell customers on value and not price have already changed the way they go in to prospective accounts or existing customer accounts. At KSS Enterprises, Kalamazoo, Mich., the company's sales reps are encouraged to develop relationships at the highest levels in customer organizations, says Ed Stasiak, the company's vice president. For example, if it's an industrial account, the sales reps will meet with the owner of the company, while in an education account, the sales reps are encouraged to meet with the superintendent or the business manager. Stasiak says sales reps also must proceed with caution.
"Obviously you have to be careful not to overstep your boundaries of a facility director or other decision makers," says Stasiak. "We usually will ask for permission if it's OK for us to approach maybe the boss or their boss's boss."
Getting to sit on the other side of the desk from higher-level executives in a customer account takes time. In fact, Treat, whose company focuses heavily on the education market, says it took his company nearly a decade to build a strong enough relationship to be able to bypass middle management and go straight to upper management in school districts.
"In year one and two, we use to go around and show the custodial directors what we can offer them," says Treat. "In year three, four and five, we showed some of the financial guys what we tried to do. Then in year 10, we started showing the assistant superintendents. In year 11 and 12, we started showing superintendents. In the last two years, we started showing school boards."
Today, Treat's Solutions is reaping the rewards of climbing the ladder in school districts and other accounts. Instead of once having to lower product prices to earn business or keep customers, the upper management has entrusted Treat's to help meet their budgets and boost productivity.
"Customers understand that we're helping them deal with their budgets, not price and product," says Treat. "We're detailing how much their budget could be, how much we can show their budget should be, how many people they need to clean and how many they have overstaffed or understaffed."
Like Stasiak, Treat says distributors have to build enough trust with customers to be able to continue penetrating the ranks. However, presenting to upper management in an account requires distributors to have the right personnel in place, who are properly trained. Unfortunately, proper training is something most distributors have not offered their salespeople.
"Those distributor salespeople that go to upper management and say 'let me tell you about my company, let me tell you about my training, let me tell you about my product line, let me tell you about my service,' they'll be stopped within three minutes of the conversation and the person on the other side of the desk will say you really need to talk to our purchasing agent and they will be sent down," says Volpe.
But if a distributor can go into top management with a keen understanding of a customer's needs and concerns, they are more apt to win over the customer than other distributors who walk in with their product hat on. One key phrase Volpe suggests distributors use is "I'm not here to talk about product unless you really wanted me to."
Instead, Volpe suggests distributors begin by detailing how their company is different from other distributors and how they can bring real value to their business.
Gaining access to upper management is only the beginning. All the hard work of getting to that point is lost if distributors are not constantly monitoring their value-adds and making sure they are still meeting each individual customer's needs and providing real value.
"We constantly have to measure what we do," says Treat. "Measure if the customer likes us and don't let our sales force tell us how good we are. Measure our sales force, grade our sales force. Ask our customers how we are. And when we do training, make sure our customers grade us and tell us how we are doing. That information tells us where we need to improve. And there's always room for improvement. The way we improve s by asking the customer how they view us as a company."
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