Delivering for Best-in-Class Wholesaler-Distributors
October 25, 2018  |  ByJ. Michael Marks, NAW Institute for Distribution Excellence Fellow

How frequently should sales reps call on existing customers? It’s a good question, because most distributors we’ve worked with are investing $75 or $80 per sales call once they account for all expenses associated with hiring, training, managing, transporting, supporting and compensating an outside sales rep.

In some ways, though, this question misses the mark by assuming that outside sales reps should regularly be visiting existing customers. It’s time to rethink how you go to market. As you consider how to allocate your most expensive resource — outside sales reps — challenge that assumption by asking yourself these questions:

1. What are outside reps typically doing during these visits?

You may think your salespeople are spending most of their time out in the field disrupting the competition and making new markets, but in my experience, most sales reps are market-servers, not market-makers.

In our research, we’ve found that 95% of what customers buy from distributors they have bought before. In most cases, a salesperson is not actually selling to a customer; he or she is merely helping the customer buy by fulfilling a transaction. Is this the best use of your outside reps’ time? Or could these transactional tasks be completed by a lower-cost function such as inside sales or customer service?

2. Where are reps going?

Is there potential for growth in the accounts your reps typically visit? Are they currently buying from your competitors? Can you offer them value that will position you as their preferred supplier? It’s true that your largest accounts may have potential to become even larger, which is why distributors’ sales teams have traditionally focused on them. But the same amount of potential and more may exist in accounts that start off much smaller.

While some purchases may be one-offs from small companies or individuals, others may be the result of a failure by a larger company’s previous supplier: a golden opportunity for your rep to swoop in and save the day. The more you know about your target customers’ potential, the more likely you’ll be to get a worthwhile return on your sales investment.

3. How and how often do customers want to contact you?

To maintain relationships with customers with little to no growth potential, sales call frequency should be defined by the customer. Often, when we do a focus group with a client’s customers, customers say they don’t want to see a salesperson unless they actually need to see a salesperson.

Customers should also define their preferred communication channels. Some customers may prefer to see reps in person, but others may prefer to get the help they need via phone, chat, etc. Finding out what their preferences are makes it easier for them to contact them in a variety of ways, reducing your cost to serve in the process.

Allocating your sales force’s time for the best ROI isn’t as simple as finding the right number of times to visit each customer. It requires an understanding of your sales force’s true cost and your customer’s buying potential and preferences. And the willingness to make the big changes that will better align this expensive investment with worthwhile returns.

You may also be interested in reading What Challenges Are Distributors Facing?

To learn more about Mike’s approach to value creation in distribution, read his NAW-published books: What’s Your Plan? Smart Salesforce Compensation in Wholesale Distribution, Working at Cross-Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully and Value Creation Strategies for Wholesaler-Distributors. You can also reach Mike by visiting ircg.com.

The following two tabs change content below.
J. Michael Marks, NAW Institute for Distribution Excellence Fellow
J. Michael Marks, NAW Institute for Distribution Excellence Fellow J. Michael Marks is Managing Partner of Indian River Consulting Group (IRCG). He became a NAW Institute for Distribution Excellence Fellow in 2002. IRCG is an experience-driven firm that continues to focus on the wholesale distribution channel. Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, a vertically integrated electronics distributor. Prior to that, he was Director of Corporate Training and Development at Ducommon Inc., an industrial distribution company.
J. Michael Marks, NAW Institute for Distribution Excellence Fellow

Latest posts by J. Michael Marks, NAW Institute for Distribution Excellence Fellow (see all)

Leave a Comment:

ajax-loader