How to pick a winner?

Google

By Gary Peacock

As the excitement mounts for the Melbourne Cup, the horse race that stops Australia, many people are trying to pick winners. In horse racing you win, not by listening to what the owners say, you win by looking at form: what the horses have done.

“The spirited horse, which will try to win the race of its own accord, will run even faster if encouraged.” Ovid.

In business, with your customers, how do you pick winners? By winners we mean profitable and loyal customers. Similar to horse racing don’t listen to what customers say, you win by watching what customers do. In some markets when a customer says they want to partner with you, what they mean is they just want to reduce your prices to take some of your margin. If they really wanted to partner you would see some specific actions to show they were serious about building a stronger and deeper business relationship. Later we will explain what you should see if your customer is serious about being a partner.

Our first tip about picking winners is a technical one: segment your customers.  By segmenting we don’t mean what the marketing department means— segmenting using customer demographics and customer needs. We mean segment customers by their relationship with you.

We use a simple method: how important is the relationship with you to them; how much value do you deliver to them, as they see it. This gives us four possible segments:

Relationship (to them)	Value (To them)	Segment
Low	Low	Transactional
Low	High	Technical
High	Low	Relationship
High	High	Partner

To pick winners, once you segment your customers you must treat them how they want to be treated. Some people think winners can only come from the Partner segment. In our experience, winners can come from any of the four segments.

For the sake of brevity, we will discuss just two segments. Transactional customers are the toughest. They want your lowest price and fastest delivery. Nothing else. Spending time on relationships or spending time sharing technical information is wasting time and wasting money.

If you want to pick a winner with a Transactional account: make it as easy as possible for the customer to do business with you. Find ways to automate transactions and take all possible costs out of the relationship. Spend less time and money with them. Automate the transactions in ways which build barriers to your Transactional customer swopping to another supplier. Can you create unique connections to their systems and processes?  

Some of your people will resist automating transactions and talk of moving this account to another segment. In our experience, it is tough to move a Transactional account to another segment. If you are going to assign time, money and people to moving an account from one segment to another, then try to move a Technical account to a Partner account. It’s easier and more likely to succeed.

So, how about customers in the Partner segment? Typically, your staff want to put more of your customers in the Partner segment than belong there. The killer question is: how much of their time, money and people are they investing in the relationship, compared to your company? If you have been investing far more in the relationship for more than two years, then this customer does not belong in the Partner segment.

If your customer is serious about being a Partner, then what should you see? Over two years you should see more of their people, more senior of their people attending more meetings to discuss more strategic issues in their business.  If you see this, you have picked a winner.

For more insights into segmenting customers look at: http://www.gordianbusiness.com.au/strategic-account-management/ or contact us on +61 2 9450 1040 or email gary@gordianbusiness.com.au. Please share your comments below and subscribe at the top right of the page.

How not to run a two day strategy session [Boring your people to Death by PowerPoint]

Google

By Gary Peacock

An envelope arrives, a letter inviting you to a two-day strategy session for your department.  What’s your reaction? Based on our experience, you will probably groan. One reason you will groan is too many senior managers think a strategy session means locking you in a room for two days and bombarding you with PowerPoint slides.

“I have made this letter longer than usual, only because I have not had the time to make it shorter.”

Blaise Pascal

When we ask senior managers why they do this? They explain it is vital to make sure the managers create strategy that fits the broader company strategy. And of course we cannot disagree with this objective. However, let’s pause for a moment and ask a question…what is one of the biggest challenges in strategy? The biggest problem is implementing strategy.

If you accept that implementing strategy is often a big problem, then let’s consider another question. To implement strategy better, does the audience need more information or does the audience need more motivation?

In our experience, it’s rare an audience needs more information and it’s common an audience needs more motivation. When we say the audience needs more motivation; they are usually interested in the strategy, but if we bombard them continuously with PowerPoint then the audience are not involved.

Let’s assume as a senior manager you bring along the strategy and all you want is to get the group involved in implementing strategy. How can you do that?

First, create a strategy on a page or on a single slide. When we say a strategy on a page, we don’t mean a page of tiny 8 point text that is unreadable, (at least unreadable without binoculars.) We mean a reasonable amount of text in a readable font, ideally no smaller than 14 point. It takes time to get a strategy on a page. But it will save your employees far more time and will increase the chances your strategy will be implemented successfully.

[ASIDE: Of course, some managers will argue they cannot fit their strategy on a page.  May we diplomatically suggest that perhaps this is not a strategy? It might be an action plan or a list of objectives or something else. But it is not a strategy.

A couple of quick elements that should be part of the strategy:

What will the company not do? What will the company do?

Unfortunately, too many strategies do not clearly define what you will not do. So, some company’s strategy is to satisfy as many kinds of customer in as many ways as possible. But this is not a strategy because it does not give direction to employees and it does not help employees set priorities. That’s enough of an aside, back to the process.]

Second, ask the participants: What are the biggest challenges to implementing your strategy? Get the brains in the room to think about the challenges. Give the participants 30 minutes to work as a table and produce a flip chart answering the question.

Third get them to work as a table and create action plans to overcome the challenges.

A good strategy session should be where the participants spend at least 75% of the time discussing and debating between themselves and at the most 25% listening to the senior manager present.

Do this and you will find you have a motivated and energised group who are ready and willing to implement your strategy. Don’t do this and you will finish with sleepy, goggle-eyed participants with no commitment to your strategy. In business and in strategy, you have choices and consequences.  May you make good choices and enjoy good consequences.

“Nobody ever did, or ever will, escape the consequences of his choices.”

Alfred A. Montapert

For help planning and delivering a motivating strategy session take a look at http://gordianbusiness.com.au/persuading-for-results/ or contact us on +61 (02) 9450 1040 or email gary@gordianbusiness.com.au. We welcome your contribution so please comment below and subscribe to our blog at the top right of the page.

Beware of Wolves in Sheep’s Clothing

Google

By Gary Peacock

Are you interested in improving your Strategic Account Management?

Yes, you are interested in Strategic Account Management. So, then you start to browse the internet and look at websites and potential companies to work with. Companies to improve your current processes or to implement a new process. Beware of companies who I would describe as wolves in sheep’s clothing.

"Well, wolves will pretty rarely hunt. You're vulnerable if you're on your own or injured."

Bear Grylls

 So, what does a wolf in sheep’s clothing look like? Well these are companies whose products and services are just to sell products and services.  In short, they are sales training companies who have changed the titles of their workshops and consulting, from sales to Strategic Account Management. Simply renaming their services to take advantage of an opportunity in the marketplace.

If someone from one of these companies was beside me as I write this blog, they would argue with me. Typically, they would say “Gary, the skills of selling are useful in Strategic Account Management.  That’s why we can offer services to help our customers with Strategic Account Management.”

There is a nugget of truth in this argument. Part of Strategic Account Management is selling your ideas to your strategic accounts and selling your ideas to your organisation to get resources for your strategic account. So, some selling techniques are useful, for example asking good questions and building credibility with the person you are trying to sell an idea to.

However their approach is simply using selling techniques under a new name. This flaw is serious but not fatal. However, there is one fatal flaw to buying from a wolf in sheep’s clothing. When you examine their approach carefully, you will see they frequently set sales targets for products.  Also, they frequently talk about products and pitching products. So, their approach is simply high level sales training to sell more products. In short, “this is how you get access to the CEO level to sell more products or a bigger bundle of products”. This is not Strategic Account Management. This will not create more strategic relationships. Typically, a competitor will come in with a bigger discount or bigger rebate at the end of the contract period. So, you can lock in a strategic customer for a while. But competitors can and will be able to wrestle the customer from you.

So, if this is not Strategic Account Management, what is? Well the answer is surprisingly simple. Strategic Account Management is a process not designed to sell more products but to improve the business results of your strategic customers. Just so we are clear, it is not about more sales of your products and it is about more results for your customer.

The most successful Strategic Account Programs are built on this foundation. To build a deep strategic relationship, you need to invest in improving your strategic customer’s results. If you do this for 12 to 18 months and do not gain an obvious benefit from the work you do, it transforms the relationship. Working on improving their business results creates a deep strategic relationship that competitors cannot easily break with bigger discounts or bigger rebates.  This transforms the relationship because the customers view changes:

• From “ I think this is just a new technique to sell me more products”
• To “I think this supplier is serious about helping me improve my business results in ways that are not just going to increase their sales. I wonder if they can help me with…”

Perhaps this can be summed up best by quoting part of a conversation between a customer and a strategic supplier at a dinner attended by executives from the two companies.

“We see you as a partner not just a preferred supplier.”

“What’s the difference?”

“With preferred suppliers we meet with them long enough to get the biggest discounts. With a partner like you, our executives share our business problems and opportunities with your executives. Then we listen to your market knowledge and work with you on your ideas for new businesses to create more revenue and profit for us.”   

If you want to be like this company and transform your relationships into strategic relationships, beware wolves in sheep’s clothing. To find out more about Strategic Account Management click this link: http://www.gordianbusiness.com.au/strategic-account-management/

"That strong mother doesn't tell her cub, Son, stay weak so the wolves can get you.
She says, Toughen up, this is reality we are living in."

Lauryn Hill

We would love to hear your views so please add your comments below and subscribe to our blog at the top right of the page. Or contact us to discuss how we can help on +61 (02) 9450 1140 or email gary@gordianbusiness.com.au

Getting Past No

Google

By Gary Peacock

Are you facing some of your toughest negotiations? Are you constantly being asked to drop your prices? Are you finding it ever more difficult to get past “No”?

As business conditions remain tough, some of our negotiations get tougher. Our competitors are hungry for business and will aggressively drop their prices. So, more often we will face customers saying NO.

Some businesses will immediately drop their prices. This reminds me of a story told in Gavin Kennedy’s amusing and excellent introductory book ‘Everything is Negotiable’, originally published in 1982 and still in print. Explorers on a sled in the arctic are being chased by wolves and they decide to throw the wolves an Elk steak to stop them chasing the sled.  When they throw the elk steak, the wolves stop to eat it. The explorers think that has solved their problem. However, 30 minutes later the wolves are back chasing the sled even more enthusiastically.

In business, if at the first no from a customer we drop our price then we simply teach them to say no more often. Just like the wolves, they will be chasing our sled again looking for more Elk steaks, more drops in price.

We will talk in another post about the importance in presenting our value in ways to prevent price objections, in this post we will suggest a question that can broaden the range of negotiating variables beyond simply price.

A very powerful question to ask is; under what circumstances could you accept our offer? Typically, the first response of a customer is to say “only if you lower your price”. So, be ready with the amended question; Apart from price, under what circumstances could you accept our offer?

What else could you include in the package that would be of value to them to accept your price?  Expect the customer to go quiet, that’s the sign of a good question; they are thinking.

Be prepared to challenge them; is there nothing else we could do or add into the package? Sometimes they will say, you probably could not do this but if you could include X then we might be able to accept your price.

This question can transform the negotiation: from haggling on price to finding other sources of value for your customer; from fighting to finding joint value. For help in showing your customers the value of your proposition then call us on +61 2 9450 1040. Please share any thoughts you have on this below and subscribe to our blog using the RSS feed at the top right of the page.

How well are you managing your Strategic Customers?

Google

By Gary Peacock

In many of today’s markets growth is becoming slower. In slow growth markets competitors need to steal a market share from you. The first place they will look is your Strategic Customers. How well are you managing your Strategic Customers?

A quick test is during your 90 day account reviews: to ask two questions?

1. How many actions in the account plan are going to make a difference to the customers’ results and your results beyond this financial year?
2. How many actions are about more than your products and services?

The first question will show you if you are only being tactical—focusing on delivering sales this year. Or if you are also being strategic— building the relationship by doing some things that will cost you this financial year but produce a better sales result for you and your customer in the next financial year.

Some activities that support this year's sales is fine. However, too often and too soon, the tyranny of today drags Account Managers from investing time in activities that will pay off next year.  Not investing this time will soon condemn your relationship to being transactional.

The second question shows whether your Account Managers are simply salespeople with a fancy title. If the actions in the account plan do not include actions that are about more than products and services then you are only being tactical—focusing on delivering sales this year.

The best Strategic Account Managers bring ideas and insights to help their Strategic Customers improve their results without any immediate return in increased product sales.  Why? Simply because this is the biggest investment in the strategic relationship you can make. If your Strategic Customer sees you doing this and sees there is no obvious return for you, then they know you are serious about building the relationship.

Some simple examples:     

• Getting your HR manager to share with their management team ideas for improving their employee satisfaction
• Letting your Insurance manager share his experience of making a claim for a flooded factory
• Getting your IT manager to share her experience installing SAP so the customer can learn from your experience

None of these will sell you more products and services; all of these will build your relationship which will sell more products and services.

Too often, Strategic Account Programs drift towards becoming product sales programs and away from building the strategic relationships.  Building strategic relationships will build more sales beyond this financial year and will build barriers to keep your competitors out.

So, during your 90 day account reviews ask these two killer questions.

1. How many actions in the account plan are going to make a difference to the customers’ results and your results beyond this financial year?
2. How many actions are about more than your products and services?

If you need help to focus your Account Managers on their strategic relationships then call us on +61 2 9450 1040. We welcome any comments you want to share. To receive our blogs directly to your email then subscribe to the Gordian blog at the top right of this page. Simply add your email address to the box, click the button and you will receive all future Gordian blogs direct.