Marketing Missiles v1.2

Service-Dominant Marketing has a series of interesting position papers in it each of which poses thought provoking concepts both past and present. Let’s look at market coverage.

We started in the equipment world with salesmen; there were rarely any women, each of whom was given a geographic territory – “These are your counties.” The salesmen then went dutifully about their work and called on customers and sold machines. The problem with this method of market coverage is that it is the salesman that determines who will be covered and who won’t. The employer doesn’t even factor into it. I know many of you will be saying that the sales manager will have something to say about that but you also know that I am right.

Pioneer Hybrid Seeds, before they were sold, radically altered the market coverage approach when they went to a customer list for market coverage. This was covered in a Harvard Business School case study in the 1990’s. They found terrific success when they focused on relationships of the salesmen and the farmers. Sales increased dramatically and the company ultimately was sold for a hefty premium as a result of their market penetration and sales results.

For some time now we have had product support salesmen as well; people selling parts and service programs and supporting the customer in their needs and wants. Unfortunately the same pattern was followed as with equipment salesmen with a small kink in the approach. The salesman was required to bring back a quotation to prove to the Company that in fact they had influenced the purchase. As you can imagine this led to all manner of tricky behavior to get paid, rewarding the Company with exactly what they were trying to avoid.

Over time the market was segmented, more on that in a future blog, and the salesmen were given specifically named customer accounts to cover. Finally we got to the point where the salesmen could concentrate on developing a relationship with their customers. The number of customers assigned was rarely more than 150 although there are exceptions with a smaller urban territory. The other factor that was taken into consideration was the number of machines. The number of machines was limited to 500 but this too had to be made smaller depending on the type of machine and the application. After all in the parts and service world the machine is the customer. Many dealers who have followed this approach, assigning customers to salesmen with limits placed on the numbers of accounts and machines are reaping terrific results. Market capture rates are higher as is customer retention. We will continue this dialogue in the next blog. The time is now.

Marketing Missiles v1.1

Last year I was introduced to a book on marketing “The Service-Dominant Logic of Marketing” by a friend in Asia. This book is a compilation of a series of papers in academia on marketing both from a historical perspective and currently. This evolution has gone from marketing commodities to now we are in the age of marketing services and relationship are prominent as is quality. This should be right up the alley of thinking operations people.

Marketing is not some flashy sales process ort advertisement. It is not a spiffy campaign. It is about the development and maintenance of relationships in the supply chain and with the ultimate customers.

Those of us in the Product Support arena live this every day. We are trying to satisfy customers. Or delight depending on your mood. This is about the magic of the duties that our “heroes” perform every day – the people with whom the customer interacts. This is the drudge of the day to day operation. It is not sexy and at times it is hard to stay motivated. But it is akin to being married for three or four decades. You now know what love is on a very personal level. The parts and service operational personnel have to perform each and every day – with a smile in their voice and on their face and sometimes having serious difficulties; the backlog of your service work or the backorder of a critical part.

That is what Service-Dominant Marketing is all about. We will explore this together in more detail in missiles to come. The time is now.

Marketing Missiles v1.0

I wonder how many people understand marketing in the Product Support world; what is that? Is it advertising or sales campaigns? What is it? Well my hope is that through this blog we can have more people think about the marketing of parts and service.

I will start with a definition of marketing as “the selling of products or services – the business activity of presenting services in such a way as to make them desirable.” In the case of parts and service I question the word desirable don’t you? But it is basically the sales of products or services.

I will pursue the basics of marketing – the 4 P’s. The “market” coverage subject as it relates to Product Support Salesmen and all that entails. I will address market share which is the ultimate measure of success in the marketing world. We will discuss customer retention and how we can influence that in our operating world. In other words this blog is intended to cover everything and anything about marketing parts and service. I hope you will join me on this voyage. The time is now.

Data Mining – the last time we spoke

One of the advantages you have is your data and your information. It is a shame not to use it. With a good VoIP  and good data one of the first things I would show on the screen, as the phone rings, is the purchase history of the customer. What is the business volume this year, this year to date, last year, last year to date, transaction size this year, transaction size last year, number of contacts by you to the customer, number of contacts from the customer to you. Date of last sales transaction by category and date of last contact with you. Do you think you could do something if you had that type of information each and every time that either the customer called you or you called the customer? The time is now…

Data Mining – Statistics

With all the data available to us and the lack for many of us of acquiring information, we should look at the branch of Mathematics called Statistics. With statistics you are able, amongst other things, to predict events or activities. It is all based on probability theory. I won’t bore you with the details of probability theory other than to say that the closer together the last two similar transaction or similar activities are the higher the probability that there will be a repeat transaction or activity in the future. And also the further apart the last two similar transactions or similar activities are the lower the probability that there will be a repeat transaction or activity in the future. This is the foundation of most inventory management system theory.

What I look forward to is the ability to do probabilistic planning for sales transactions. For instance, it is a truth that the larger the dollar value of the last transaction the higher the probability for a future sale and the lower the dollar value the lower the probability. This should help us in any number of ways. Sales call management and scheduling for instance. There are starting to be tools available to us that allows this type of data mining to determine the probabilities and start us on the path of “planning” activities in the business. This is very exciting to me as it opens a series of doors that will allow us to control our businesses better. In the end that means better customer service which means higher sales and profits. The time is now…

Books in the Bin

Hi I will be writing a seeries of books in the coming years on subjects near and dear to my heart.

Several of you have commented that books would be more of interest than a monetized blog.

parts

  1. instore selling
  2. inventory management
  3. warehouse layouts and design
  4. backorder analysis
  5. pricing as a marketing tool
  6. purchasing
  7. metrics and dashboards
  8. instore merchanidising
  9. call centers
  10. the internet as a tool for a parts department
  11. teleselling
  12. technology as a process foundation

 

Service

  1. shop floor management
  2. field service
  3. flat rate systems
  4. service administration
  5. job flow and scheduling
  6. the internet as a tool for a service department
  7. inspection programs
  8. maintenenace programs
  9. service sales programs
  10. pricing and standard charges
  11. metrics and dashboards
  12. technology as a process foundation

 

Product Support Selling

  1. parts and service Selling is a science not an art
  2. territory management
  3. territory theory and design
  4. commission and compensation systems
  5. customer business management for parts and service

 

Marketing

  1. business development for parts and service
  2. market segmentation
  3. customer retention

 

management

  1. the balanced scorecard as a management tool
  2. activity-based management for parts and service
  3. personnel leadership

Selling Skills Part Three

Last time we talked about the six steps in selling. Let’s dig a little deeper into the first one.

  1. Research

Within research there are three more points to cover.

a)      The Customer

b)      The Products of Service

c)       The relationship.

Customer: For researching the customer we need to know everything and anything that might be significant. In the Capital Goods Industries this means specifically the equipment that the customer owns. The make model and serial number of every piece of equipment; the hours of use of each unit and the applications; any special attachments or configurations on each unit. This is what determines the opportunity. The consumption of parts and service is dependent on the hours of use and the application.

Then we need to have a complete customer profile; family circumstances and birthdays and anniversaries, hobbies, etc. A company profile; in what industries they work (SIC codes); type of business, years in business, number of employees, influential, etc.

The Products or Services: This is the full features and benefits area. This has become a lost art for many people in sales. I think this is extremely important. It allows you to separate yourself from the competition. It allows you to sell value if you have this knowledge. I also think it is important knowledge such that you will be able to “position” your offering rather than making a presentation which can become stale and sound canned.

The Relationship: This is the purchase history of the customer with your company. What they buy and what they don’t buy. How the purchases relates to the potential – this for both parts and service.

With these three stages completed in Research we can move onto the second step in the sales process. Good sales people are diligent in their research. It makes a difference in their success. The time is now…..

Thoughts on Selling

Selling is as old as the hills. It probably started with Adam and Eve, and I am not sure who was selling to whom. People who are not involved in the sales profession are somewhat intimidated by the thought of selling. There is still a negative connotation to being a salesman for many people.  Imagine what the world would be like if there were no salesmen. What a thought that is isn’t it? So to better understand selling let me list the six fundamental steps in the sales process.

  1. Research
  2. Objectives
  3. Questions
  4. Benefits
  5. Objections
  6. Closing

Within each of these six elements there are several important steps – more on that later. As in life selling is pretty simple it is people that screw it up. The time is now…..

Selling Skills Part Two

Presentations in the world of parts and service sales are truly a lost art. Rarely does a Parts and Service Salesman go to a customer and make a presentation on a product or service that they are offering. Yet this is a skill and call type that needs to be developed if we are to obtain the proper capture rate for the authorized equipment dealers.

The first problem that I encounter is that there is a serious deficiency in features and benefits knowledge on what we are selling. How did this happen? I submit to you it is because we are in the order processing business more than we are in the sales business.  We will deal with this matter in more depth later.

The second is that we don’t know how to deal with objections. An objection is a huge signal indicating what it is that you as a salesman have to overcome in this discussion with your customer. They are telling you that there is something here that they don’t understand very well. You need to become adept at communications and show all your feature and benefits knowledge. One thing to remember is that the features are for you. It is the benefits that are for the customer so don’t spend a lot of time bamboozling them on fancy mumbo jumbo on fantastic features.

Finally is closing the sale. This reminds me of the high school dance at the gym. The guys lined up on one wall and the girls on the opposite wall. A boy walks across the floor to ask a girl to dance and returns in front of everyone having been turned down. Many salesmen have that image imprinted on their brain and they are afraid to ask for the order. Imagine.

Selling is pretty simple it is people that screw it up. The time is now…..

Market Capture Rates

Some of you have equated the labor efficiency blog with the actual market capture rate of labor. They are two very different elements in the business. One measures the performance of the supervision of the labor pool and the efficiency of a particular technician on a specific job or group of work orders. The other measures how much of the available market the dealer in question has actually obtained and maintained.

The market capture rate is dependent on maintaining an accurate and up to date machine population and the hours of work for each of the machines in the dealer territory. With the arrival of GPS on most current production machines this is becoming easier to maintain and to track. Older machines, however, still outnumber new machines in most geographical jurisdictions and as such this remains an elusive goal.

If we have an accurate machine population as well as the hours of work for each machine then we can calculate the market potential for both parts and service. This is an important step in the maturation of the parts and service management as we will be able to determine the successes of each of the store locations in a territory. We will then need to become much more professional and effective in our processes, systems and skills when we deliver customer service. The Manufacturers and your bosses will be able to measure objectively how well we do our jobs. I think that will bring a lot more attention to the skills and execution of the management and supervision in parts and service. The time is now.