This is the 3rd article in the series of articles focusing on the drive and desire to deliver diversification in the office supplies and workplace sector.
In the first two articles, Adam Noble and Steve Gorham explored strategy and supply chain; with Steve focusing on one of the strategic themes - Managed Services and working with 3rd party supply partners. Adam, in next month’s article, will delve deeper into the second strategic theme of diversification; how this can be achieved through integrating new categories and services into your business by way of ‘managed investment’.
These two strategic options of ‘in house’ and ‘3rd party’ are business-specific, determined by the ability and desire to invest – financial, operational capacity/capability and resource/time – and, of course, customer specific; or, more accurately, target-market specific. What your customer needs and wants.
Both are valid and both will deliver a diversifying solution for any workplace supplies business. The third way, the most likely outcome in fact, will likely to be a combination of both; some ‘in house’ investment and some 3rd party partnerships. In fact, it is most likely that internal investment (in house) will follow 3rd party partnerships as one or more categories will evolve as the more successful ones. That will be determined by your customer reactions to your new diversified solution and will, as I’ve said, likely be target-market / customer driven.
Or at least it should be!
For now, in this article, I would like to look at some of the considerations that have to be made to ensure the crucial areas of ‘sales’ is explored.
Where do you start?
In simple terms you have two types of customers – those who buy from you (existing) and those who don’t (prospects)…yet!
Starting with your existing customers, the number one reason they do not buy additional categories from you is because they don’t know you sell it. Beautiful. Easy to address.
Or is it? We’ll look at that a bit more in a sec.
The other main reasons they don’t buy from you are – they don’t need it; the person you deal with isn’t responsible for it; they buy it from somebody else.
We can discard ‘we don’t need it/buy it’ straight away. Even the best salespeople in the world will struggle with making that work. Unless, of course, they don’t buy it/need it YET (that is another article for sure).
The two areas easiest to address, for existing customers, is ‘we didn’t know you did it’ and ‘we buy that from someone else’.
We didn’t know you did it
If you are a sales-led business (and I don’t mean you like sales revenues, I mean you engage with your customer via pro-active sales activities) then it is easy to tell your customers you now sell X and Y. Just tell your salespeople to tell their customers. It’s risk-free isn’t it?
Well, no it isn’t. Even though any business development model you like will tell you that selling new products to your existing customers is the most likely way to succeed when introducing new products and services, there is still risk.
The risk isn’t that the new product or service will not actually be bought by that customer, the risk is the potential to undermine the existing business you currently enjoy by winning that new category and then getting it wrong! Reputational damage if you like.
If I was to ask 100 salespeople why they don’t sell X and Y to their customers, I am willing to bet 80 or more will tell me it will be because they don’t want to risk losing the business they currently have.
So your journey to diversification nirvana is to start with the internal sale; convincing your sales people to sell it (or try and sell it) before any customer engagement takes place.
Motivating salespeople to diversify
I’ve always liked to simplify motivation into two simple extremes - greed and fear.
In this case the greed aspect is straightforward - your customer will buy more from you/us, and that will increase your sales revenues/target achievement/income potential/job security and so on.
The second, less obvious benefit, is the heightened customer retention potential. i.e. the more your customer buys from you/us, the less easy we make it for them to leave you for someone else.
And then there is the development potential – the more your customer engages with us on this new X area, the more receptive they will be to us when we talk to them about Y. And Z.
The fear extreme is less appealing but can’t be ignored. I am not talking about the ‘do it or I will fire you’ approach, the fear really is that if you don’t do this for your customers then somebody else might! In a world where diversification is developing apace (‘necessity is the mother of all invention’), it is only a matter of time before a competitor turns your customer’s head.
Do I have your attention?
Let’s assume for now that our salespeople are convinced (Sorry for the assumption, I only have so many words allocated – Michelle Sturmann will be kicking my backside if I go over…again!), let’s turn our gaze towards the customer.
When engaging with an existing customer, discuss the category as an independent solution/offering to your current categories. Do not bundle it into everything else… just yet.
The benefits of an enhanced ‘single source’ offering for the customer are customer specific. Be comforted by the fact they are likely to be at least receptive to single sourcing if they are buying hundreds of office products from you already. But don’t lead single source; use it as a back-up benefit if needed – single order point, consolidated billing, fewer deliveries, one-throat-to-choke etc etc; (it will also provide you with a great opportunity to remind that customer how much value you already provide).
Treat this new category discussion as an independent solution to begin with. The ‘I didn’t know…’ reaction is obviously married to ‘I get that from someone else’, and that someone else, if they are supplying that single category, is likely to be a specialist or established provider in that sector.
And you need to un-pick that!
Let’s assume the ‘I didn’t know you did it’ was delivered as a ‘thank the Lord you do it’ reaction. The usual suspects of existing price and service levels, product quality, lead times etc will most likely need to be matched. But not necessarily so.
This kind of ‘I didn’t know you did it’ reaction is great if its foundations are based on their current supplier not being very good (or not as good as you). Do the discovery part of the sales process again with just this new category as a focus as if this customer was a prospect and you didn’t know what you know about them.
(This is the reason I think the ‘discovery’ phase of the sales process is the most important part of the, normally, 7 steps is because, executed well, the customer or prospect will tell you what you need to do).
You may well only need to match some of the things the customer currently gets from their existing supplier if (a) their supplier is not good enough for them (b) they would prefer to get it from you. Find out which one it is. And why!
The other part of ‘I didn’t know you did it’ may well be married to ‘We get it from someone else we like’.
And that is slightly different.
Assuming (again) you have done the discovery phase well; you will now have to justify the switch to you. This is where you have options. One, match the current provider but with an emphasis on the benefits of single (consolidated) supply solutions (you!). Two, provide an enhanced solution -be that service or price (highly likely), or both.
Treating the new category as an independent solution to start is the only credible way to convince your customer that this is a solution they should explore. If you can successfully address the ‘match and/or improve’ solution you can then demonstrate the single source benefits as an ‘added value’ benefit - and ‘added value’ is always more powerful as a sales message.
Customer Perception – risk versus reward
Let’s move across the table and sit in the customer’s chair. Unless you have saved them from their current supplier’s inadequacies, they will see this as a risk. They will also be worried that the good relationship and supplier experience they enjoy working with you on will be undermined. They will also be worried that by moving business to you they run the risk of losing their existing supplier relationship.
I have some good news. The very thing that worries your salesperson about diversification is now your bestsales message. The risk you are taking.
The message is simple. Why would you try and sell them something new if there was a risk to undermining the business you already enjoy? You wouldn’t. Your solution is backed by your commitment and ability to deliver the great service you already deliver. Just on an expanded offering. You personally (salesperson) would not take that credibility risk. Nor would the business. Yes, you would like to enjoy additional business (of course), but this is a solution for the customer who already appreciates (and desires) consolidated supply solutions and benefits, and it is backed by your proven reputation, your suppliers’ credibility/reputation/guarantees, your integrity.
You need to provide both an incentive and a safety net for your customer. The incentives are obvious -service, price, supplier consolidation, improved processes (purchasing, operational, financial), et al. The safety net is in any assurances or ‘guarantees’ you can provide and/or their ability to re-source those products from elsewhere should you not be as good as you say you will be.
And this lends itself to which diversification categories you start to talk to your customers about.
I’ll try and explain.
The ‘thank the Lord (TTL)’ customer is demonstrating a pain point in their business. Start there.
(In fact, start there before you start selling anything, find out your customers pain points first - see Steve Gorham’s previous article - this is why we started this series of articles on strategy and supply chain. Those foundations are crucial to establish before we even start to look at the selling part).
The TTL customer is not taking much risk. They already have an issue, and you can solve it.
We like those types of customers. Find them first. Start with them. ‘If I could provide additional areas which ones would you like it to be?”
It may be specific to that business but If they have a category/supplier issue that is solved by your offering, perhaps your other customers do too? Talk to them next about this category. It may be a wider issue and could well be that diversification category that takes off first for you.
The ‘We use another supplier….and we like them’ is different. Their perceived risk is much higher. You may have to provide added incentive to mitigate the perceived risk. You may have to start with supplying products or services that are easy for them to re-source again if you don’t deliver on your commitments so that they are not operationally impacted.
Discovery, discovery, discovery.
It’s not me who buys it
This response opens up another level of potential pain. This is most likely to happen in the larger the customer where category purchasing is a silo’d process in that organisation.
IF you are selling a single source solution (I prefer ‘consolidated supply solution’ personally) then there’s every chance you have sold from the top down. The senior decision maker. That’s great, as I would hope that contact level allows you access to expand your single source message across additional areas.
If not and there are other ‘decision makers’ in the business you don’t already deal with today, and this is the most likely scenario, especially with bigger customers, then you have options.
This needs you to understand the purchasing/procurement strategy of that customer.
Back to discovery.
Treat the customer as you would a brand-new customer. Find out why it is a separate part? What are the purchasing goals and objectives of the business? Have they changed since you became a supplier? Why? Who is the senior decision maker? Does the person you need to speak to about this new category have the same reporting line as your current contact? Does your current contact know if this is a problem area? Do they work together? Can they recommend you? What intelligence can you gather from your current supplier?
There is quite a lot of variety to consider in this scenario. Almost another article!
It’s not a Pot Noodle
I have tried to further open up the conversation in this article around the subject of sales and diversification in the office products sector. I hope, from my summarised and simplified content above, that there are some useful messages to take away.
From mine and Steve’s experience at Anglo of trying to drive diversification into our market and customer type (London market, mid-large sized customers) we had to try various things.
For example, I, for one, certainly did not see milk becoming our biggest selling product when we introduced Managed Services to our customer proposition.
It was a combination of discovering customer pain points – one customer issue, a Thank The Lord customer if you like, led us to discover this was a category-wide pain point - and our partnership with an amazing supplier that kicked open that door. It was actually driven by our salespeople and their customers to introduce milk at all, not me or Steve. Once we started talking to our customers about new categories and services, milk became the ‘if you could do this….’ conversation piece. We build from there in many cases.
That solution, once proven, allowed us to use it as an entry point for other categories in those customers: Our reputation as a broader solutions provider was up and running, so we could introduce other areas.
In pretty much every instance, we started with one category or service and moved on to others once we had proven ourselves in that. It wasn’t a quick fix – we had a saying at Anglo; This Is Not A Pot Noodle, we can’t expect instant success - nor was it easy but once we got going and had examples of success, the perceived risk from a customer perspective was reduced considerably.
What’s next?
I could literally write 20,000 words on the sales subject. The trial and error, the different types of customer, the variety of sales solutions, the type of business you are, the kind of salesperson you are, the markets you operate in.
And I haven’t even started to talk about marketing and sustainability and CSR; we will endeavour to do so in subsequent articles.
I guess it’s why I love sales so much. Two days are never the same.
What’s next from the TSP team will be a follow up from Adam Noble who will expand more into both the strategy and sales proposition he pioneered at The Irongate Group. The Irongate story is one of successful diversification in their customers and target markets.
Gary has enjoyed a 30-year career in sales, sales leadership and senior leadership roles at a regional, national and international level within the workplace services sector, working for and with many of the industry's leading companies and organisations .
Comments