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SMART MANAGEMENT
Whoa! A practical list of things to stop doing now
I
n many of my columns I chal- lenge you to “just do it,” and often provide a list of activities or
actions for you to consider “just doing.” This month I want to base this column on the old saying, “When you find that you are digging yourself into a hole, the first priority is to stop digging.” This prevents further dete- rioration of the situation — and often provides the time needed to work your way out of the hole. So the mantra this month is “Just
stop doing it.” My list of things to stop doing includes: • Stop bleeding – This has been a
tough couple of years and overall our industry has been hit harder than most. After excluding extraordinary expenses, if you are not in the black, you need to get real focused on get- ting profitable. In the worst of the downturn, even the best-run whole- salers were struggling to stay in the black, but in the current economy, it seems that most are profitable and some are doing pretty darn good. If you are not, something is wrong. The first step is to compare your company to similar wholesalers using industry performance reports. Some segments are still in trouble — but it’s a big red flag if your segment has recovered and your company has not. • Stop hiring the wrong people –
There are so many companies in our industry with little or no process for bringing good people on board. With-
out a solid process, your odds of find- ing a successful long-term employee are not great. I think the owner or senior management should be per- sonally involved in every hire in small and medium sized companies. This may seem burdensome, but hir- ing involves high cost, high risk and an area where quality matters the most. In this size of company the owner is often involved in this kind of decision. Plus, at least for a while, you are not going to be hiring many people so it shouldn’t require a lot of time. Further, with few openings, you want them filled with the best and brightest. When, for whatever reason, senior management involvement is not possible, a strictly-followed, de- tailed process must be created to maximize the odds of a proper hire. • Stop keeping the wrong people
– Even with great processes and sen- ior management involvement, hiring is often a 50/50 proposition. While a bad hire is unfortunate, I feel it is for- givable since it is impossible to cover every base during the hiring process. Sometimes people misrepresent themselves intentionally, especially when they are out of work and possi- bly desperate. Often these good process-bad hires are miscommuni- cations or misunderstandings that can happen in life. What is unforgivable is to continue
the relationship when you know that it was a bad hire. It is bad for the
company and bad for the individual. Both parties should move on. Of course, you must comply with labor laws. Further, I believe that there should be a defined process that al- lows the individual to improve their performance — but there should be a short timeframe for the required im- provement, lots of communication and an explicit decision regarding the individual’s continued employment. This is critically important as the
recovery is causing wholesalers to hire people to support growth. Hire the best possible people into your company and it will give you even better odds of growing faster than your competition. • Stop showing cost and gross
margin on sales order screens – The cost and gross margin of the product have nothing to do with the price that the customer will find fair. Salespeo- ple should face the customer to deter- mine the price that is acceptable. Cost and gross margins are a crutch that untrained salespeople use instead of conversing with the customer about the fair price for a product and the competition in the marketplace. • Stop sending your salespeople
into battle with inadequate train- ing for their job – Are they prepared to properly manage the account? Is their only “sales tool” a price conces- sion that is used as the universal so- lution for every customer problem? Do they have an interesting and com- pelling story to tell about your com- pany’s value proposition? Are they prepared to sell the full breadth of your offering? Do they have a catalog to show your customers what you sell? Do they have fresh marketing and selling materials that help make sales calls interesting? For a reprint of the column I did on the value cat- alogs, e-mail me at
rich@go-spi.com • Stop sending your salespeople
into battle with inadequate mar- keting – Most salespeople in our in- dustry get little help from marketing beyond arranging hot dog lunches, the golf tourney and handing out hats. Thoughtful promotions for the counter, inside sales, outside sales and for house accounts are a good start. Measuring the results and ad- justing the approach is a requirement. Store merchandising is a marketing activity since most store managers don’t have the training or time to make it happen. Creating a “grow the sale” program is a marketing activity. The idea is to remind the customer to add associated products to their order.
• Be sure to visit
www.thewholesaler.com for web exclusive articles and videos! •
BY RICH SCHMITT Management specialist
This is accomplished through sales training and using the reminder fea- ture that probably exists in your com- puter system. This type of program increases order size but, when prop- erly structured, often pulls higher- margin products onto the order. • Stop allowing your team to give
away profits casually as if it didn’t matter –Most wholesalers are strug- gling to make acceptable returns, yet they allow just about anyone to give discounts that hemorrhage profits in huge amounts. In a year when a 1- point margin increase may be the dif- ference between black and red ink, they allow people to routinely give discretionary discounts of 5%, 10%, 15% or more. (Maybe the manage- ment team doesn’t understand that a 15% discount is a 15-point margin dump.) Further, there is seldom a re- view or discussion of these give- aways because there is no reporting and accountability for the problem. Another excuse for inaction: The list of senseless give-aways is so overwhelming that nobody looks at it any more. • Sales management, stop sitting
in your office – The war is being fought far away from your office. I am a fan of quotas, measures and sta- tistics but they show what happened and do little to shape what will hap- pen as your company competes for business. As the Benjamin Franklin saying goes, “Believe half of what you see and none of what you hear.” • Stop thinking that you don’t
need a first-rate website and web storefront –You are kidding yourself if you don’t think that the world is moving in that direction at an accel- erating pace. Most of your business will continue to come through tradi- tional channels. B2B web business in our industry is still in single-digit or low double-digits as a percentage of total sales. I just don’t think you should concede that business to a competitor without a fight. Customers may look at your five-year-old web- site and your POS (and I don’t mean point of sale) web storefront and choose another wholesaler — even if they like everything else about you. (Turn to Prepare for... page 79.)
•THE WHOLESALER® —APRIL 2011
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