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Feature: Make Your Own Waves No More "Endless Summer" Some of you may remember the movie “The Endless Summer”, which featured surfers that traveled the globe following the best surfing conditions. Whether you remember or not, there’s a point to be made.
Are We Like Disappointed Surfers? When the surfers in the movie got to their destinations, the waves weren’t always the best. They either waited till the weather whipped up the surf, or moved on to the next destination. Surfers, you see are dependent on the whims of Neptune to produce the waves. In business, we are also dependent on the "waves" if we depend only on the economy, or the health of a single market segment like the languishing industrial market. Like expectant surfers, most businesses are reactive. They stick to a couple of beaches, and hope for the best. The boys from The Endless Summer were pretty creative in one sense, though, going where the surf was best at different times during the year. But what if none of the beaches offered any really nice waves to ride for a considerable time? Our surfers would be sorely disappointed. Did Too Many "Waves" Cloud Our Vision? From 1993 through mid 2000, maybe we became complacent in our efforts to create significant new value-added offerings to customers because  plenty of "waves" kept coming our way. And because of that, maybe we didn’t put enough emphasis on R&D and creating new, significant value added products and services by performing solid market research that discovered latent customer needs or looked forward in time to identify legislative, code, or technology convergence trends that would lead to “new product or service opportunities”. Maybe we did some of this, but not enough, because when the wind died down, the waves diminished, and we were left like disappointed surfers, gazing out over the horizon in anticipation of the next big swell. Cut Costs? With a perceived lack of market upside, almost everything you read about these days says to cut costs during these times. Well, duh! My gut always tells me to do the opposite, though. No, don't ignore intelligent cost reductions, but actually INVEST more in R&D that will either get you a competitive advantage in value added, or increase the demand for the kinds of product or new products you could develop. One of Marketing's key objectives should be to create increased usage or greater value to command more of the buyer's available dollars. Today, you are in competition with more than competitors in your narrow product category. With suddenly more scarce discretionary dollars, you are competing with just about anything on which a customer would spend their suddenly much dearer dollars. The Recovery is right around the Corner... That's a typical hopeful response (Excuse?). But, the only thing that's around the corner may be more of the same. We asked distributors and manufacturers about their 2002 sales results at the recent Region 1 NAED conference. The results were mediocre for most. The prevailing feeling  for 2003 was that nobody expected the market to get much better. They're probably right, given the news from the experts: The Economy: 3% Gross Domestic Product (GDP) Growth (McGraw-Hill, NAHB, NABE) Residential Market: Housing starts will decline 3.5% (NAHB) Construction: Construction Spending will drop 1% (McGraw Hill) Lowlight: Office construction will be down another 8% beyond last year's 29% decline. Industrial: Capital spending may increase 5%, offsetting last year's 5% decline, which was depressed anyway. We've been in a seven quarter decline in capital spending, the longest in NABE's 21 year history of tracking it. Risk: war may squelch capital spending recovery in all but defense-related industries.   DISC Corporation's Herm Isenstein forecasts a very flat scenario from 2000-2006, and no real significant recovery until 2005. These numbers are not deflated, so if they were, things would probably look negative. But, what manufacturer is seeing realized price increases anyway? If you're wondering how the total can be 1.4%, while contractor and industrial are slightly lower, the difference is made up by the smaller commercial & institutional user and utility markets. For more details, visit www.disccorp.com. Isenstein has other products to find pockets of more attractive segment or geographical growth. Check it out. Dawn on The Horizon OK, so things take time to be understood in this industry. But they are being understood pretty clearly now, after nearly three years of poor economic performance. We’ve been in an economic funk long enough to give up the hope that another big “wave” will save us.   However, I’m sensing that a light is going on in the minds of a few of those we spoke with. They are starting to pay attention to some "back to basics" strategy elements. Three Legs of The "Back To Basics" Stool New Value Propositions Companies are reviewing the mix of products and services offered by market segment. They are looking at where the opportunities are, how they are positioned vs competition on price, value and features, what they should do to improve their offerings, how to get in touch with customers to discover new features, products or services to offer. They plan well out into the future, identifying external "trigger points" that signal when it is time to release a new set of product features or services. Focused Field Market Planning Smart distributors and manufacturers are creating market catalogs, reviewing not just sales and share, but share of all possible customers in each territory, who they want to sell more to, which new business opportunities they want, setting sales and share goals, and measuring results by trading area. Manufacturers are taking a hard look at distribution authorization planning this way, too. Compensation Alignment It's not enough to focus on new opportunities at headquarters. And surprisingly, a new value proposition won't help much either in a market where personal selling is eighty percent or more of your communications. You have to change the incentive. IRCG Principal Mike Marks recently reminded me that most people will do things to get out of pain vs. doing things because they're the right strategy for the company. Accordingly, change your compensation plan to reward sales people for doing the new things you need them to do. Salary and bonus plans generally work much better than commission plans in this regard. Why? You're in control, not the troops. Sun Tzu once said: "If your troops are at the river and they have the alternative to board their ships and retreat, burn the ships and they will stand and fight." When you think of it, #1 is how you make your own waves, and #2 is your surfboard, because #1 rides your sales force (and distribution if you are a manufacturer) to shore. But # 3 is what gets your sales force to focus on accomplishing the new things management requires of them. Keep it Up If you’re going to generate your own waves, you need to keep at it regularly because waves have their own lifecycle, and it's not under your control. If the economic climate is robust, another one is always coming along, so you don’t have to worry. The opposite is also true! When you shift from an opportunistic mode to the game of providing superior value added, you need to stay on top of emerging trends that will affect your customer’s needs, and you need to create a formal, ongoing methodology to involve your customers in the creation of new features, products and services. Make Your Own Waves If the waves aren't being whipped up by Neptune, make your own. Focus on distinct end user and channel marketing opportunities, and get closer to the customer as your partner in new product and service design. Finally, make sure you have the right incentive program to drive the new behaviors you deem necessary. If the waves aren't coming to us, we've got to be more focused and productive at spotting and developing THEM. Neil Gillespie Gillespie is a principal and co-founder of Channel Marketing Group
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Article and Web Highlights Sales Shape Up Sales Shape Up(.doc) Neil Gillespie Protracted periods of prosperity may create complacency for protracted periods. Shape up your sales planning focus. Getting Manufacturer Support Getting Manufacturer Support (.pdf) David Gordon Selling your ability to perform, and grow a manufacturer's business is key to getting their support.  Once you have your plan, how do you approach your business partners?  More Market Planning 7 Steps to Strategic Sales Planning How distributors can do a better job of market and sales planning. Neil Gillespie Distribution Planning How manufacturers can do a better job of choosing the right distribution. Neil Gillespie
Contributing Writer Let’s Put New Plays in our Playbook Bill Marshall Corporate VP Marketing Leviton Manufacturing Company It would seem that the economy, our experience of the past two years, and the declining bottom line seen from both the distributor’s and manufacturer’s perspectives should motivate us all to concentrate more energy on our strategic sales and marketing plans. For those who are regulars at the planning table, the question is usually what went well the past year, what should we be doing more of and what should be eliminated. Unfortunately, many times we simply recast what we did rather than thinking of what would best suit our longer term plans. For those that haven’t grabbed a seat at the planning table – we should all work out a plan for THIS coming year. And we need to ask ourselves “why aren’t we planning?  Why the delay? Looking around, listening, reading, nearly everything points in 2003 to at best – slow growth, a continued decline in employment and flat capital spending in the first six months of 2003. Basically mimicking much of what we have experienced in 2002.   Circumstances like these make for an ideal environment to focus on MARKETING and SALES PLANNING. The two go hand in hand. It is easy to hit goals when the economy is humming along – challenging times call for some new plays in our business playbooks.   These economic indicators cry for a game plan to help us hold what we have and grow in those few encouraging areas where growth is possible. In those bright spots are we prepared to differentiate ourselves from others that service and sell the health care, education, the single family home construction and existing home renovation markets? Do we know what is necessary to differentiate ourselves from these markets current suppliers? What process for prospecting new accounts do we have? How do we measure our sales folks effectiveness?   The type of programs needed to grow, effect some turnaround or simply stop a slide are really not that hard to put together if we focus our combined resources. It’s not a lack of ability…it’s more the inability to make the time.   Manufacturers continue to have a desire to invest their varied resources in growth opportunities but these times have made us more keenly focused on investing in business plans that offer roadmaps to growth, with measurement of those plans. It has become the reasonable, de-facto yardstick to measure these investments (co-op, promotional, other incentives) a.k.a. “funding”, on an ROI basis of incremental sales and margin contribution.   Building Integrated Marketing & Sales plans is one of the most important things we should be doing in any times…but certainly now. As important as this is, it is profitable for both parties, can be downright fun and helps us both bring our relationships and abilities to higher, more professional levels.   It will define our real business partnerships, so let’s do it more and better than before.
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