How some companies have abandoned old-style sales for a whole new kind of relationship with customers.
The smartest company builders are abandoning old-style sales for a whole new kind of relationship with customers -- and are finding they have to remake their businesses in the process
If you're still selling the old-fashioned way, mark our words, you won't be for long. As companies in one industry after another are discovering, a good product at a fair price, backed up by a responsive customer-service department, is merely the price of admission to the new competitive marketplace. To stand out from the pack today, you need to tailor your products and services to meet the particular needs of each of your customers. That, it turns out, is a major undertaking that can affect your entire operation. Leegin Creative Leather Products, for example, set out to make itself indispensable to its customers -- and totally reinvented itself in the process. (See "A Business Transformed," [Article link].) To help prepare the way for you, we've asked several companies that have already made the shift to tell us the biggest challenges they faced along the way. But first, some background.
Much of the pressure for change comes from large corporations intent on cutting their costs and their payrolls. They are choosing as suppliers companies that are aggressively helping them to streamline their operations. That has been the experience of Manco Inc., a Westlake, Ohio, company that transformed itself from a $4-million distributor of industrial tape in 1977 to a retail supplier of tapes, weather stripping, and mailing supplies, with sales of $76 million, in 1992. "Retailers are pushing inventory management off on us," says the company's president, Tom Corbo. "It's a burden we like; it gives us more control." Today one of the ways Manco distinguishes itself is by helping to manage the inventory of its 30 products for such big customers as Wal-Mart and K mart. That, Corbo notes, requires an entirely different approach to selling.
At the extreme, as the experience of G&F Industries Inc. shows, it can mean no selling at all -- at least in the traditional sense. In 1987 G&F, a small manufacturer of molded-plastic parts in Sturbridge, Mass., got an unusual request from its largest account. Bose, a $500-million acoustic-speaker maker in nearby Framingham, wanted to know if G&F would consider assigning a full-time employee to work at the Bose plant -- eliminating the need for a salesperson to call (and helping Bose shave the cost of buyers and planners). It was a risky move for little G&F, which at the time barely cleared $3 million in sales. President John Argitis had some sleepless nights before agreeing to give it a try. "This has changed our whole way of doing business, but I never thought it would work this well," he now says. "Instead of spending time trying to get new accounts, we concentrate solely on servicing and pricing. You don't really sell, you look for opportunities." Over the past five years, G&F has grown 25% to 40% a year, on average, despite a depressed plastics industry. Sales were close to $15 million last year.
What G&F has in common with the other companies thriving in the new environment is its focus on adding value to what in the past was sold as a commodity. The trick is to figure out how to shape that commodity so it meets the needs of individual customers. Often, as in the case of duct-tape manufacturer Manco, that means adding on services that will reduce your customer's work load. That's also what Business Interiors, a $55-million office-furniture dealership in Irving, Tex., accomplished. Seven years ago CEO John Sample started moving beyond selling upscale office furniture to provide additional services, such as renting, refurbishing, and repairing furniture, for his recession-racked Texas clients. Sample's strategy: "Forget what we sell, let's ask customers what they want and organize ourselves around that." The strategy has paid off. J. C. Penney, based in Plano, Tex., selected Business Interiors as its 1991 supplier of the year. When the large corporation moved its headquarters to Texas, Terry Palmer, its senior project manager, used almost every service Business Interiors offered -- including its computer-aided-design system, which saved on architect's fees. How does Palmer look at the role of a supplier? "I expect support from ser-vice people, from upper management, from shipping, the whole cycle. Everyone should be trying to make J. C. Penney number one and get more of our business. That needs to come across to us."
It's not just business-to-business sales that are taking on a new look. Customers, all types of customers, expect more these days. And the switch from commodity selling to value-added selling requires a whole new understanding of those expectations. You must know much more about the problems your customers are trying to solve, and be creative in figuring out how your product or service can help them achieve their goals.
Some of the companies that have been most successful in value-added selling have turned to it to get out of a rut. Fletcher Music Centers Inc., in Clearwater, Fla., used to sell keyboard instruments. Period. Today it does all it can to meet the musical, physical, and social needs of its primary customers, retirees. Since 1986 president John Riley has reworked every aspect of customer service -- from designing Fletcher's own home organ (with oversize print and controls) to making free group lessons a social event. In recent years sales have more than doubled, to $22 million, despite a long decline in the organ market.
Inevitably, if you haven't yet started down the value-added road, you will. And if it's any comfort, you should know that there's no one way to make the transition. But while the solutions vary, the challenges each company faces along the way are remarkably similar. Value-added selling, says Tom Corbo of Manco, "requires teamwork, a different kind of salesperson, and investing the time where it's worth it." Here, then, are some of the issues you'll need to address as you move into the new selling environment. Be warned ahead of time: the transition involves much more than adjusting your sales techniques. Before it's over, you may find yourself forced to reexamine your entire operation.
