Transcript No Slide Title

Re$ults $elling to
Boost Profits in Today’s
Ready Mixed Business
November 13, 2013
Wayne Outlaw, CMC,CSP
BASED ON RESEARCH
Some improvement, but not where it needs to be!
Legal
Ground Rules
We cannot discuss prices in any open forum. The Sherman
Anti-Trust Act and the Clayton Act (Robinson-Pattman
Amendment) prohibits vendors from collusion in setting
prices.
We will show ways to use value to substantiate the price you
choose to sell a product or service for.
Practical
Because it is a very sensitive subject, we will not examine
specific strengths and weaknesses of product lines or
vendors since all are valuable.
We will show ways to position your organization, the services you
offer, and the products you sell to meet the customers' needs and
be perceived as having the greatest value.
We will use examples of what others have done and principles that you can apply!
1 MILLION DOLLAR INVESTMENT
Return Today
Low Risk
$40,000- 4%
Medium Risk $60,000- 6%
Higher Risk
$80,000- 8%
Return Today
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Return on Capital, no matter how invested is expected!
Profit is not a 4 letter word…
It is a…
• Cost of Capital Invested
• Necessary for Sustainability
• Element of Product Price
Do you include PROFIT as budget line item or element of cost?
“We have met the enemy and He Is Us”
- Pogo-
Let’s find the
enemy of…
Reasonable,
Healthy
Profit!
WHAT’S HURTING PROFITS?
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Seller’s competence
Seller’s sales skills
Management direction
Lack of new business focus
Belief in your value
Let’s Look Deeper!
Latest
NRMCA Survey
Average Member
- 0.3% Operating Profit
- -0.8 EBITA
Today May be better BUT ….
Is it enough for your risk and to ensure
future of this industry?
Reduction Impact
Based on $100 Sale Price at 5% profit
Drop
20%
40%
60%
Price Reduction
1%
2%
3%
To Get The Same Results
Price Reduction
1%
2%
3%
Additional Sales
25%
67%
150%
If no more selling and operating expense.
Stakeholder
What’s required to satisfy…
• Owner
• Stockholder
• Lienholder
How We Compete Evolves
• Ecosystems
• Organization
• Product
Competing and Cooperating Today!
SUCCEED TOGETHER
Build a Bigger Opportunity
CURRENT
PRACTICE OF
REDUCING PRICE
RATHER THAN
BUILDING VALUE
MUST CHANGE!
BASIS
OF
PRICE
•Cost
•Availability
•Competition
•Value
•Skill and Confidence of Seller
HIGH
OUTLAW VALUE MODEL ®
HIGH
SERVICE
Competitive Advantage
PRODUCT
Less Expense
PRICE
LOW
LOW
Value in Account
Need Additional Support /Programs
Happier Customers/Retention
Need to Differentiate
BUSINESS
Time Commitment
Projects Are More Profitable
Need to have good, capable people
ORGANIZATION
Skills and Confidence
Value Received by Customers
Loyalty to Provider
Willingness to Pay
Enables True Organizational Success
OUTLAW VALUE MODEL®
ORGANIZATION
BUSINESS
SERVICE
Not all customers
respond to higher
value approach
PRODUCT
PRICE
Key is to find
customers who
will pay for a
higher level of
value
Let’s look at how to elevate your value to increase your Re$ults!
I may not be able to change those I am
selling to now to value my capabilities
but…
I can replace them
with those who do
appreciate value!
If you have to have the business…
You are not negotiating.
-Jerry Smeltzer-
Prospect so you can chose
your customers…
Choose good ones!
POTENTIAL PROBLEM
FAILURE TO MANAGE ACCOUNTS
By Profit Not Volume
Account Value
Low
A
C
B
D
Effort
Maintenance
High
Profit Level
Low
ACCOUNT VALUE
STRATEGY
A. High Profit/Low Effort/Maintenance – PROFIT From It
B. High Profit/High Effort/Maintenance – REDUCE MAINTAINENCE
C. Low Profit/Low Effort/Maintenance – INCREASE TO MINIMUM %
D. Low Profit/High Effort/Maintenance – CONSISTENTLY REPLACE
Consistently Prospect for New Business
To Be Able To Prune!
EXERCISE
MARKET SIGNS
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Products Or Services “Appear” Same
Power Is In Buyers’ Hands
Apparent Sameness Creates Price Sensitivity
Buyer Pits Seller Against Seller
Can Slip Into Commodity Status
Without Your Knowledge!
SIGNS OF COMMODIZATION
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Must Qualify As Bidder
Receive RFP’s
Real or Apparent “Reverse Auction”
Product Specification Is Focus
Product Not Results Is Focus
Who Drives The Sales Process - You or the Customer?
“Your Price is Too High”
It can mean more than meets the eye.
“I can buy it cheaper somewhere else”
“I don’t see the value”
“I am just seeing how low you will go.”
DANGERS OF COSTING DOWN
LENGTH
OF
CORD
What Would You Pay?
Feature
PARACHUTE RISER
• Diameter, material, color
• Material
• Color
• Weight
Advantage
• Strong
• Light
• Flexible
Benefit
• Won’t break (safety)
• Won’t kink / knot (no tangles)
• Easily controllable (miss obstacles)
RESULTS -Land safely with less stress!
ATTRIBUTE
“Higher % On-time Delivery”
Because of this…You can
• Less interruption of work on job
• No Delay of Project
• No Problem Scheduling Subs
• Meet Project Deadlines
• Etc.
Customer Re$ults
• Finish Job on-time/ No Penalties
• More effective/ Produce Job with Less Cost
• Improve Projects from Job
• Get More Jobs Because of Performance
• Etc
You Can Do Much Better At Defining Results!
Value
Depends on “Re$ults” not “Content”
• Clothesline
- Keeps your clothes off the ground and prevents soiling
• Parachute Riser
- Keeps your clothes off the ground with you in them
- Prevents injury.
Use Re$ults to Boost Your Profits!
Must Help Customer Define
the Value You Provide!
You Must Know
Before You Can
Communicate It!
HOW TO COMMUNICATE VALUE
Feature
Specification or Attribute Of Your Company
Advantage
What they get “because of your”
Features or Attributes
Benefit
The Re$ults The Customer Receives from the “because of your”
advantage.
What Are The Attributes of a
Ready Mix Concrete Producer?
Let’s Figure Them Out & How They Provide Re$ults!
VALUE
What are your “Sellers” selling…
Parachute Risers
OR
Clotheslines
Value is based on
Creating Results and Producing Profit…
Not Product or Price!
Who Is Your Competition?
Not Just Other Producers
It is all those who provide products
and services for Job
and even the Job’s Profit!
REASONS SELLERS
DISCOUNT?
• Skill
• Confidence
How to get out of the trap?
HAVE A CONSISTENT SYSTEMATIC
NEW BUSINESS FOCUS…
ESPECIALLY WHEN BUSINESS IS GOOD!
NEW APPLICATION FOCUS
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Architect
Engineer
Developer
Probe for Applications
Help write specs
Not Just A Bigger Slice of The Pie…
But Enlarge The Entire Pie!
USE QUESTIONS
• Low Trust
• High Trust
Only when you have earned right to ask high trust
questions will you know…
•Real Needs of Project/Customer
•What They Value/Will pay for!
Know Each
Customer
• What is their situation?
• What problem do they want to solve? (NEED)
• What will result from this solution? (BENEFIT)
• What has been their past experience?
• What you can provide better
Cannot Assume - Must Know!
KNOW WHO SELLS
Selling Skills…Sales Activity
Don’t Determine by Product Knowledge or Tenure!
IS YOUR SELLER A
HUNTER OR FARMER?
• Farmers Good At Keeping Accounts
• Farmers Good At Growing Accounts
• Hunters Good At Identifying New
Relationships/Sales
• Hunters Good At Closing Accounts
• Few People Good At Farming and Hunting
What Do You Need Today?
IDENTIFYING SELLER
UNDER-PERFORMANCE?
Typical Observations
•Low New Business Results
•Sells On Price Alone
•Consistent Errors
•Deadlines Not Met
•Complaints
•Budgets Not Achieved
Real Under-Performance Is Not Reaching Potential Which Is
Absolutely Necessary During Challenging Times!
REASONS FOR SELLER
UNDER-PERFORMANCE
•Poor Job Fit
•Unclear or Low Expectations
•Lack of Skills & Knowledge
•Inadequate Sales Activities
•Leadership & Management
Even A Past Good Performer,
As Business Demands Increase, Can Underperform!
DO YOU HAVE
WRONG
PEOPLE FOR
TODAY’S JOB?
PERFORMANCE MODEL
Low
P1
P2
Passive
Fit
P4
Peak
Poor
P3
Potential
High
Development
Low
Performance Model
Fit
Low
Learning
Index
Behavioral
Traits
•Verbal
•EnergySkill
LevelInterest
Occupational
•Verbal
Reasoning
•Assertiveness
•Enterprising
•Numerical
Skill
•Sociability
•People
Service
•Numerical
Reasoning
•Manageability
•Mechanical
•Attitude
•Finance/Administration
•Decisiveness
•Technical
•Accommodating
•Creative
•Independence
High
•Objective Judgment
Development
P1
P2
Passive
P4
Peak
Poor
P3
Potential
Training
Coaching / Feedback
Management
- Setting Expectations
- Providing Rewards
- Developing Accountability
Low
PERFORMANCE MODEL
Model will vary depending on your situation!
Hire
•Attitudes
•Values
•Capabilities
Develop
•Skills
•Knowledge
PRE-EMPLOYMENT
EVALUATION
•Provides insight
•Types of instruments
- General Aptitude
- Mental Ability
- Job Skills
- Integrity / Values
- Behavioral
- Job Fit
Must fit specific need & can be beneficial for employees!
STAFFING THE ORGANIZATION
Is Now the Time to Upgrade
Those Who Staff The Company?
SUCCESSION PLANNING
The RIGHT People
In the
RIGHT Spots!
Job Fit Is Critical In Succession Planning to
Avoid Failure in a New Position!
DO YOU NEED
MORE NEW
BUSINESS
FOCUS?
SALES MANAGEMENT TRAP
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Accepting Marginal Performance
Managing Seller’s Results Only
Failing to Manage Sales Skill & Sales Activities
Failure to Replace Poor Performers!
ROLE OF EXPECTATIONS
A Self-Fulfilling Prophecy
• Company
• Manager
• Individual
What do you “really” expect from Sellers?
SET
EXPECTATIONS
All areas including
New Account Development
• Define expected level of performance
• Determine sales activities needed
• Define sales skill level needed
• Start at reasonable level
• Increase with experience
Continuously raise the bar!!
Define Them So They Can Be Met and Exceeded!
SALES
ACTIVITY
Before you define
sales activities
needed, you have to
define the process a
customer goes
through to make a
buying decision!
DECISION MAKING PROCESS
TYPICAL FOR NON-CUSTOMERS
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Initial Meeting
Present Capabilities
Identification of True Needs
Site Visit/Proof Source
Qualification as Prospect
Analysis of Job/Specification
Proposal
Close
May take several attempts to reach next step!
DECISION MAKING PROCESS
DEFINE FOR YOUR NON-CUSTOMERS
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Knowing Steps Allows Manager to Set Activity
Levels to Ensure New Accounts are Opened!
LET’S LOOK AT PROPOSALS
What will this decision
be based on?
What Does Your Request
For Business Look Like?
WHAT GETS MEASURED GETS DONE!
Categories, New, Working, Forecast, Aged
Use an Organized System to Measure New Prospects Identified
and Track Progress Each Month!
MEASURE NEW BUSINESS HEALTH
POTENTIAL TO EVALUATE MONTHLY
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New Accounts Quoted
New Business Orders
New Prospects Qualified
Volume Delivered
Average Price/yard
Average $ Profit/yard
% of the Time Spent…Truly Prospecting
% of $ on Expense Reports from Non-Customers
Number of New Business Prospect Visits in Last Month
Non-Customer is Someone Who Has Not Done Business With You
in Set Time Frame, Such As, 6 Months or Year, Depending on Size.
RE$ULTS $ELLING
TO BOO$T PROFIT$
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Define The Real Results You Provide
Communicate It To Employees Until Believed
Ensure Sellers Have High Job Fit
Increase Skill and Confidence of Sellers
Increase New Account Development By Sellers
Manage Accounts To Boost Your Profit Results
Increase Sales Management Effectiveness!
What Actions Will You Take …
To Apply What You Heard?
Complete Your Action Plan
THANK YOU!
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