Progressive Distributor - Strike three, you’re out!

Strike three, you're out!

This issue, Frank and Malcolm tackle the issue of what to do when a customer strikes you off its list of approved vendors

by Frank Hurtte & Malcolm Mills

A Scenario:
Overtired, Frank wandered into the office. As Sales Supervisor for a large industrial distributor, Frank’s job was complex to say the least. His company balanced the needs of thousands of customers with hundreds of suppliers. They carried thousands of items. He worked his level best to keep sales guys motivated. His team coordinated with a half-dozen customer service people and a slew of support people – IT, warehousing, truck drivers and all the rest. There was way too much going on in his life.

At home that afternoon, having put out the fires at work, Frank scooped up the mail from his in-box and began sorting through the bills, letters and flyers. Here was something ridiculous. Not only did he have a bill for long distance from one company, he had another bill from another telephone service provider for basic phone service and yet another bill from his cell phone provider. “This is nuts,” muttered Frank. “It’s time to consolidate. I think I’ll look into a bundle with one provider. It just makes sense.”
His cell phone rang. Western Widget — their once shining star of an account — had announced a round of vendor consolidation and Frank’s team wasn’t in the running. In fact, they’d been cut from the team.

Frank’s dream flashed back. The sales team had missed the ball on a couple of opportunities lately. Maybe they missed the ball by a mile. But, they did have a history together.

“Okay, Frank, you’re up.”

Frank scowled. He hadn’t slept all night. Suitcases drooped under bloodshot, bleary eyes. He thanked deities everywhere for the invention of sunglasses.

He was on edge. But the last thing he wanted was for his archenemy of all time on the other team to see him rattled. Every year they played and every year Frank’s team lost. Oh, they won games alright but never the championship. But this year would be different.

Standing outside the batter’s box, Frank took a few good practice swings to loosen up his arms and neck muscles which were drawn so tight he could barely turn his head. His eyes never left his nemesis, Malcolm the Destroyer Mills, the pitcher for the Purchasing Blasters. The man was a menace. He was heartless and mean. They said he’d bean you as soon as look at you just to take you out of the game. Not that Frank had actually witnessed the event but where there was smoke there was fire. He’d strike you out in a second if you let him.

Frank took a deep breath, exhaling slowly, relaxing as he did so. Unhurriedly, he smiled a wicked, ruthless smile. But Malcolm wasn’t letting up….

“Strike one,” shouted the umpire as Frank swung and missed. He wasn’t worried. Stepping out of the box, he unwound his shoulders in windmill fashion for 30 seconds, then stepped back in.

His second swing hammered a hard ground ball just foul of the third base line. Malcolm’s eyes bored into Frank’s. It was two-and-zip and Frank felt his flesh crawl; the Destroyer was going to come in close; he felt it. Frank moved in a little. Maybe he’d just sacrifice himself by getting clipped and become the first of his team on base. A little crowd sympathy might not hurt either. Anything to throw the varmint off his stride.

The ball sizzled so close to Frank’s face it all but sucked the gum out of his mouth. His knees went weak and his mind wondered what he’d been thinking. The loud speaker echoed “Strike three” in the bleachers as Frank dragged his tired butt to the dugout. He was too old for this.

Then with a snort and shutter, Frank woke from his deep sleep. Why was this happening? This dream — the game that kept playing over and over — what did it mean?

Malcolm: “Frank, I know I’m in the bleachers watching the game but why in the heck didn’t you see this coming sooner? Surely you saw your sales decline over the past few years, didn’t you?”

Frank: “We can’t be perfect all the time. We make mistakes, we have people who leave and there are vacancies. We were just a bit short-staffed for a couple of months. I don’t say that with excuses in mind. It’s just the ebb and flow of business.”

Malcolm: “Right, Frank. For two years? Come on. Something happened. And even if nothing big happened, you still have to keep going back to the well, don’t you?”

Frank: “Well, there could be a few good reasons. With all the price cuts, something has to give. It’s impossible to maintain the same service levels when the customer insists on bare-bones pricing.

“Sometimes there are personalities you clash with and our salespeople have to pull back and regroup. Sometimes the buyer/purchaser just beats them up so badly that you quit calling and save the gas. I don’t know. Every situation is different.”

Malcolm: “But in this case none of that happened, the salesperson just seems to have stopped calling. What would they expect other than to be taken from the approved/active vendors list? It costs money to administer and maintain all these files nowadays. I just can’t figure out sales folks sometimes.”

Frank: “You think you can’t figure us out? We can’t figure YOU out. A lot of buyers out there change distributors like we change socks. And the only reason that anyone can see, other than that the wind changed direction, is price.

“You know, Malcolm, I find the vendor reduction thing hard to argue when the services are compared apples-to-apples. Just look at my own little story above. The issue becomes, ‘How is the comparison taking place?’ How are the services and values being measured?’”

Malcolm: “Hmmm, touchy aren’t we? But we both agree that maintaining records and all the other aspects of maintaining a buyer/supplier relationship costs a lot of money. And we both agree that in some instances you sales types do relax your service levels just a bit. You call it human, I call it costly. When a supplier’s time has come it’s fini, done, kaput. Comprendez?”

Frank: “Hogwash. We just talked about this a month back. Suppliers are entitled to another kick at the can if they can show new value.”

Malcolm: “I don’t know about ‘entitled’ Frank. Buyers are usually pretty open to listening, but here it looks like someone more than just dropped the ball. What does that tell you Frank?

“And you’re right. We talked about it last month and the problem is still there. No service, no client understanding, no follow up, equals no good reason to keep purchasing from that supplier.”

Frank: “And isn’t that exactly what’s wrong with the buyer-seller relationship today? Buyers are awfully quick to slam the door or move on to another supplier.”

Malcolm: “Wouldn’t you, Frank? Ever cut someone out of the line-up? So Frank, you’re the expert on salvaging lost accounts. How are you going to rescue this lost cause?”

Frank: “The fact that we are in there fighting back to keep providing products and value into the account is a three-pointer as far as I can see (Sorry, I’m mixing my sports analogies here).”

Malcolm: “You mean you think you’ll hit a triple with Western?”

Frank: “Well, sorta. We’re presenting a triple play.

1) We’re showing that we are still very serious about providing products, service and value to their account.

2) We’ll sell them on the fact that we still understand some areas of their process better than anyone else.

3) We’ll admit our shortfalls and show them that we are going to address the problem(s) satisfactorily.”

Malcolm: “But what about the costs of maintaining records, administrating vendor status, processing your payments and all the rest? Why should Western listen to you now?”

Frank: “Man, you’re a tough nut. Sure we’re facing a bad situation, but there are a couple of good reasons critical to keeping that door open.

“I’ll explain it to you this way. Let’s go back to why I made the decision to keep three separate suppliers of phones:
• To me, unique coverage patterns make a difference. For example, if the phone service for one provider didn’t cover my whole territory, I would have kept multiple services – albeit the extra work for me.
• If one of my salespeople required special service such as messaging for the deaf, I would have kept the extra service, too.
• If one of the phones offered other special services such as wake-up calls or Spanish language answering service, I would have rethought my decision.

“In my phone example, the service had become a generic commodity. But here we are speaking not of commodities. We speak instead of the specialized products that keep your plant running smoothly. The commodity products you already buy at the best price on the planet. You can’t have it both ways. You can’t always get what you want! Catchy tune, eh?”

Malcolm: “From your perspective I’m sure that proving your value with words and selling me on Spanish language answering services, which I don’t give a fig about, is a noble and worthy venture in your tiny sales mind. But I sure don’t agree that you’re entitled in any way. Tell me why you believe I should take the time from my busy day to reverse a decision already made? What tangible value can you possibly bring that’s worth my time to reverse the decision that I and other members of my team have arrived at concerning your past poor service?

“If I were Western and I’d already made the decision to remove you, it would have been based upon thorough scrutiny of your performance over the past year or two.

“Really, whether I’d listen to your sales spiel to save your sorry skin would depend on a few specific factors, some of which you’ve already covered.

1) Past performance would have had to have been pretty darned good at some point prior to your service falling into the crapper.

2) You’d have to convince me on the phone or in a letter or somewhere in a very short space in time that there was a benefit for me in even going forward on this.

3) You’d also need to convince me with facts and figures, veritable proven occasions when your exclusive services saved me time, money and or both.

4) I’d want proof that you’ve recognized your shortfalls and already remedied the situation.

5) I’d want more assurance than just your word. After all, you ignored me for more than a year; why are you so warm and fuzzy now?

6) I also need to know that this is coming from the president of the company, not just the guy in the warehouse or the salesperson who struck out.”

Frank: “Malcolm, if there are but two points everyone must learn from this episode they are:
• It’s not enough to produce value. You’ve got to document it.
• Value must be measured and converted to dollars.

“Proving value includes specific details. When I made an emergency delivery that kept your plant running back on January 23, 2007 – I need to recall it down to the exact detail. The time you forgot to fax the order in July, I need to provide you specifics of how my salesman drove to downtown Tucumcari just to bail you out.

“But, that’s not enough. I need to convert these superlative events from interesting actions to some measure of value. I like that five-millennium old standard – MONEY.

“We said we made some mistakes – no deific claims here. But even in our stumbling state, we managed to produce positive results.

“The leaders of companies are accountable for the actions of the whole of the organization (or at least in the best of companies they are). The very best companies put leaders together to develop business strategies. In a case like this, I am sure the leader of any truly progressive distributor will look you in the eye and say, ‘We are working to get better. We will still make mistakes, but we will be better next year and the year following.’”

Malcolm: “As far as I’m concerned, you probably deserve every bit of grief you’ve derived from the occasion. If you neglect customers, you don’t belong in the game.

“Frank, this isn’t a lob ball league. I’ll pitch as close to those false teeth of yours as I need to if it’ll keep you on your toes. I’ve told you before that I’ll listen if you present a good argument, but that doesn’t carry into perpetuity. After strike three, I think you should be out.

“Now, having said all of that, I’ll eat a few of my words. I was approached one time in a carbon copy situation of this and because the supplier:

1) had a plausible and proven track record,

2) knew the company, our equipment plus the history that went with it,

3) and because I had no idea what strike it was, I not only listened but rekindled the relationship to our mutual benefit.

“Now, if this worked on a tough s.o.b. like me, it’ll work on those softy buyers out there who listen to pitches all day rather than throw them.

“There’s hope for you all yet.”

Frank Hurtte of River Heights Consulting is a 28-year veteran of the distribution world. Reach Frank at frank@riverheightsconsulting.com.

Malcolm Mills of Matrix Solutions Inc. is a 22-year veteran of professional purchasing. His book, “It’s a Tough World Out There – 25 Ways to Lose a Customer 25 Ways to Fix It” is available directly through Xlibris publishing USA www2.xlibris.com/bookstore/ or at malcolmmills@shaw.ca.