The sales cycle in our economy is extraordinarily slow today. It takes longer to make a sale, and when it finally happens, it may be for a reduced budget and it will probably move slower than imaginable. That means that new business development is more costly than in previous years.
It may be smart today to look at acquiring firms because they represent a faster alternative to grow business; and, since the economy is sluggish, those acquisitions should be more affordable than ever.
Of course, to do that, you need cash. Assuming you have cash, then every new business development plan must have acquisitions as a prime focus.
Barry LaBov
LaBov and Beyond
www.labov.com
Friday, September 4, 2009
Wednesday, September 2, 2009
No time to be cocky if you sell through the channel
In a previous recession, a former client, the president of a multinational company, had a business that was down 20 percent. He felt it was time to take his dealer network up a notch and demand more from the dealers. I didn't disagree with him that the dealers could do better.
He then said, "Since our business is down 20 percent, that means the dealers are down, too, which means I can play hardball with them. They need me more than ever."
That I disagreed with, but he didn't listen. He went ahead and crafted a new policy toward dealers that included reduced commissions and reduced territories. It went over very poorly and was a disaster. Why? Because he didn't understand the dealer mentality.
The average dealer is a small business person. He or she is important in the community and is not, generally, not in awe of a corporate exec. Many dealerships are family businesses, which means the current dealer principal is second- or third-generation, is used to living pretty well and is not interested in losing a hard-earned position in the community or at the country club or wherever. The focus is on protecting his or her wealth.
Upon hearing the threat from the president, several dealers quit and joined up with his competitors. The vast majority did not quit; they did something worse. They gave lip service to the president and then went about protecting themselves by dabbling in other small business ventures that would add a little money to their coffers. All that activity took the focus off my client's business and, in turn, he saw his sales and market share plummet further. His career with that company ended soon after that.
The corporation that sells through channels such as dealers or reps needs to make it as attractive as possible for the dealer (or rep) to focus all its energy on selling its products or services.
Just because sales are down doesn't mean the dealer is more focused on your product - in fact, it may mean the opposite.
Barry LaBov
LaBov and Beyond
www.labov.com
He then said, "Since our business is down 20 percent, that means the dealers are down, too, which means I can play hardball with them. They need me more than ever."
That I disagreed with, but he didn't listen. He went ahead and crafted a new policy toward dealers that included reduced commissions and reduced territories. It went over very poorly and was a disaster. Why? Because he didn't understand the dealer mentality.
The average dealer is a small business person. He or she is important in the community and is not, generally, not in awe of a corporate exec. Many dealerships are family businesses, which means the current dealer principal is second- or third-generation, is used to living pretty well and is not interested in losing a hard-earned position in the community or at the country club or wherever. The focus is on protecting his or her wealth.
Upon hearing the threat from the president, several dealers quit and joined up with his competitors. The vast majority did not quit; they did something worse. They gave lip service to the president and then went about protecting themselves by dabbling in other small business ventures that would add a little money to their coffers. All that activity took the focus off my client's business and, in turn, he saw his sales and market share plummet further. His career with that company ended soon after that.
The corporation that sells through channels such as dealers or reps needs to make it as attractive as possible for the dealer (or rep) to focus all its energy on selling its products or services.
Just because sales are down doesn't mean the dealer is more focused on your product - in fact, it may mean the opposite.
Barry LaBov
LaBov and Beyond
www.labov.com
Tuesday, September 1, 2009
Corporate and dealer relationships in a recession?
We all know there is a recession going on, but the aftermath of it will be felt in the relationships that dealers have with the manufacturers they represent.
Most manufacturers have reduced their sales force, which means that fewer of their people are spending less time developing relationships and business with the dealers. If the manufacturers don't overcome this, then dealers will look elsewhere to make money - they'll turn to the companies that spend time with them or the products that are easiest to sell.
The answer is to 1) increase the sales force (not likely); 2) focus on the top dealers and drop the rest; or, 3) develop alternative tools to engage the dealer such as online training or specialist programs designed to reward the dealer focusing only on your product and not the competition.
Once the economic recession starts to subside, there will be a relationship recession that will have to be overcome - unless you're one of the few that avoids it.
Barry LaBov
LaBov & Beyond
www.labov.com
Most manufacturers have reduced their sales force, which means that fewer of their people are spending less time developing relationships and business with the dealers. If the manufacturers don't overcome this, then dealers will look elsewhere to make money - they'll turn to the companies that spend time with them or the products that are easiest to sell.
The answer is to 1) increase the sales force (not likely); 2) focus on the top dealers and drop the rest; or, 3) develop alternative tools to engage the dealer such as online training or specialist programs designed to reward the dealer focusing only on your product and not the competition.
Once the economic recession starts to subside, there will be a relationship recession that will have to be overcome - unless you're one of the few that avoids it.
Barry LaBov
LaBov & Beyond
www.labov.com
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