It’s come to my attention that my book lacked mention of contracts or written agreements between the independent sales rep and vendor he or she is to sell for. It’s a good point, as some states now require such a legal document.
My own experience is that I’ve rarely had to use them. When I did, the relationship didn’t turn out very well anyway, and it may not be cost-effective to try a lawsuit over state lines. Many industries are kind of close-knit, so if some party cheats the other, the word is out and reputations are an important thing to maintain. Remember too the deal between Arnold Palmer and Mark McCormack of IMG. This was a handshake deal between the athlete Palmer (vendor) and personal manager McCormack (the salesman), and it lead to the world of sports management we see today. No contract was ever signed.
But we live in a country with one lawyer per 50 people, easily the most over-litigated nation in the world. So it’s best to be prepared for such documents.
I’ve seen two different types—the agreement letter and the more formal contract. What follows in this post is a typical agreement letter and notes in bold italics:
_______________________________________________________________________
XYZ Corporation Inc.
www.xyz.com, (800) CAL LXYZ
John Q. Representative
JQR Sales Group LLC
123 Main
Anywhere USA
Re: Sales Representation Agreement Form (Typical agreement form used; can be considered a binding legal contract)
John:
We’re pleased to hire your services as an independent sales rep with our company. We expect you to act as our sales agent for the territory we will define below for as long as it is mutually beneficial to you and XYZ Corp., as well as the individual accounts involved. Either you or XYC can terminate the agreement upon 30 days notice or as agreed. This letter will be the sum of our agreement. If there are particular issues in this agreement please feel free to call and discuss, or send in a separate letter with return of a copy of this letter signed.
Your territory will be the states of ___________, ____________, _________ (filled in as needed by vendor—rep can amend as he/she sees fit). If there are any other accounts outside this area, please feel free to phone us for approval.
You’ll be an independent contractor, so we will not be withholding taxes from your commissions. We will send you 1099s or any other appropriate IRS tax documents. We’ll need following info from you in order to process these and your commission checks:
· Full personal or business name as it will appear on check and in our files.
· Complete mailing address.
· Telephone and fax numbers, plus email address and website URL.
· Social Security & Taxpayer ID numbers.
· Names of any subreps or associates you have working under you.
· Other special instructions you require.
Enclosed with this agreement (or, if it were emailed, substitute “Being forwarded to you”) is a complete set of sales materials that includes:
· Catalog binder
· Representative product samples and display units (Vendor may bill rep for these, with the expectation that the samples be returned or paid for when requested back by vendor, when partnership ends, or when product becomes discontinued. Rep may be responsible for payment of samples not returned).
A list of accounts in your area is attached. Your salesman number will be #62. (Vendor may request the rep handle these existing accounts or may request they keep hands off…or a combination of the two. Vendor will usually give details here as to how accounts are handled by the rep so that the rep gets credited with the commission).
Your commission level is ___% based on the pricing shown in your catalog binder and our wholesale website. If you need to discount from that price for larger accounts, your commission will be adjusted down accordingly. Please feel free to call and discuss before you discount any price. (Some vendors may provide a discounting schedule as well).
We accept credit cards Mastercard, Visa, and AMEX. We will accept COD Company Check with a bank reference. We can also do prepay via check mailed to us or wire transfer. In your catalog binder there is a standard Credit Application form if an account wants Net terms. We can also email this form to you. (Most companies will have policies such as this, or a few variations).
Please read this agreement thoroughly and feel free to call me with any questions or amendment concerns you might have. When you agree to what’s stated herein and any amendments we discuss, please sign and return original, keep a copy for your records. Welcome aboard!
Regards,
Sam Salesmanager
I have read and understand the above letter and by signing below, agree to the terms.
Date: ____________ Rep signature_________________________
Date:_______________ XYZ Sales Mgr ________________________
_________________________________________________________________________________
Don’t hesitate to ask a sales manager (or whoever has composed such a letter) to change anything to your favor. Something as simple as just asking for one additional state or part of a territory can reap benefits. They may have overlooked this area (they may be poor at geography and didn’t realize it was next door to your state!); if you are dealing with accounts in that area already and know the vendor is not being handled there, go for it.
In the next post, we’ll deal with a more formal looking legal contract. Both of these documents can be legally binding. The only difference is the kind of language used and the formality and tone expressed.
Wednesday, October 5, 2011
Monday, August 22, 2011
“That’s Not My Job” And How It Better Start To Be…
One of those snippets of AP-sourced news found on my browser home page recently announced that employees who objected to their boss asking them to occasionally take on some different task, might find themselves out of a job when/if the time comes to cut costs in payroll.
As an independent sales rep, or as any kind of entrepreneur, this is “old news”. If you are thinking of becoming any sort of self-employed individual, taking on another task should be second nature. Clean the bathroom, because it needs it. Do an associates job while he’s on vacation because, well, he’s on vacation and it needs being done!
Never once in the AP article did it mention the idea that employees that do willingly and cheerfully take on another task outside their normal job description, are the kind of employees that stand themselves to be promoted when/if that time comes…people do get promoted even during economic downturns, you know. And if you were in the boss’s shoes, who’d you want to promote? Someone who stuck to their “job description” or a well-rounded individual who knew the ropes all around?
Sadly, the fact we have to be told this kind of thing via an AP news blurb is pretty pathetic and an indication that Union Mentality creeps into all sorts of corners of the workplace. Do you like Unions? Would you like to move to Detroit or Appalachia?
I guarantee the boss-man/lady or owner spent many an extra hour cleaning the bathroom, cutting the lawn out front, cleaning dishes, packing and shipping the last 10 orders of the day, whatever it took, to keep the business running. If you want to wonder why they are boss, you might contemplate that.
T.Boone Pickens was a guest on a radio talk show I listened to in the 1980s. He was discussing entrepreneurship in particular. A caller, obviously a young man fresh out of school, asked him “Mr. Pickens, when one first starts out in their own business like you once did, about how many hours a week should they expect to work?”. Pickens answered in as kind a voice as he possibly could, “Ralph (or whatever his name was), if you are even thinking about that, you will never make it in your own business. To be your own boss, you work until the job gets done, or at least caught up”.
The “How many hours a week” mentality is very closely related to “That’s not MY job!”.
This is also why it is important for an independent rep to become as well-rounded and experienced as possible. YOU are your own boss…or you have many bosses. When you find something needs doing, you may be the only one who has the time or talent to do it. If a vendor (a boss, so to speak) needs something more than just someone to take orders and send them in, they will notice someone who’s talented in multiple areas.
Here are some examples of what a rep can do to go beyond “their job”:
· Get as tech savvy as possible, and keep educating yourself to what can be done with today’s technology. One of my own lines can name-drop a store’s logo onto the back of t-shirts. A customer who wasn’t very tech-savvy sent in a cute logo, but no script. They wanted us to add it. The vendor could not, or was hesitant to do so. I took it upon myself and after about 5 or 6 tries to get the dpi-resolution to comply, I got it to where the customer and vendor were both happy with the results.
Therefore the sale was made. It would not have been made if I had simply stuck to “my job”.
· Become a marketing expert. Marketing is the process where you prepare the prospective customer with information and tools so that when they are ready to buy, they buy from you…. or your vendor. Many vendors may be good at producing product, but they may do a questionable job marketing it. This means it may also be harder to sell. Sales are the end result of good marketing, not bad.
Don’t be afraid to offer help to a vendor that has a boring website or lacks any sort of print campaign. Think like the customer and translate that into “Would I buy from this company?”. Make up some of your own marketing materials or enhance your own website and see the results. Share them with your vendors.
· Think like an inventor. Use customer feedback or your own observations to think of what the market lacks…if you see a lot of products adapting a particular theme, fad, or trend, why not products that one particular vendor would be good at and has the production capability to pull off?
Remember the line of t-shirts that could be name-dropped? I suggested such a line to this vendor for several reasons. I had another line of good product of this sort, but horrible delivery. The vendor I contacted was already doing programs similar to what I had in mind, and I stressed they’d have a market pretty much all to themselves. It turned out with a little research, they agreed, and they could do the product fairly inexpensively compared to other things they had…and the new product could sell to their existing accounts as well.
· Be a bean counter. As mentioned in my book “The Independent Sales Rep” (check Amazon.com), you should keep track of your sales and commissions in detail. When you get paid, the check should have a detailed statement as to what orders it covers. It’s surprising many reps don’t do this. Check off those orders on your statement as though it was the bank statement for your checking account. Notify the vendor as to what orders from that period you were not paid for. It may be those orders are still in house and on hold due to the customer not paying an old invoice—you may offer your services as a collector too, but it may not have to come to that. It may be that the orders were lost. Or it may be they were shipped on time and credited to someone else.
Several times I have been owed commissions and went over my list with whatever list (or lack of it) a particular vendor had. When it became obvious to me in some of these cases that the person in charge of commissions couldn’t tell a PO# from a pig’s snout, I made a personal call to the owner/CEO of that particular company and told them: “In all honesty, if I had someone like that in charge my money at my company, I’d have my hand on my billfold 24 hours a day”. In each case, the commission handler was either fired or transferred to another department that did not involve handling money. These bean counters were not up to the job, so there may come a day when an independent rep has to be.
Of course the independent sales rep can’t literally do everything, from production down to shipping…but when things get stalled on account of someone, somewhere, not being able or willing to do their jobs, ask yourself: “Can this be something I can make my job?”. Customers and vendors alike will notice this and you’ll earn their trust.
As an independent sales rep, or as any kind of entrepreneur, this is “old news”. If you are thinking of becoming any sort of self-employed individual, taking on another task should be second nature. Clean the bathroom, because it needs it. Do an associates job while he’s on vacation because, well, he’s on vacation and it needs being done!
Never once in the AP article did it mention the idea that employees that do willingly and cheerfully take on another task outside their normal job description, are the kind of employees that stand themselves to be promoted when/if that time comes…people do get promoted even during economic downturns, you know. And if you were in the boss’s shoes, who’d you want to promote? Someone who stuck to their “job description” or a well-rounded individual who knew the ropes all around?
Sadly, the fact we have to be told this kind of thing via an AP news blurb is pretty pathetic and an indication that Union Mentality creeps into all sorts of corners of the workplace. Do you like Unions? Would you like to move to Detroit or Appalachia?
I guarantee the boss-man/lady or owner spent many an extra hour cleaning the bathroom, cutting the lawn out front, cleaning dishes, packing and shipping the last 10 orders of the day, whatever it took, to keep the business running. If you want to wonder why they are boss, you might contemplate that.
T.Boone Pickens was a guest on a radio talk show I listened to in the 1980s. He was discussing entrepreneurship in particular. A caller, obviously a young man fresh out of school, asked him “Mr. Pickens, when one first starts out in their own business like you once did, about how many hours a week should they expect to work?”. Pickens answered in as kind a voice as he possibly could, “Ralph (or whatever his name was), if you are even thinking about that, you will never make it in your own business. To be your own boss, you work until the job gets done, or at least caught up”.
The “How many hours a week” mentality is very closely related to “That’s not MY job!”.
This is also why it is important for an independent rep to become as well-rounded and experienced as possible. YOU are your own boss…or you have many bosses. When you find something needs doing, you may be the only one who has the time or talent to do it. If a vendor (a boss, so to speak) needs something more than just someone to take orders and send them in, they will notice someone who’s talented in multiple areas.
Here are some examples of what a rep can do to go beyond “their job”:
· Get as tech savvy as possible, and keep educating yourself to what can be done with today’s technology. One of my own lines can name-drop a store’s logo onto the back of t-shirts. A customer who wasn’t very tech-savvy sent in a cute logo, but no script. They wanted us to add it. The vendor could not, or was hesitant to do so. I took it upon myself and after about 5 or 6 tries to get the dpi-resolution to comply, I got it to where the customer and vendor were both happy with the results.
Therefore the sale was made. It would not have been made if I had simply stuck to “my job”.
· Become a marketing expert. Marketing is the process where you prepare the prospective customer with information and tools so that when they are ready to buy, they buy from you…. or your vendor. Many vendors may be good at producing product, but they may do a questionable job marketing it. This means it may also be harder to sell. Sales are the end result of good marketing, not bad.
Don’t be afraid to offer help to a vendor that has a boring website or lacks any sort of print campaign. Think like the customer and translate that into “Would I buy from this company?”. Make up some of your own marketing materials or enhance your own website and see the results. Share them with your vendors.
· Think like an inventor. Use customer feedback or your own observations to think of what the market lacks…if you see a lot of products adapting a particular theme, fad, or trend, why not products that one particular vendor would be good at and has the production capability to pull off?
Remember the line of t-shirts that could be name-dropped? I suggested such a line to this vendor for several reasons. I had another line of good product of this sort, but horrible delivery. The vendor I contacted was already doing programs similar to what I had in mind, and I stressed they’d have a market pretty much all to themselves. It turned out with a little research, they agreed, and they could do the product fairly inexpensively compared to other things they had…and the new product could sell to their existing accounts as well.
· Be a bean counter. As mentioned in my book “The Independent Sales Rep” (check Amazon.com), you should keep track of your sales and commissions in detail. When you get paid, the check should have a detailed statement as to what orders it covers. It’s surprising many reps don’t do this. Check off those orders on your statement as though it was the bank statement for your checking account. Notify the vendor as to what orders from that period you were not paid for. It may be those orders are still in house and on hold due to the customer not paying an old invoice—you may offer your services as a collector too, but it may not have to come to that. It may be that the orders were lost. Or it may be they were shipped on time and credited to someone else.
Several times I have been owed commissions and went over my list with whatever list (or lack of it) a particular vendor had. When it became obvious to me in some of these cases that the person in charge of commissions couldn’t tell a PO# from a pig’s snout, I made a personal call to the owner/CEO of that particular company and told them: “In all honesty, if I had someone like that in charge my money at my company, I’d have my hand on my billfold 24 hours a day”. In each case, the commission handler was either fired or transferred to another department that did not involve handling money. These bean counters were not up to the job, so there may come a day when an independent rep has to be.
Of course the independent sales rep can’t literally do everything, from production down to shipping…but when things get stalled on account of someone, somewhere, not being able or willing to do their jobs, ask yourself: “Can this be something I can make my job?”. Customers and vendors alike will notice this and you’ll earn their trust.
Wednesday, February 23, 2011
Where To Manufacture Your Product? China? Think Again
In recent years, when a start-up company wanted to have their goods manufactured the dominant mindset was “Well, let’s go to China”. Cheap labor was always the answer and China has it in abundance.
American manufacturing companies suffered as a result. They just could not compete. Large companies like Wal-Mart could set up their own facilities over in China and get the job done. Smaller companies, retail or wholesale, could find a source that would be willing to manufacture the items in bulk and ship to warehouses in the U.S.
As a rep I started noticing flaws in the past few years with this supposedly winning strategy. Customers may not have been willing to wait for several months or more that usually was the norm for manufacturing in China. Quality may not have always been there either.
An article in the March ’11 issue of Wired confirms that “Made In America” may be making a comeback. Recent currency rates certainly have something to do with it, but there are other key factors that may have been going on for quite a while.
The U.S., it turns out, has more manufacturers up to speed on robotics. Chinese have lots of cheap laborers, but robots eventually cost less than any human workers…and when things get going real good, robots don’t demand pay raises. Remember when Japan and Korea were both the places to go when you wanted to make something cheap? As those countries became more affluent, their laborers wanted more money. And their costs approached that of using U.S. workers. So you see Japanese carmakers building factories in Tennessee, Ohio, other U.S. states…and often, they are non-Union shops turning out good quality cars. These factories also pioneered robotics.
When one manufactures in China it involves huge quantities to be produced…and that large amount of inventory dollars may not be quite the advantage that a smaller cost-per-item means. U.S. companies may be better off with a domestic maker who doesn’t commit their customer to a boatload of finished goods months in the future. What if, by the time they show up, demand is starting to slacken for that particular item? If it is a new, innovative product, what if, by the time it shows up, someone else has produced a similar product domestically and beat you to the punch? They will have had several months of sales under their belt while you’re unpacking for the first time.
That touches on another aspect: waiting for months for goods to ship. Most customers appreciate fast service. If someone committed to a large purchase order of goods in early 2008, what do you think their reaction was when they shipped that holiday season when sales had plummeted during the start of the recession? There are many cases where a customer wants to hold his cards close to his vest and place an order with a quicker ship window. U.S. manufacturers hold an advantage here.
One company I’ve worked with that sells special, collectible guitar picks had this exact problem. Their Chinese connection promised goods by a certain time and kept putting off the delivery date. Funny, when they set up things in the first place, the manufacturer promised them the moon!
Whether this Chinese manufacturer was an outright liar or not, who can tell? I do know from personal experience, however, that many Asians think it rude to tell the truth when the truth might be bad news for the recipient. It isn’t that they are trying to deceive or cover their own hide…it’s just good etiquette on their part. My Indonesian wife and I needed to get some documents over to a translator during our honeymoon in Bali. We asked a cab driver if he knew the address, he replied he did. Then he proceeded to drive around aimlessly for the better part of an hour when the translator told us by phone she was only five minutes from the hotel. The driver finally admitted he was totally lost. We did not pay him as we got out and started walking...
They are trying to be polite, but would you want to tie up your goods with a guy who could turn out to be like that cab driver?
Brendon Koerner’s Wired piece also mentions the phenomenon where many Chinese manufacturers have reached their limit. They simply have too much work on their hands. What do they do from there? They either tell the American customer they can’t deliver when promised, or they outsource to another Chinese manufacturer in Western China where the quality standards may not be as high…and where the team doing the work has not dealt with the original source. The goods wind up being of inferior quality, and it’s a classic case of “penny-wise, pound foolish”. It’s real hard trying to return a boatload of inferior goods. If an American manufacturer screws up, at least it’s easier to get them to make good.
This leads us to the next problem: copyright and intellectual property theft. It’s well known that this issue dominates discussions between diplomatic corps of China and the U.S. If a manufacturer in Coastal China farms out some of his work to someone near Mongolia, how copyright protected are those goods? Obviously, this is a distinct possibility.
When discussing new product lines or product types with a vendor, it is a good idea for sales reps to mention the kinds of expectations their customers may have and what advantages “Made In U.S.A.” can have for faster service, better quality. In the long run, the extra cost, if there is one, may be worth it.
American manufacturing companies suffered as a result. They just could not compete. Large companies like Wal-Mart could set up their own facilities over in China and get the job done. Smaller companies, retail or wholesale, could find a source that would be willing to manufacture the items in bulk and ship to warehouses in the U.S.
As a rep I started noticing flaws in the past few years with this supposedly winning strategy. Customers may not have been willing to wait for several months or more that usually was the norm for manufacturing in China. Quality may not have always been there either.
An article in the March ’11 issue of Wired confirms that “Made In America” may be making a comeback. Recent currency rates certainly have something to do with it, but there are other key factors that may have been going on for quite a while.
The U.S., it turns out, has more manufacturers up to speed on robotics. Chinese have lots of cheap laborers, but robots eventually cost less than any human workers…and when things get going real good, robots don’t demand pay raises. Remember when Japan and Korea were both the places to go when you wanted to make something cheap? As those countries became more affluent, their laborers wanted more money. And their costs approached that of using U.S. workers. So you see Japanese carmakers building factories in Tennessee, Ohio, other U.S. states…and often, they are non-Union shops turning out good quality cars. These factories also pioneered robotics.
When one manufactures in China it involves huge quantities to be produced…and that large amount of inventory dollars may not be quite the advantage that a smaller cost-per-item means. U.S. companies may be better off with a domestic maker who doesn’t commit their customer to a boatload of finished goods months in the future. What if, by the time they show up, demand is starting to slacken for that particular item? If it is a new, innovative product, what if, by the time it shows up, someone else has produced a similar product domestically and beat you to the punch? They will have had several months of sales under their belt while you’re unpacking for the first time.
That touches on another aspect: waiting for months for goods to ship. Most customers appreciate fast service. If someone committed to a large purchase order of goods in early 2008, what do you think their reaction was when they shipped that holiday season when sales had plummeted during the start of the recession? There are many cases where a customer wants to hold his cards close to his vest and place an order with a quicker ship window. U.S. manufacturers hold an advantage here.
One company I’ve worked with that sells special, collectible guitar picks had this exact problem. Their Chinese connection promised goods by a certain time and kept putting off the delivery date. Funny, when they set up things in the first place, the manufacturer promised them the moon!
Whether this Chinese manufacturer was an outright liar or not, who can tell? I do know from personal experience, however, that many Asians think it rude to tell the truth when the truth might be bad news for the recipient. It isn’t that they are trying to deceive or cover their own hide…it’s just good etiquette on their part. My Indonesian wife and I needed to get some documents over to a translator during our honeymoon in Bali. We asked a cab driver if he knew the address, he replied he did. Then he proceeded to drive around aimlessly for the better part of an hour when the translator told us by phone she was only five minutes from the hotel. The driver finally admitted he was totally lost. We did not pay him as we got out and started walking...
They are trying to be polite, but would you want to tie up your goods with a guy who could turn out to be like that cab driver?
Brendon Koerner’s Wired piece also mentions the phenomenon where many Chinese manufacturers have reached their limit. They simply have too much work on their hands. What do they do from there? They either tell the American customer they can’t deliver when promised, or they outsource to another Chinese manufacturer in Western China where the quality standards may not be as high…and where the team doing the work has not dealt with the original source. The goods wind up being of inferior quality, and it’s a classic case of “penny-wise, pound foolish”. It’s real hard trying to return a boatload of inferior goods. If an American manufacturer screws up, at least it’s easier to get them to make good.
This leads us to the next problem: copyright and intellectual property theft. It’s well known that this issue dominates discussions between diplomatic corps of China and the U.S. If a manufacturer in Coastal China farms out some of his work to someone near Mongolia, how copyright protected are those goods? Obviously, this is a distinct possibility.
When discussing new product lines or product types with a vendor, it is a good idea for sales reps to mention the kinds of expectations their customers may have and what advantages “Made In U.S.A.” can have for faster service, better quality. In the long run, the extra cost, if there is one, may be worth it.
Wednesday, December 8, 2010
The Holiday Season—Super Bowl For Business: Don’t Fumble!
A friend of mine was on an airplane once and struck up a conversation with a fellow businessman. They were talking about, well, business, and this other guy told my friend,
“No matter what kind of business you’re in, a lot of what you do depends on going into or coming out of Christmas”.
The more you think about it, it’s true. My friend had a wholesale lumber business at the time and did not think the holidays really applied to him, but he started thinking more and more about how they should. He could very easily fine tune his marketing to cash in on the money changing hands during and because of Christmas. That’s the key.
Christmas comes once a year, and it offers an opportunity to look upon your business in a fresh way. Retailers ought to see it as the same kind of thing as a Grand Opening. Even if you sell summer garden supplies wholesale, if you don’t take advantage of the buying mood Christmas affords, you really ought to have your head examined.
Years ago in retail, having a well-stocked store was crucial for the holidays. Retailers did not worry about putting everything on sale—this was the time of year when you had captive shoppers who simply had to buy something. So it was also a time of year retailers made profits.
Wal-Mart and online shopping have changed that—this is why you see so many sales going on from Black Friday (the day after Thanksgiving) up to Christmas, maybe New Year’s Day. But it is still crucial for a retailer to have the goods even if they are not making as much margin on them, because how the retailer appears during the holidays will affect return traffic for the rest of the year and into the future.
Think about the chaos that happens during this time of year. If a retailer is running out of best selling goods, if he or she is short staffed, mismanaged in any way shape or form, how do you think the customer is going to react? What will the customer think of this store in April, August, or even next holiday season? Any fool can see that being on your toes during the holidays is going to pay dividends, just as it would during a Grand Opening.
Face it: a lot of retailers ARE in a chaotic state of affairs during this season. It separates the men from the boys. If you arrive at the Super Bowl and fumble in the opening drive, throw interceptions in the second quarter, lay down on defense in the third quarter, and generally poop out because you’re out of shape in the fourth, you are not going to win. But if you’re prepared, you win both in retail and in the Super Bowl.
The holiday season is the Super Bowl. You have all year to realize this. Don’t fumble!!!
Wholesalers and Sales Reps need to be on their toes too. How? The best way is to accommodate the winners you have as accounts who are preparing properly for this time of year. And go a step beyond accommodating them, train and educate them as well.
Here are the ways how:
Marketing Materials
· Right Way: have your catalogs, brochures, whatever you use for lead generators or informational needs, ready to be sent out by September 1st. I know, you’re complaining about department stores putting Christmas decorations out before Halloween. But think about that: do you think they expect shoppers to shop that early? Not really: but they do want to tell those shoppers that they, the store, is prepared. The same thing happens with priming your accounts in September and October. If they receive a new catalog and start preparing early, they will be better prepared when the customer crunch comes in late November. A store full of customers in late November is not the time for a retailer to be doing a thorough order for your products and lines. He should be free to wait on customers and nothing else.
Smaller, fill in orders can be done in November and December, but to do those, the retailer must have an idea of what’s moving, and he/she’ll have a better idea of what’s moving if they base that on a large stock order done earlier in the fall.
· Wrong Way: catalog and brochures released December 1st. You’re playing catch-up at this point. If you get orders, they will be done with half attention, half effort on the part of the retailer. Mark your calendar in June of next year to be on time (September) for having your print materials ready.
New Products
· Right Way: similar to your marketing material, have these ready to go in September. Some industries, like fashion, show products at trade shows almost a year in advance for large chains to buy in time for the holidays (or, for that matter, other seasons). Rolling out new items early gives accounts plenty of time to order them and get a read well before Christmas.
· Wrong Way: releasing any time after November 1st. This is not the time of year for market research and moving planograms around to accommodate something new. The movie industry can get away with Dec. 24th release dates, but odds are you can’t.
Sales Calls & Meetings
· Right Way: sales calls and meetings relating to the holidays should be held well in advance. For major chains, summer, maybe September at the latest. If you are a rep selling to wholesalers, you want to prep them so they are ready to meet with their accounts at that time, so your meeting may occur in the Spring or a year in advance. However, support staffs for major chain stores generally have slow schedules in the weeks around the holidays, and if a meeting concerns matters and issues for the coming year, that could be a good time to schedule a sales call.
· Wrong Way: any time after mid November for individual stores is a bad time to impose your presence on a retailer. That’s when they should concentrate on customer service, not listening to your spiel.
Shipping Schedule
· Right Way: have plenty of order pullers and shipping staff trained to the max to handle the extra business you should be receiving. Step it up a bit—if your usual in house time is three days, make it two. Come out with a schedule and notify all your accounts and reps (and you reps notify accounts too) to get orders in by a certain date to get shipments by Christmas week. Have warehouse personnel constantly monitor what is in house—no orders piled up in the “to do” tray. If there is a stack of boxes labeled for a particular account sitting for more than one day they should know exactly why—credit issues? Awaiting prepay? It should be shipped if there is nothing holding it back.
· Wrong Way: blasé attitude like it’s just another time of year. Giving some problem issue to someone else to do—in other words, all employees, if a customer or rep calls in wondering what is taking so long for an order, don’t give it to someone else to do. As Ross Perot once said, “If you see a snake, kill it. Don’t wait for some meeting to discuss the issue or think someone else will do it.”
Since the trend of holding huge holiday sale events at retail became vogue, the December holidays for smaller retailers have come close to disappearing…but many of these independent retailers are finding the period after the holidays to be just as important, if not more so. Reason? Gift Cards is a big part of it. But as a sales rep or wholesale vendor, be aware that “the holidays” can be considered to be a longer period now…almost Halloween to Valentine’s Day.
Anything that generates foot traffic at retail should be taken seriously, and the holiday season is the most traditional event of this type. Another, more recent phenomenon of traffic generation is the “tax free weekend” many states have adopted in order to encourage sales of school supplies/apparel (Texas started this) to hurricane season preparation (as in Louisiana). Even if a retailer does not sell the goods that qualify for tax free status, they can and should join in on the fun. When you think about it, saving 8% sales tax is not a big deal—would anyone respond to an 8% sale”? Yet they do, and many retailers go beyond 8% to attract shoppers. These events have whetted the appetite of shoppers so much that neighboring states (like Oklahoma) had to stage their own “tax free weekends” because local merchants were sick of seeing migrations to Texas every year at that time.
This shows the importance of that lemming-like mindset shoppers can possess with events like this. So why treat the Christmas holiday season like it is any other time of year? You know traffic is going to increase, you know customers are going to shop (and they will shop for items for themselves as well as gifts). They will be in the mood to spend money, no matter how dire the economy, and they’ve done so for 2010 years! It’s the Super Bowl, don’t fumble!
Prepare for this season and help your accounts prepare for it. It is the most crucial traffic generating time of year and no opportunities should be wasted.
“No matter what kind of business you’re in, a lot of what you do depends on going into or coming out of Christmas”.
The more you think about it, it’s true. My friend had a wholesale lumber business at the time and did not think the holidays really applied to him, but he started thinking more and more about how they should. He could very easily fine tune his marketing to cash in on the money changing hands during and because of Christmas. That’s the key.
Christmas comes once a year, and it offers an opportunity to look upon your business in a fresh way. Retailers ought to see it as the same kind of thing as a Grand Opening. Even if you sell summer garden supplies wholesale, if you don’t take advantage of the buying mood Christmas affords, you really ought to have your head examined.
Years ago in retail, having a well-stocked store was crucial for the holidays. Retailers did not worry about putting everything on sale—this was the time of year when you had captive shoppers who simply had to buy something. So it was also a time of year retailers made profits.
Wal-Mart and online shopping have changed that—this is why you see so many sales going on from Black Friday (the day after Thanksgiving) up to Christmas, maybe New Year’s Day. But it is still crucial for a retailer to have the goods even if they are not making as much margin on them, because how the retailer appears during the holidays will affect return traffic for the rest of the year and into the future.
Think about the chaos that happens during this time of year. If a retailer is running out of best selling goods, if he or she is short staffed, mismanaged in any way shape or form, how do you think the customer is going to react? What will the customer think of this store in April, August, or even next holiday season? Any fool can see that being on your toes during the holidays is going to pay dividends, just as it would during a Grand Opening.
Face it: a lot of retailers ARE in a chaotic state of affairs during this season. It separates the men from the boys. If you arrive at the Super Bowl and fumble in the opening drive, throw interceptions in the second quarter, lay down on defense in the third quarter, and generally poop out because you’re out of shape in the fourth, you are not going to win. But if you’re prepared, you win both in retail and in the Super Bowl.
The holiday season is the Super Bowl. You have all year to realize this. Don’t fumble!!!
Wholesalers and Sales Reps need to be on their toes too. How? The best way is to accommodate the winners you have as accounts who are preparing properly for this time of year. And go a step beyond accommodating them, train and educate them as well.
Here are the ways how:
Marketing Materials
· Right Way: have your catalogs, brochures, whatever you use for lead generators or informational needs, ready to be sent out by September 1st. I know, you’re complaining about department stores putting Christmas decorations out before Halloween. But think about that: do you think they expect shoppers to shop that early? Not really: but they do want to tell those shoppers that they, the store, is prepared. The same thing happens with priming your accounts in September and October. If they receive a new catalog and start preparing early, they will be better prepared when the customer crunch comes in late November. A store full of customers in late November is not the time for a retailer to be doing a thorough order for your products and lines. He should be free to wait on customers and nothing else.
Smaller, fill in orders can be done in November and December, but to do those, the retailer must have an idea of what’s moving, and he/she’ll have a better idea of what’s moving if they base that on a large stock order done earlier in the fall.
· Wrong Way: catalog and brochures released December 1st. You’re playing catch-up at this point. If you get orders, they will be done with half attention, half effort on the part of the retailer. Mark your calendar in June of next year to be on time (September) for having your print materials ready.
New Products
· Right Way: similar to your marketing material, have these ready to go in September. Some industries, like fashion, show products at trade shows almost a year in advance for large chains to buy in time for the holidays (or, for that matter, other seasons). Rolling out new items early gives accounts plenty of time to order them and get a read well before Christmas.
· Wrong Way: releasing any time after November 1st. This is not the time of year for market research and moving planograms around to accommodate something new. The movie industry can get away with Dec. 24th release dates, but odds are you can’t.
Sales Calls & Meetings
· Right Way: sales calls and meetings relating to the holidays should be held well in advance. For major chains, summer, maybe September at the latest. If you are a rep selling to wholesalers, you want to prep them so they are ready to meet with their accounts at that time, so your meeting may occur in the Spring or a year in advance. However, support staffs for major chain stores generally have slow schedules in the weeks around the holidays, and if a meeting concerns matters and issues for the coming year, that could be a good time to schedule a sales call.
· Wrong Way: any time after mid November for individual stores is a bad time to impose your presence on a retailer. That’s when they should concentrate on customer service, not listening to your spiel.
Shipping Schedule
· Right Way: have plenty of order pullers and shipping staff trained to the max to handle the extra business you should be receiving. Step it up a bit—if your usual in house time is three days, make it two. Come out with a schedule and notify all your accounts and reps (and you reps notify accounts too) to get orders in by a certain date to get shipments by Christmas week. Have warehouse personnel constantly monitor what is in house—no orders piled up in the “to do” tray. If there is a stack of boxes labeled for a particular account sitting for more than one day they should know exactly why—credit issues? Awaiting prepay? It should be shipped if there is nothing holding it back.
· Wrong Way: blasé attitude like it’s just another time of year. Giving some problem issue to someone else to do—in other words, all employees, if a customer or rep calls in wondering what is taking so long for an order, don’t give it to someone else to do. As Ross Perot once said, “If you see a snake, kill it. Don’t wait for some meeting to discuss the issue or think someone else will do it.”
Since the trend of holding huge holiday sale events at retail became vogue, the December holidays for smaller retailers have come close to disappearing…but many of these independent retailers are finding the period after the holidays to be just as important, if not more so. Reason? Gift Cards is a big part of it. But as a sales rep or wholesale vendor, be aware that “the holidays” can be considered to be a longer period now…almost Halloween to Valentine’s Day.
Anything that generates foot traffic at retail should be taken seriously, and the holiday season is the most traditional event of this type. Another, more recent phenomenon of traffic generation is the “tax free weekend” many states have adopted in order to encourage sales of school supplies/apparel (Texas started this) to hurricane season preparation (as in Louisiana). Even if a retailer does not sell the goods that qualify for tax free status, they can and should join in on the fun. When you think about it, saving 8% sales tax is not a big deal—would anyone respond to an 8% sale”? Yet they do, and many retailers go beyond 8% to attract shoppers. These events have whetted the appetite of shoppers so much that neighboring states (like Oklahoma) had to stage their own “tax free weekends” because local merchants were sick of seeing migrations to Texas every year at that time.
This shows the importance of that lemming-like mindset shoppers can possess with events like this. So why treat the Christmas holiday season like it is any other time of year? You know traffic is going to increase, you know customers are going to shop (and they will shop for items for themselves as well as gifts). They will be in the mood to spend money, no matter how dire the economy, and they’ve done so for 2010 years! It’s the Super Bowl, don’t fumble!
Prepare for this season and help your accounts prepare for it. It is the most crucial traffic generating time of year and no opportunities should be wasted.
Friday, October 29, 2010
Reasons Reps Fail
If this economy hasn’t taught us all anything, we really are doomed for failure. Nobody, no company, (and certainly no government) can survive by continuing to spend money they don’t have, or continue to always do “business as usual”. Being in a drastically changing business has given this writer front row seats to witness just how and why businesses, companies and yes, even independent sales reps fail.
Being an independent rep is still a great way to operate your own business…be your own boss…and write your own ticket for success. But like any other vocation, one can get lazy and complacent…can get stuck in a routine and be blind to changes going on around them. Here are some of the common pitfalls my past colleagues or competitors fell prey to and are, as a result, no longer independent sales reps:
Thinking vendors are your sole source of identity: What this means is that you, as a rep, tend to think that your vendors are your reason for being and are your strong point, your main source of value. Of course, vendors you represent are your source of income. But think about it for a minute: why are you valued as a rep? It’s also because of the network of customers and relationships you have. It’s your expertise in getting product placed in accounts. Why do you think vendors ask you to rep for them in the first place? It may be because you have other vendors that compliment their product line, but it’s mostly your relationships with customers they are after.
Allowing this balance between your customer relationships and vendor relationships to go too far toward the vendor side is dangerous. About fifteen years ago many vendors in the industry I am in started using a large rep firm that was looking to expand into other territories. Vendors were presented with a choice by this rep firm: your existing rep or us. Many existing reps lost those vendors, in some cases myself included. I took two actions as a result:
· I started re-examining the other vendors I already had, and vowed to work them a bit harder now that I had more free time, and
· I looked for other new vendors in slightly different product lines that would appeal to my customer base.
Some of these new vendors worked out extremely well. Some were vendors that large rep group also had, but that they were overlooking and not working!
Other reps who’d lost these lines made appointments to meet with the vendors that fired them at subsequent trade shows to basically beg back for their jobs. This would wind up being a waste of time, because oddly enough, many of those vendors would go out of business within a few years! The jilted reps would have done much better by looking for new lines at the trade show, or attending other trade shows to look for new product lines that could appeal to their customer base.
Besides wasting time asking for their territories back, these jilted reps were also presenting themselves in a bad light. Think about it, if someone is fired at any type of business, what image does the fired employee project when they go back to the company and ask for their job again and again?
Relying too much on one big account: big accounts are desirable but to sit back and rest on one big account or a few fairly large ones is dangerous as well. In economies like this, many of these types of accounts are always looking for favorable deals, lower prices…and product that may very well be those other than yours. And let’s not forget that big account could go belly up or be sold to another company who will be now making decisions outside of your territory.
A smart move when you find yourself in a situation where your business is heavily weighed in one account is to use the earnings from the commissions earned to try to expand into other territories, other account types, picking up a few new lines that can redirect you accordingly. Get into more small accounts…and then from there you can possibly move into another big account that you’ve never had a chance to sell before.
Another tactic is to try to get other product lines into that same account—not other brands of the same type of goods, but other goods entirely. Is the account a retailer that sells a multitude of product types? Most do nowadays. Are they a distributor catering to a certain industry? They have to be diverse to make money these days, so why not take advantage of your relationship with the account by selling them something else….this leads to the next point,
Relying too much on one product type: some reps see themselves as selling only widgets or microthingies—they carry tons of lines on that one product type thinking that will last them forever and they will be able to hand it down to their grandchildren. Think again.
Reps that I was competing with or selling alongside of a decade ago when one particular type of product (in our case, t-shirts) were the big commission earner, are now gone. They are selling cars or real estate or something else. They relied too much on one particular product rather than keeping their eye out for other trends that would appeal to the same customers…and better yet, in turn allow them to do business with new types of customers.
Thirty years ago it was thought people would buy phonograph records, or at least recorded music, forever. The head of the retail chain I was working for at the time had a good analogy, and it applies to sales reps as well as it does retail. He surmised that our chain was going to get involved in selling and renting video movies, where most of our competition was resisting. He said “we sell entertainment, that’s why we’re going to try selling video, whatever it takes”.
The analogy was this: in the 1930s, the railroads passed on developing and investing in interstate truck transport. They said “We’re railroads, that’s what we do, we’re not into hauling product over highways”. Last time I looked there is really only one major corporation hauling freight by rail these days: BNSF—the letters standing for decades worth of mergers that resulted in one last standing. But there are many trucking lines hauling freight over our highways—and doing a better job of getting stuff to us because not every storefront or warehouse backs up to a set of rails.
“Record” retailers that realized they sold entertainment instead of just recorded music have survived because they got into video, then video games, and any other entertainment trend they could. Those that did not, have disappeared. It’s also interesting to note even those later retailers that picked up on video when the record stores did not, but then subsequently painted themselves into a corner by not diversifying, they too are disappearing—been to a Blockbuster lately?
Nokia started out a century ago selling toilet paper…now they are one of the world’s cell phone manufacturers! So there is a lesson here. Don’t restrict yourself as a rep that only sells one kind of product. You never know how long it will last, or even if it will last at all.
You’re only as good as your last recent sale..or the ones that will be your future sales: some reps had moments of glory then they just coast along without keeping up with trends and keeping an eye out for opportunities for the future.
If you keep hearing requests from customers for product that isn’t really out there or is being offered by a competitor that isn’t keeping up with demand, get on the phone and talk to some of your trusted vendors about the opportunity that’s being ignored.
Once you’ve landed a successful sale to an account, keep up with it. Keep looking for ways to make it better. Don’t let the product get stale. Don’t let the success go to your head.
There’s probably no better example of success gone stale than the Dallas Cowboys football team. In spite of having a talented team, they continually fall way short of the kinds of success they had 15 years ago. Seeing their frustrations on the field you can’t help but feel they just don’t have the hunger required to have a championship winning team anymore.
Spending money like a drunken sailor: if you can work out of your home, why are you renting office space? If the ad you placed is not getting any quality leads, why have you continued to advertise in that magazine or website for years? If you can get around in a smaller car, why are you driving a massive SUV? If there are 20 companies out there that offer phone, internet etc service at competitive rates why aren’t you at least renegotiating with your present provider? If hardly any of your lines bother to exhibit at a particular trade show anymore, and you have not found any new quality lines at that show in years, why do you bother flying to it and renting car and hotel room—to say nothing of spending a whole week wasting time there? Cut out the fat and quit spending money like a congressman. It’s not necessarily how much money you earn, it’s how much you keep.
Summing it all up, hopefully most reps can survive this economy and emerge even stronger when it improves. Lesson learned: Stay hungry as a rep! Grow your business by expanding your customer base as well as expanding the portfolio of lines you can sell. Keep your eyes out for new opportunities—for new things to learn and profit from.
Being an independent rep is still a great way to operate your own business…be your own boss…and write your own ticket for success. But like any other vocation, one can get lazy and complacent…can get stuck in a routine and be blind to changes going on around them. Here are some of the common pitfalls my past colleagues or competitors fell prey to and are, as a result, no longer independent sales reps:
Thinking vendors are your sole source of identity: What this means is that you, as a rep, tend to think that your vendors are your reason for being and are your strong point, your main source of value. Of course, vendors you represent are your source of income. But think about it for a minute: why are you valued as a rep? It’s also because of the network of customers and relationships you have. It’s your expertise in getting product placed in accounts. Why do you think vendors ask you to rep for them in the first place? It may be because you have other vendors that compliment their product line, but it’s mostly your relationships with customers they are after.
Allowing this balance between your customer relationships and vendor relationships to go too far toward the vendor side is dangerous. About fifteen years ago many vendors in the industry I am in started using a large rep firm that was looking to expand into other territories. Vendors were presented with a choice by this rep firm: your existing rep or us. Many existing reps lost those vendors, in some cases myself included. I took two actions as a result:
· I started re-examining the other vendors I already had, and vowed to work them a bit harder now that I had more free time, and
· I looked for other new vendors in slightly different product lines that would appeal to my customer base.
Some of these new vendors worked out extremely well. Some were vendors that large rep group also had, but that they were overlooking and not working!
Other reps who’d lost these lines made appointments to meet with the vendors that fired them at subsequent trade shows to basically beg back for their jobs. This would wind up being a waste of time, because oddly enough, many of those vendors would go out of business within a few years! The jilted reps would have done much better by looking for new lines at the trade show, or attending other trade shows to look for new product lines that could appeal to their customer base.
Besides wasting time asking for their territories back, these jilted reps were also presenting themselves in a bad light. Think about it, if someone is fired at any type of business, what image does the fired employee project when they go back to the company and ask for their job again and again?
Relying too much on one big account: big accounts are desirable but to sit back and rest on one big account or a few fairly large ones is dangerous as well. In economies like this, many of these types of accounts are always looking for favorable deals, lower prices…and product that may very well be those other than yours. And let’s not forget that big account could go belly up or be sold to another company who will be now making decisions outside of your territory.
A smart move when you find yourself in a situation where your business is heavily weighed in one account is to use the earnings from the commissions earned to try to expand into other territories, other account types, picking up a few new lines that can redirect you accordingly. Get into more small accounts…and then from there you can possibly move into another big account that you’ve never had a chance to sell before.
Another tactic is to try to get other product lines into that same account—not other brands of the same type of goods, but other goods entirely. Is the account a retailer that sells a multitude of product types? Most do nowadays. Are they a distributor catering to a certain industry? They have to be diverse to make money these days, so why not take advantage of your relationship with the account by selling them something else….this leads to the next point,
Relying too much on one product type: some reps see themselves as selling only widgets or microthingies—they carry tons of lines on that one product type thinking that will last them forever and they will be able to hand it down to their grandchildren. Think again.
Reps that I was competing with or selling alongside of a decade ago when one particular type of product (in our case, t-shirts) were the big commission earner, are now gone. They are selling cars or real estate or something else. They relied too much on one particular product rather than keeping their eye out for other trends that would appeal to the same customers…and better yet, in turn allow them to do business with new types of customers.
Thirty years ago it was thought people would buy phonograph records, or at least recorded music, forever. The head of the retail chain I was working for at the time had a good analogy, and it applies to sales reps as well as it does retail. He surmised that our chain was going to get involved in selling and renting video movies, where most of our competition was resisting. He said “we sell entertainment, that’s why we’re going to try selling video, whatever it takes”.
The analogy was this: in the 1930s, the railroads passed on developing and investing in interstate truck transport. They said “We’re railroads, that’s what we do, we’re not into hauling product over highways”. Last time I looked there is really only one major corporation hauling freight by rail these days: BNSF—the letters standing for decades worth of mergers that resulted in one last standing. But there are many trucking lines hauling freight over our highways—and doing a better job of getting stuff to us because not every storefront or warehouse backs up to a set of rails.
“Record” retailers that realized they sold entertainment instead of just recorded music have survived because they got into video, then video games, and any other entertainment trend they could. Those that did not, have disappeared. It’s also interesting to note even those later retailers that picked up on video when the record stores did not, but then subsequently painted themselves into a corner by not diversifying, they too are disappearing—been to a Blockbuster lately?
Nokia started out a century ago selling toilet paper…now they are one of the world’s cell phone manufacturers! So there is a lesson here. Don’t restrict yourself as a rep that only sells one kind of product. You never know how long it will last, or even if it will last at all.
You’re only as good as your last recent sale..or the ones that will be your future sales: some reps had moments of glory then they just coast along without keeping up with trends and keeping an eye out for opportunities for the future.
If you keep hearing requests from customers for product that isn’t really out there or is being offered by a competitor that isn’t keeping up with demand, get on the phone and talk to some of your trusted vendors about the opportunity that’s being ignored.
Once you’ve landed a successful sale to an account, keep up with it. Keep looking for ways to make it better. Don’t let the product get stale. Don’t let the success go to your head.
There’s probably no better example of success gone stale than the Dallas Cowboys football team. In spite of having a talented team, they continually fall way short of the kinds of success they had 15 years ago. Seeing their frustrations on the field you can’t help but feel they just don’t have the hunger required to have a championship winning team anymore.
Spending money like a drunken sailor: if you can work out of your home, why are you renting office space? If the ad you placed is not getting any quality leads, why have you continued to advertise in that magazine or website for years? If you can get around in a smaller car, why are you driving a massive SUV? If there are 20 companies out there that offer phone, internet etc service at competitive rates why aren’t you at least renegotiating with your present provider? If hardly any of your lines bother to exhibit at a particular trade show anymore, and you have not found any new quality lines at that show in years, why do you bother flying to it and renting car and hotel room—to say nothing of spending a whole week wasting time there? Cut out the fat and quit spending money like a congressman. It’s not necessarily how much money you earn, it’s how much you keep.
Summing it all up, hopefully most reps can survive this economy and emerge even stronger when it improves. Lesson learned: Stay hungry as a rep! Grow your business by expanding your customer base as well as expanding the portfolio of lines you can sell. Keep your eyes out for new opportunities—for new things to learn and profit from.
Thursday, August 5, 2010
Is This The End Of Brick And Mortar Retail?
This week, two bits of news hit the streets—actually, most people got the news hitting their screens, since that’s where they get their news now…and that’s a good clue as to the theme this article will take.
The two news items were these:
· Amazon announced that book download sales (i.e. for their Kindle or other electronic readers) surpassed sales of hardback books on Amazon.com
· Barnes & Noble Booksellers, with 720 brick and mortar locations, has announced it’s up for sale, citing the crossroads it finds itself at with the rising prominence of electronic books mentioned above…
We can learn a lot from the failure of most music retailers who did not adequately prepare themselves for the decline and demise of physical recorded music products…and from what may be B&N’s smart move to get out while the getting’s good.
Retailers will be the main beneficiaries of such lessons but those that support or make a living from dealing with retailers, can learn from these events as well.
It doesn’t matter what type of retailer we are talking about. Many brick and mortar retailers have online versions of their stores, and that’s good…but for those that don’t, they need to realize: Online retailers pose a threat to any brick and mortar location. Lucky will be those who work for a brick and mortar location in a company that also has a strong web presence…and they can switch their job over to that division of their corporation. But for those smaller businesses out there with no web presence or a weak presence online, this needs to be addressed.
Think about it: What makes someone shop at any particular store? There are a variety of reasons, but throughout history the biggest three reasons have always been:
· Location
· Selection
· Price
…and you know what Mr. Brick&Mortar Retailer? The web nails you to the wall in all three!
Location has always been dominant in these three factors. The biggest cliché in retail success formulas is “Location, Location, Location”. If your store was convenient to drive-/ride-/walk- to from the customer’s home or business, or between the two, your store had a distinct advantage. But now, the web beats you all the time, because the customer doesn’t even leave his house to shop!
Selection and price battle back and forth for second/third place. The selection on any web retail location is always superb—look at Amazon vs. just about anybody in whatever it is they sell. Price is the same way, the web can keep costs low and pass that savings along to the customer even if the customer has to pay a shipping and handling fee.
So what’s next, you wonder? Miles of empty storefronts? Possibly…but look around at the types of stores that seem to attract traffic. Notice anything?
For example, there seems to be a plethora of independent coffee shops even in the wake of the expansion and contraction of Starbucks. Almost all of these indies seem to be doing well. But nearly all of them host events like live music and open mic night almost daily. Starbucks didn’t do this as much. They sold exclusive CDs…but so what? Is that going to get you the customer out of the house, particularly when Starbucks usually sold the CDs on their web store as well?
Large specialty retailers like Michaels and Lowes hold seminars and classes on how to scrapbook, how to lay tile, any type of activity involving the product they sell, whether it’s hobby/craft related or having to do with home improvement. These events may not result in a customer actually buying anything at that time, but so what? It’s a form of marketing that a business must do to build its customer base.
Existing retailers must learn how to trick up their business by making their LOCATION a place to go, a destination to be yearned for by the customer. Retail Stores of the future will have to do a better job of enticing the customer out from behind his computer, into his garage, into his car and to drive several miles to get to that location! I’m not saying you have to hold “Ladies Night” like the local pickup bar does every Tuesday night…but as a theory, that’s not a bad idea when you think about it: Give single ladies heavily discounted or free drinks /food and that will entice more single guys who pay full price….plus, do it on the slowest night of the week.
This may mean more retailers are open later at night or longer hours on weekends to accommodate…so be it. If they try to trick up their SELECTION they run the risk of overstocking themselves and killing their turn on inventory and preventing open-to-buy dollars being available when they really need it, like the holidays.
If they try to trick up their PRICES they will slash their profit margins and go the way of many failed businesses in the past that thought PRICE was all that mattered to the customer. A smaller chain or independent retailer simply cannot compete on price with the likes of Wal-Mart, and whenever they attempt, they lose.
Support services and suppliers for retailers, such as sales reps, would be wise to keep an eye out for such opportunities to accommodate the “tricking up” of LOCATION. Don’t just push more SELECTIONs at “better” PRICES, because that will only result in the failure of the brick and mortar retailer to continue in business, or to continue to be a lucrative account.
If Support picks up new product lines or engages in joint venture with other companies that can accommodate just that kind of help to make the location a more desirable one, that will endear them to the retailer and expand upon the role from being a salesman/customer to teacher/student. We all remember good teachers with far more fondness than we do good salesmen, don’t we?
An example? How about the supplier of mugs, coffee makers and store fixtures for your typical coffeehouse becoming suppliers (and better yet, installers) of sound and audio equipment? Or, at least joint-venturing with a music store that does just that kind of installation? In return, that coffee-equipment supplier might be able to get some references from the audio technician of some of the churches, schools, offices, theaters he has serviced…and when this writer last checked, coffee machines are used a lot in all of those places-- so much so that the standard store-bought models often break down.
More and more, the retailer of the future will be providing a service, an entertainment if you will. If you have a retail store you should already have some way to sell online either by your own site or partnered up with Amazon or another web powerhouse. But you must make your store a better location/destination. If you are in any sort of retail support business, find ways to help keep your customers on this trend.
The two news items were these:
· Amazon announced that book download sales (i.e. for their Kindle or other electronic readers) surpassed sales of hardback books on Amazon.com
· Barnes & Noble Booksellers, with 720 brick and mortar locations, has announced it’s up for sale, citing the crossroads it finds itself at with the rising prominence of electronic books mentioned above…
We can learn a lot from the failure of most music retailers who did not adequately prepare themselves for the decline and demise of physical recorded music products…and from what may be B&N’s smart move to get out while the getting’s good.
Retailers will be the main beneficiaries of such lessons but those that support or make a living from dealing with retailers, can learn from these events as well.
It doesn’t matter what type of retailer we are talking about. Many brick and mortar retailers have online versions of their stores, and that’s good…but for those that don’t, they need to realize: Online retailers pose a threat to any brick and mortar location. Lucky will be those who work for a brick and mortar location in a company that also has a strong web presence…and they can switch their job over to that division of their corporation. But for those smaller businesses out there with no web presence or a weak presence online, this needs to be addressed.
Think about it: What makes someone shop at any particular store? There are a variety of reasons, but throughout history the biggest three reasons have always been:
· Location
· Selection
· Price
…and you know what Mr. Brick&Mortar Retailer? The web nails you to the wall in all three!
Location has always been dominant in these three factors. The biggest cliché in retail success formulas is “Location, Location, Location”. If your store was convenient to drive-/ride-/walk- to from the customer’s home or business, or between the two, your store had a distinct advantage. But now, the web beats you all the time, because the customer doesn’t even leave his house to shop!
Selection and price battle back and forth for second/third place. The selection on any web retail location is always superb—look at Amazon vs. just about anybody in whatever it is they sell. Price is the same way, the web can keep costs low and pass that savings along to the customer even if the customer has to pay a shipping and handling fee.
So what’s next, you wonder? Miles of empty storefronts? Possibly…but look around at the types of stores that seem to attract traffic. Notice anything?
For example, there seems to be a plethora of independent coffee shops even in the wake of the expansion and contraction of Starbucks. Almost all of these indies seem to be doing well. But nearly all of them host events like live music and open mic night almost daily. Starbucks didn’t do this as much. They sold exclusive CDs…but so what? Is that going to get you the customer out of the house, particularly when Starbucks usually sold the CDs on their web store as well?
Large specialty retailers like Michaels and Lowes hold seminars and classes on how to scrapbook, how to lay tile, any type of activity involving the product they sell, whether it’s hobby/craft related or having to do with home improvement. These events may not result in a customer actually buying anything at that time, but so what? It’s a form of marketing that a business must do to build its customer base.
Existing retailers must learn how to trick up their business by making their LOCATION a place to go, a destination to be yearned for by the customer. Retail Stores of the future will have to do a better job of enticing the customer out from behind his computer, into his garage, into his car and to drive several miles to get to that location! I’m not saying you have to hold “Ladies Night” like the local pickup bar does every Tuesday night…but as a theory, that’s not a bad idea when you think about it: Give single ladies heavily discounted or free drinks /food and that will entice more single guys who pay full price….plus, do it on the slowest night of the week.
This may mean more retailers are open later at night or longer hours on weekends to accommodate…so be it. If they try to trick up their SELECTION they run the risk of overstocking themselves and killing their turn on inventory and preventing open-to-buy dollars being available when they really need it, like the holidays.
If they try to trick up their PRICES they will slash their profit margins and go the way of many failed businesses in the past that thought PRICE was all that mattered to the customer. A smaller chain or independent retailer simply cannot compete on price with the likes of Wal-Mart, and whenever they attempt, they lose.
Support services and suppliers for retailers, such as sales reps, would be wise to keep an eye out for such opportunities to accommodate the “tricking up” of LOCATION. Don’t just push more SELECTIONs at “better” PRICES, because that will only result in the failure of the brick and mortar retailer to continue in business, or to continue to be a lucrative account.
If Support picks up new product lines or engages in joint venture with other companies that can accommodate just that kind of help to make the location a more desirable one, that will endear them to the retailer and expand upon the role from being a salesman/customer to teacher/student. We all remember good teachers with far more fondness than we do good salesmen, don’t we?
An example? How about the supplier of mugs, coffee makers and store fixtures for your typical coffeehouse becoming suppliers (and better yet, installers) of sound and audio equipment? Or, at least joint-venturing with a music store that does just that kind of installation? In return, that coffee-equipment supplier might be able to get some references from the audio technician of some of the churches, schools, offices, theaters he has serviced…and when this writer last checked, coffee machines are used a lot in all of those places-- so much so that the standard store-bought models often break down.
More and more, the retailer of the future will be providing a service, an entertainment if you will. If you have a retail store you should already have some way to sell online either by your own site or partnered up with Amazon or another web powerhouse. But you must make your store a better location/destination. If you are in any sort of retail support business, find ways to help keep your customers on this trend.
Friday, July 9, 2010
BIGGER Is Better--Oh, Really???
If bigger is better, why is it the dinosaurs are no longer around, but the small rodents, insects and microbes they shared the world with are?
We live in an age where big government bails out big businesses and banks that are “too big to fail”. Any idiot can tell you these bailouts just postpone the inevitable—that these businesses will go back to their failed way of doing things, will keep making mistakes and they will fail again, but who will be there to bail them out? Big government can change laws and pass bills that temporarily prolong the vital signs of these dinosaurs but they can’t change the laws of mathematics. They can’t spend money they don’t have or can’t get without thoroughly antagonizing the electorate…and they can’t print more money without suffering even more disastrous consequences in the form of inflation.
“B-b-but what are we supposed to do?” Let ‘em fail, I suggest. Let the cream rise to the top and let’s grow in a positive manner. General Motors would have been better off to fail, sell off divisions that they could (are you telling me Corvette couldn’t stand on it’s own alone as a brand when Ferrari can?) and let people who feel they can make things work right in a downsized world do what they must. Smaller, leaner, more efficient and able to turn a profit.
There’s ample evidence that the bigger a company gets, the more it chums up with the government. And there’s ample evidence the government is lousy at running most of what they attempt to run. Listening to members of Congress and other bureaucrats (most of whom have never balanced a budget or run a business profitably) grill executives from Wall Street and Toyota is laughable when you think about it deep and hard.
So what does this have to do with independent sales reps?
Let’s take vendor relationships for starters. An indie rep will try to add as many lines as he/she can, but with the realization the top 20% or so will account for about 80% of their income. So while it might seem that the rep is trying to be “bigger is better”, they know full well they can’t fully represent each and every line in their portfolio.
Vendors and reps should discuss things beforehand to get an idea as to how much business they can do together. The line a rep is taking on may be a huge potential source of commissions, or it may be a line the rep feels can only go into a few targeted accounts. It’s important to think about this on both sides. It’s important too that the small vendor realize that his line may be on a “reserve” status…but that the possibility may come someday when they have a product the rep can really cut loose with. Relationships may be forged that will pan out later. So long as the vendor can keep expenses low in the rep relationship (which is easy nowadays with websites and high quality images available online), the wait for the relationship to strike gold is worth it.
No matter how many lines a rep has, there will always be a select few that are, what the rep will feel, are the strongest. These may have popular trendy items, good perennial sellers, or the vendor may just provide a decent commission structure and have a great reputation for service. Ideally, these favored vendors will combine all of these attributes: “current hits”, great day-to-day bestsellers, timely and fair commissions and service that a rep doesn’t have to sweat over later on. It should be understood too that such a vendor would be morally well grounded and not have a reputation for backstabbing or otherwise ruining the relationship with the rep. If the vendor feels the need to end the relationship it will be done in a professional and open manner.
Here’s where the lure of “bigger is better” starts to threaten the rep—and any business. What if the rep has many lines, but tends to pay attention to a favored few that he or she thinks are great just because they are “big”? They have a lot of trendy product to sell, but they just so happen to be lousy at aspects like paying commissions and service.
In this case, the rep is writing orders mostly for those lines, yet waiting longer to get paid (if at all) and since the service is terrible, may only be getting paid for 40% of his work, since that is the fill-rate potential on these supposed “bigger is better” vendors. This happens quite a lot in many businesses.
Jonathan Knee, in his book Curse Of The Mogul discusses many of the mergers that have happened in the last several decades with media related companies. While many of these mergers looked great in theory and their CEOs (or “moguls”) promised the moon, very rarely did these new mega mergers make money for their shareholders, or provide better products or service to customers. The moguls and their close friends and colleagues (who you just know happen to hover around our nation’s capitol) are the only ones who make money in these deals because, in forming the merger, they specifically structure pay for executives with huge bonuses whether the company is profitable or not. A great example of such a failed venture was AOL/Time-Warner.
Remember the popular book The Peter Principle (Lawrence Peter & Raymond Hull, 1969)? This was the theory that in most businesses individuals would advance through the ranks but eventually hit their “level of incompetence”—in other words, they’d reach a point at which their limitations would become evident. From there they’d either get demoted or they’d remain in that position and cause everyone around them to work harder to compensate for the individual’s incompetence. Sound kind of like what we have today, on a grand scale, from President Obama on down…doesn’t it?
But not down all the way. There are many small businesses and sales reps out there that know their limitations and live within their means. A rep can take on many lines, but the beauty of being an independent sales rep is that he or she can use the weapons (vendor relationships) at their disposal and apply them in order to maximize their business at any particular time.
A rep that focuses too much on being “bigger is better”, by focusing in on dominating one particular product type, or on vendors who outwardly appear superior but are lacking in certain areas, will almost assuredly fail over the long haul. Focusing in on “small” or (as a better way to put it), lean and fit, means the rep can change course quickly. He can react to positive trends or little disasters that would otherwise go unnoticed or cripple a big lumbering dinosaur who would either take too long to react, or won’t be able to react at all because they are so entrenched.
In one of the Dirty Harry films, Clint Eastwood, after outwitting one of his foes and watching as that foe gets blasted to Kingdom Come, mumbles “A man’s got to know his limitations”. This is advice we as a society better start heeding…and it’s great advice for reps and the vendors they work with.
We live in an age where big government bails out big businesses and banks that are “too big to fail”. Any idiot can tell you these bailouts just postpone the inevitable—that these businesses will go back to their failed way of doing things, will keep making mistakes and they will fail again, but who will be there to bail them out? Big government can change laws and pass bills that temporarily prolong the vital signs of these dinosaurs but they can’t change the laws of mathematics. They can’t spend money they don’t have or can’t get without thoroughly antagonizing the electorate…and they can’t print more money without suffering even more disastrous consequences in the form of inflation.
“B-b-but what are we supposed to do?” Let ‘em fail, I suggest. Let the cream rise to the top and let’s grow in a positive manner. General Motors would have been better off to fail, sell off divisions that they could (are you telling me Corvette couldn’t stand on it’s own alone as a brand when Ferrari can?) and let people who feel they can make things work right in a downsized world do what they must. Smaller, leaner, more efficient and able to turn a profit.
There’s ample evidence that the bigger a company gets, the more it chums up with the government. And there’s ample evidence the government is lousy at running most of what they attempt to run. Listening to members of Congress and other bureaucrats (most of whom have never balanced a budget or run a business profitably) grill executives from Wall Street and Toyota is laughable when you think about it deep and hard.
So what does this have to do with independent sales reps?
Let’s take vendor relationships for starters. An indie rep will try to add as many lines as he/she can, but with the realization the top 20% or so will account for about 80% of their income. So while it might seem that the rep is trying to be “bigger is better”, they know full well they can’t fully represent each and every line in their portfolio.
Vendors and reps should discuss things beforehand to get an idea as to how much business they can do together. The line a rep is taking on may be a huge potential source of commissions, or it may be a line the rep feels can only go into a few targeted accounts. It’s important to think about this on both sides. It’s important too that the small vendor realize that his line may be on a “reserve” status…but that the possibility may come someday when they have a product the rep can really cut loose with. Relationships may be forged that will pan out later. So long as the vendor can keep expenses low in the rep relationship (which is easy nowadays with websites and high quality images available online), the wait for the relationship to strike gold is worth it.
No matter how many lines a rep has, there will always be a select few that are, what the rep will feel, are the strongest. These may have popular trendy items, good perennial sellers, or the vendor may just provide a decent commission structure and have a great reputation for service. Ideally, these favored vendors will combine all of these attributes: “current hits”, great day-to-day bestsellers, timely and fair commissions and service that a rep doesn’t have to sweat over later on. It should be understood too that such a vendor would be morally well grounded and not have a reputation for backstabbing or otherwise ruining the relationship with the rep. If the vendor feels the need to end the relationship it will be done in a professional and open manner.
Here’s where the lure of “bigger is better” starts to threaten the rep—and any business. What if the rep has many lines, but tends to pay attention to a favored few that he or she thinks are great just because they are “big”? They have a lot of trendy product to sell, but they just so happen to be lousy at aspects like paying commissions and service.
In this case, the rep is writing orders mostly for those lines, yet waiting longer to get paid (if at all) and since the service is terrible, may only be getting paid for 40% of his work, since that is the fill-rate potential on these supposed “bigger is better” vendors. This happens quite a lot in many businesses.
Jonathan Knee, in his book Curse Of The Mogul discusses many of the mergers that have happened in the last several decades with media related companies. While many of these mergers looked great in theory and their CEOs (or “moguls”) promised the moon, very rarely did these new mega mergers make money for their shareholders, or provide better products or service to customers. The moguls and their close friends and colleagues (who you just know happen to hover around our nation’s capitol) are the only ones who make money in these deals because, in forming the merger, they specifically structure pay for executives with huge bonuses whether the company is profitable or not. A great example of such a failed venture was AOL/Time-Warner.
Remember the popular book The Peter Principle (Lawrence Peter & Raymond Hull, 1969)? This was the theory that in most businesses individuals would advance through the ranks but eventually hit their “level of incompetence”—in other words, they’d reach a point at which their limitations would become evident. From there they’d either get demoted or they’d remain in that position and cause everyone around them to work harder to compensate for the individual’s incompetence. Sound kind of like what we have today, on a grand scale, from President Obama on down…doesn’t it?
But not down all the way. There are many small businesses and sales reps out there that know their limitations and live within their means. A rep can take on many lines, but the beauty of being an independent sales rep is that he or she can use the weapons (vendor relationships) at their disposal and apply them in order to maximize their business at any particular time.
A rep that focuses too much on being “bigger is better”, by focusing in on dominating one particular product type, or on vendors who outwardly appear superior but are lacking in certain areas, will almost assuredly fail over the long haul. Focusing in on “small” or (as a better way to put it), lean and fit, means the rep can change course quickly. He can react to positive trends or little disasters that would otherwise go unnoticed or cripple a big lumbering dinosaur who would either take too long to react, or won’t be able to react at all because they are so entrenched.
In one of the Dirty Harry films, Clint Eastwood, after outwitting one of his foes and watching as that foe gets blasted to Kingdom Come, mumbles “A man’s got to know his limitations”. This is advice we as a society better start heeding…and it’s great advice for reps and the vendors they work with.
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