Complex Selling Made Effective

Small Business Survival Instincts Force Knowledge to Cash Fast

Louis Columbus
Cincom Systems

This is the second week of the global competitive strategies course I am teaching at a local university. If there is a single take-away from this class so far it is this: small businesses have a fighting survival instinct going on right now and it is injecting a very pragmatic pace and tone to the class.  I like it.  It keeps the class grounded. 

Small Businesses: Keeping It Real

Every class should have these small business managers and owners it in.  The recession isn’t felt from reading the Wall Street Journal every day, it is in seeing the people physically walking into their stores ebb and flow with customer confidence.  It is literally like talking to people who live on the fault line of this economy.

We’ve been covering how the truly great companies are capable of transforming knowledge into competitive strength, from the Toyota Production System to the use of supply chain optimization by United Parcel Service and Wal-Mart.  We have been blessed to have a Deloitte supply chain specialist in the class who has worked with Wal-Mart for years too. It’s a challenging class to teach but an extremely rewarding one too. 

Market-Driven Begins With Turning Knowledge into Cash

Looking at how knowledge networks dominate small businesses and how critically dependent they are on each other for everything from discounts with suppliers, to sales leads, referrals and referencing, the following take-aways emerged from the discussion:

• Technology only has a single purpose in their small businesses: create and sustain trust.  These small business owners and students could care less about generating mountains of metrics or doing intensive ROI analyses – they are all about using Web-based technologies and especially social networking to stay connected with their customers.  And it isn’t the en masse strategies you read about so often – it is one-to-one relationship building over time. 

• A far greater sense of urgency and skill in small business about transforming knowledge into cash.  This was apparent not only in the class discussion but also from the case studies we looked at.  Of my students who are from small businesses, they have developed a skill of transforming supplier knowledge into potential selling strategies much faster than the larger organizations allow their employees to.

• A passionate focus on reducing customer churn at all costs. Again the students from small businesses have their paychecks indexed by reducing churn either directly through comp plans or due to the fact that only the most loyal customers are upgrading the products he sells.
  
• Supplier exchanges have become very popular to gain purchasing clout.  There is a definite take-no-prisoners mindset in the telecom small businesses represented in my class about supplier exchange.  Looking to drive down purchasing costs to the lowest level possible, small business owners are banding together and pooling purchase orders more than some of these students have ever seen before.

• Team selling has become the norm.  Up and down the distribution channels of the PC industry this is happening right now, especially on deals in vertical market industries.  Where before one reseller would try to handle all the requirements of a customer, there is more solution knowledge sharing going on than ever before.

Bottom line: You have to admit the intensity and creativity small businesses are bringing to transforming knowledge into cash.  There is little patience with too much theoretical jargon or frameworks, much more of a focus on how to learn from other company’s mistakes. Small business owners and managers are delivering much in this class in terms of real-world knowledge as a result.

Making New Product Introductions Pay with Product Configuration

Louis Columbus
Cincom Systems

In this recession product introductions are the lifeblood many companies are relying on for future revenue.  It’s the single biggest sales-producing event that many of them have.  Getting it right requires an inordinate amount of coordination, communication, and planning from a product transition standpoint.

As a member of a study team that was funded by a Japanese electronics manufacturer with McKinsey & Company several excellent take-aways emerged on how re-defining built-to-order strategies online can increase the likelihood of success of the launch of entire new products and product line extensions. 

Here are the key take-aways:

• It takes a minimum of 16 weeks to launch a new product successfully.  An aggressive timeline for new product introductions like this assumes that a senior manager, in the case of this Japanese manufacturer, their General Manager, take the lead and prioritize work across the entire division.  This served to remove many of the roadblocks to getting the launch done.  It also did something far more valuable: it started changing the culture of the division to see the launch process not as a long, drawn-out cross-functional effort but more of a quickly and aggressively completed distribution strategy against competitors trying to take their market share.

• Creating product configurations that focused on increasing reseller margins matter most.  Everyone likes to talk about mass customization at the consumer level, yet this product launch used these powerful principles to create a stronger reseller base.  This Japanese manufacturer had done their homework, spending hours of face-time with both large and small resellers to understand how to use the combination of product catalogs, product configuration, pricing and service offerings online to actually strengthen their channels.  In the battle for reseller mindshare, this was a strategic weapon that worked.

• Cut the technical arrogance and sell more. At the time of the study less than 10% of the entire reseller base was using the online product configurator.  During one of many conference calls to understand why the adoption rate was so low one reseller said “get product configurators out of the ivory tower and do what you did with catalogs – make it intuitive!” The other resellers agreed that the navigation in the product configurators were way too complex – and when they asked for assistance they were told how it worked, not how to use it.  Frustrated, they had given up.  The entire graphical interface needed to be re-defined.  The project manager for product configuration was then turned over to Sales, not IT, and adoption, over time improved. Serving the channel with product configuration mattered more than telling them how technically awesome it was. 

Bottom line: In this recession every product launch counts. Get online catalogs, pricing, product configuration all aligned to your channels’ needs way beforehand and let them own it.  You increase your odds of success significantly by doing this.