Industryweek 5959 Sellings New Breed

Selling's New Breed

Sept. 21, 1998
Sales pros in todays competitive environment must have a variety of business skills and solve problems, not just sell products.

Could the new manufacturing signal the end of the traditional salesperson -- the product-oriented, territory-based representative carrying a sample case or product catalog and earning commissions on sales volume? For most leading manufacturers, the answer is yes. The role of the salesperson has evolved dramatically, reflecting changes in purchasing practice and in the competitive environment, and is supported by rapid advances in information technology.

"The pressure on sales," says Michael Hammer, coauthor of Reengineering the Corporation, "comes from both increasing commoditization -- manufacturers simply cant say that their product is different -- and increasing complexity in terms of product choices and product applications. Add the fact that the customer base is consolidating in many industries -- customers are getting bigger, tougher, and smarter -- and suddenly everyone is in a smaller pond. The customer relationship is changing, and its no longer a matter of selling products, its a matter of selling solutions, solving problems, of helping customers get value out of a product."


Manufacturers target the right customers, with the right story.

As salespeople become more specialized and segmented -- with separate sales forces calling on business partners, end-use customers, corporate headquarters, operational executives, buying committees, and technical users -- marketing efforts at many manufacturing companies have become much more targeted.

"Weve moved more toward one-on-one marketing -- from body-count marketing to a quality-of-contact marketing," says Mike Kalashian, marketing manager of Hewlett-Packard Co.s Manufacturing Industries business unit. "Six years ago we were territory-focused, calling on technical specifiers and technical decision-makers. We used to measure the success of a marketing campaign by how many people we touched, or how many pieces of literature we sent out. Now we ask, Did we get to the right people at the right level, and have we been able to get some sort of a positive response that they heard what we said?"

As a result, says Kalashian, "Youll see fewer marketing dollars spent on mass-market options and more spent specifically on trying to improve relationships with specific people -- both at targeted customer accounts and with partners."

In addition, HP and other major manufacturing companies are using their marketing resources to leverage relationships with partners and customers. "We take advantage of the fact that we can help partners be more successful by having a better relationship with us," says Kalashian. "We can get them access to people they might not otherwise be able to reach, and get them broader exposure through cooperative marketing events or cosponsorships that they couldnt otherwise afford."

Marketing also has a different story. "Three years ago," says Ladd Nichols, director of health systems marketing for Kimberly-Clark Corp.s Professional Health Care Div., "our marketing folks would work with product developers and think in terms of bells and whistles -- without ever looking at the customer end. A piece of collateral might have said nothing about the cost-effectiveness of the product, or how using our products could reduce costs. Now a marketing piece doesnt get developed without that story."

Todays manufacturers must offer high-quality products at the lowest deliverable cost -- differentiating in terms of value-added services. The job of salesperson is to articulate the cost savings or value-added in a way that will be convincing to customers. Thats not as easy as it might sound, and companies have developed a variety of innovative strategies -- employing a new breed of salesperson -- for getting the message across.

As A Consultant

One of the roles of this new breed is salesperson as consultant, a problem solver who can identify and define customer needs, problems, and inefficiencies and offer solutions that will solve those problems and eliminate those inefficiencies.

The sales force at Hewlett-Packard Co.s (HP) Manufacturing Industries business unit in Cupertino, Calif., provides a good illustration. "Six years ago we were territory-focused, calling on technical specifiers and technical decision-makers," says Mike Kalashian, marketing manager. "Today, operational executives are much more knowledgeable and involved in information technology." That has necessitated a change in HPs sales message from one of bits, bytes, and bandwidths to a "deep focus on supply-chain-management issues."

As a result, "We changed the nature of the sales organization to be more account-focused -- even industry-focused," says Kalashian. "The majority of our sales force focuses on a limited number of named accounts on a national and sometimes global basis." At the same time, he says, "We had to change the nature of what we were talking about and what we were representing." For example, "If the customer was an electronics manufacturer, salespeople had to have much more knowledge of electronic CAD tools. They had to understand the problems that the customer was experiencing, what the software solutions were, and then bring in the HP boxes, networks, software, and services to support the implementation of a solution."

And because HP is not calling on end-users directly, partner relationships are particularly important. "We are not involved with any of our customers in any deal without at least one partner of some kind -- either a software vendor or systems integrator," says Kalashian. "So we have a team of people whose job it is to sell to the partner and make sure the partner and the partner people around the world understand HPs value proposition, and why we think its better to work with us than one of our competitors." For key partners, the connections are in every part of the company -- in sales, at the executive level, in customer service, and on the marketing side. "We even have an R&D lab that does nothing but work with software partners to test and tune their new products as they get ready to roll them out."

A New Model

The features-and-benefits approach to sales, a model that served manufacturing companies well when business was product-driven, wont work in a customer-focused marketplace.

Just ask Kimberly-Clark Corp. "Five years ago we were selling individual products based on product features," says Ladd Nichols, director of health systems marketing, Professional Health Care Div. in Atlanta. "Now the real driver of new business is how we can economically deliver lower costs." That means, instead of technically oriented salespeople calling on doctors, "salespeople had to become better businesspeople, calling on hospital committees and capable of delivering solutions that help customers lower costs."

Information technology helps make Kimberly-Clarks sales force smarter, particularly in terms of its focus on cost-in-use positioning. "In terms of surgical gowns and drapes alone, the customer has approximately 12,000 options," says Nichols. "Its almost impossible to sort through all that. So weve developed software that can make presentations, help perform utilization reviews, make business decisions for the customer, and present those decisions in terms of dollar savings. And were developing a database of best-practice utilizations that we can use to document cost savings."

The computer-based approach also has helped Kimberly-Clark salespeople refine their new consultative role with customers -- a key goal. "If you cant be consultative in the way you approach the use of products as well as the products themselves," says Nichols, "youre not going to be able to deliver lower costs."

Keeping Up

With Wal-Mart, Kmart, Target, Eckerd, and other leading chains among its customers and Hallmark as its leading competitor, American Greetings Corp., Cleveland, has had little choice but to evolve to reduce costs and inefficiencies from its manufacturing and distribution processes to keep up with retailer requirements. The sales effort in large part has been to assure the chains that it could meet their distribution and logistics requirements.

"As the large retailers have grown, they have employed more and more sophisticated types of receiving systems, and they want to expend the least amount of time and energy they can," says Mike Birkholm, senior vice president, operations. "We began just-in-time manufacturing about 10 years ago, and in that time weve shrunk our leadtimes down to a fraction of what they were previously." More recently, the company switched from a manual system for picking and packing orders to a completely automated system. The new system allows the company to tailor documentation to fit the particular requirements of the chain.

In addition to its change in focus, the sales organization has a different job than it had 10 or 15 years ago. "There was a time when store managers of various chains had a say in what they could and did buy. When our salespeople walked into the store they were just that -- salespeople," says William Randall Mason, senior vice president and general sales manager. "Now everything is centralized. Its the headquarters of these various chains making the decisions. They control the space, and they control what you do with that space through their scanning data. So a lot of our sales emphasis has shifted from the store to the headquarters of the chain.

"The people calling on the chain headquarters are responsible for sales -- placing programs and so on," says Mason. The largest accounts would have cross-functional teams calling on them, including marketing and logistics people. "Like many other suppliers, we have our seven or eight people in Arkansas responsible for the Wal-Mart account, and it takes that -- on a day-to-day basis -- to be responsive to those accounts."

Those calling on stores are not even called salespeople anymore -- theyre called area managers -- and are responsible for the execution of product programs once they are received in the store and for managing the 30 to 40 part-time merchandisers who would be performing the day-to-day servicing of the accounts in their area.

And while the sales role is diminished, the service role -- and concomitant supply-chain value -- is greatly enhanced. "We really are responsible for the square footage that were given in a store to a great degree," says Mason. "There is very little store involvement today. We put people in to handle the space, we supply all the signage, we supply all the point-of-purchase, we even have a company that produces our fixtures for us."

Service Strategy

Manufacturers of mature, commodity-type products face a special sales challenge. Eastman Chemical Co. in Kingsport, Tenn., for instance, one of IndustryWeeks 100 Best-Managed Companies and an IW Americas Best Plants selection, competes in an industry in which product and process costs have been squeezed to the bone, and the company must look for every edge it can on the service side to differentiate itself.

"The value chains that we participate in are becoming much more efficient and effective," says Roger K. Mowen Jr., vice president-worldwide sales, customer service and materials management. "There are some areas where a particular product quality might yield a little different functionality, and that can be differentiating, but its getting harder and harder to demonstrate that. On the service side, a differentiating strategy is your ability to handle a transaction from a global customer by exactly the same standard."

And the cost of falling short in terms of either product or service can be high. "There is absolutely no forgiveness in the value chains were participating in today," says Mowen. "If you dont have product quality and services that are comparable to your fiercest competitor, you will lose the next order.

"Differentiation in customers minds is not just a matter of whether the product is differentiated or commoditized. Its a combination of a commoditized product with this level of service or a differentiated product with this service capability. And we want to respond to what the customer suggests is what they want and how they want the interface to occur."

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