Developing Sales from the Middle of the Bell Curve

Distributors are very good at focusing on core customers … typically the top 10-20% of their customer base.  The remainder of their customer base they either chalk up to “they don’t do much more business” or “my competition has the account”. The concept of developing new accounts, for many distributors, is akin to going to the dentist for a tooth extraction.

As an example, we know one large regional with sales well in excess of $300M who generated less than 50 new accounts in 2012.

Why?  Because

• It requires a skill set that most of their salespeople do not have. Most salespeople excel at account management, not sales development.
• They don’t know where to “easily” identify prospects.
• Communication of their value / value-added services is not a core competency.
• They believe their salespeople don’t have enough time.
• It requires active sales management
• And distributors traditionally lack in lead generation and sales collateral tools. 

Additionally, distributors believe that if they continue to focus on their core 10-20%, growth will occur. Unfortunately for many, there business does not follow the 80/20 rule, it is more like 90/10 or 95/5 … very few customers drive the business. We like to say “you need to follow them closely, give them a hug and tuck them into bed at night” … in other words, stay real close and management must be involved.

Many distributors, however, when they analyze their growth patterns, identify that their mid-level accounts grow at a faster rate with less sales involvement (although salespeople still claim these accounts on their lists for “compensation justification” reasons).

Consider a customer bell curve (and we suggest evaluating your customer base based upon volume categories):

 

Some solutions:

• Target your salespeople on top performers and high potential accounts. Force them to identify all of the contacts within these companies, not just the ones they call on.
• No account stays on a top salesperson’s account list unless they have purchased a minimum of $50,000 in at least 2 years
• Allocate sales resources to mid-level accounts. Utilize marketing strategies to drive demand and communicate your company’s capabilities. Consider a customer engagement strategy that utilizes multiple touch points and concurrently is customer driven. 
• Consider a sales outreach strategy. Involve other internal resources in account development.
• For prospecting, utilize marketing to generate awareness and leads; consider outbound calling resources (some can be outsourced); make lead follow-up a sales management priority; coordinate credit, marketing and sales so that new credit apps are capitalized upon.
• And remember that this audience responds well to promotions & incentives. 

The issue of account development is more complicated for manufacturers as they need to address the distributor component as well as the end-user opportunity. As a manufacturer, consider:

• Is anyone actively calling on non-national / regional enterprises (the smaller regionals that may be more profitable and still control about 40% of the business)?
• Do your salespeople only call on their friends?
• Who drives decisions of whom to call on within a territory?
• Do distributors know the breadth of your line?
• How could you explore non-traditional channels where there could be “non-traditional” profitability? And will these channels really compete with your core channel or are you conceding business to your competition?
• What message does your marketing communicate … to distributors? to end-users? by segment? or is it more focused on feature / benefits? Why should someone want to buy from your company (not your products) rather than your competitor? Do you know if your brand is preferred?