Huggers or Hunters – that is the question

So we have identified the High Potential Customers. We know who they are and where they are and what they buy and what they own. Now we can assign them for market coverage. That means we have to select the number of customers that is appropriate for one person to handle from a geographical and number of machines perspective. This becomes somewhat of an art form rather than pure science. I don’t like to have more than one hundred and fifty customers in one territory and depending on the split of machine types no more than 450 machines.

You have 3000 High Potential Customers which would provide for 20 territories. What kind of sales people are required for these customers? Well now it comes down to what they buy and what they don’t buy.  If you have a high market share of the customer’s business then you want someone to protect your business – a hugger. If you have a low market share then you want someone to grow your business – a hunter. With either individual you need to go about setting objectives for all the commodities and services you provide. You have to get a better understanding of the competitive landscape. What does your customer/competitor neighborhood look like?

We are at the beginning of being able to take advantage of Product Support Selling now.  For those of you who already employ Product Support Sales Representatives – does you market coverage look like this? If this is different there is no time like the present to get going. Are you ready? The time is now.

The 2nd Weekend of March

Well here we are – the second weekend in March – spring forward time. The clocks go forward one hour Saturday night – just what we all need – one less hour of sleep. Oh well.

The week was a good one. The only exception was a trip in which the winds of spring interrupted a nice schedule. The airline industry is becoming like the bus industry. I still remember my first business flight. It was on a DC9 which American Airlines continues to use as the MD80. I sat in the bar in Montreal watching take offs and landings where it looked like the tail of the airplane was going to bottom out on the runway. That was quite a trip through O’Hare. Customs for the first time and was I ever green.

Well there is a lot to do over the weekend and plenty of work to get done too.  I hope you enjoy. Share quality time with family and friends.

The time is now.

Points to Ponder v1.1

One of the advantages there is to travel is the ability to have time to read. In my cross country voyage yesterday I had a good chance to catch up on some of my late reading. One point came out that I really enjoyed.

“Social Cohesion at the risk of Truth” this is a quote from Jeff Bezos of Amazon fame.

I think it is amazing in its clarity. Ignoring the world around you, not implementing changes necessary, risks the truth. For some time, in my consulting life, there has is a constant. People are anxious, nervous, or just downright stubborn, when it comes to making the changes necessary. These changes might be required to improve customer service. They might be necessary to “save” the Company financially. They might be necessary for a whole host of solid rational sound reasons. Yet they are often approached with less than an excited mien. The status quo is much safer. This social cohesion – the comfort of everyone involved in many cases outweighs the needs to make change. The time is now.

Points to Ponder v1.0

When I was a little person we had an elder from the church that we went to by the name of Tony Doxsey. He took an interest in my family and was a wonderful man. He was sophisticated, incredibly well-mannered and an entrepreneur. He owned and operated an Interior Decorating/Design business. So you can imagine the impeccable taste he must have had.

He used to tell me all kinds of things – little words of wisdom. One year he gave me a little pamphlet called “The Ten Commandments of Business.” I would like to share just one of them with you today.

“Be happy in your work…or…. work and be happy. You have no choice you MUST work.

I have remembered that for over fifty years now and it has become a habit. I feel good when I work hard and it makes me happy. And I am truly blessed because I am happy in my work. I hope the same is true for you. The time is now.

Points to Ponder

This will become a regular feature of our blog. The points to ponder will be irregular in timing but they will be here often. Let’s start it off with some very pertinent questions.

In any classroom sessions I am involved with I ask for some simple definitions.

  • What is the definition of ignorance?
  • What is the definition of stupidity?
  • What is the definition of insanity?

Three simple questions and most people eventually can figure it out for themselves. Of course I want that to happen as it is much more memorable if you come up with the answer by yourselves.

Do you know the answers?

Yes of course….

  • Ignorance is not knowing what to do.
  • Stupidity is knowing what to do and not doing it.
  • Insanity is continuing to do what you have always done expecting different results.

I am sure you all got the right answer – didn’t you. The time is now.

Service Management – Unit I March 21st & 22nd, 2012

The “New” Quest Service Management – Unit I

What it looks like when it is Right

A more professional, productive and profitable Service Operation is necessary for the distributors in the Capitals Goods Industries to be successful. To assist in the development of this Service Management team we have designed a new series of training courses aimed at enhancing the skills of those charged with this responsibility. The “New Quest Service Management Level I” consists of 4 elements presented during a two day seminar.

The Principles of Management

The Basic Principles of Management – what we call the Pursuit of Performance: Planning, Organizing and Control; Job Descriptions and Responsibilities, Performance Standards and Targets – what it looks like when it is right; Employee counseling with praise and constructive criticism in Personnel Management; Time Management to set yourself free; The Business of Change and how to overcome resistance to change; How to survive in spite of ourselves.

Introduction to Accounting & Finance for Service Personnel

Understand Financial Statements from the Service Department Perspective.  Clear and understandable definitions of the main financial terminology a supervisor/manager must have. Learn the Dealership Financial Fitness Model; and Profitability Pyramid. Asset Management and the value of Return On Assets. Pricing and Return on Capital Employed (ROCE) Discover new truths about the famous “Discount” and the consequences of it on the customer and the business.

The Operational and Process Foundation

Balancing Labor and Skills Availability with Customer Service: Work Order Process Management; simplification is not just a nice word it is very possible in this clear exposure of the flow and needs of a service management job function. The impossible made understandable. Completion Dates and Meeting Them. Unleash your true power of knowledge by learning about flat rating and shop floor scheduling.

It’s All about Customers

Satisfying everyone’s requirements and developing relationships: “Inspections” to ensure Machine Reliability, Technical knowledge and advice. How you should use price as a marketing tool; variable labor rates and their application. Value added selling; and the value of Customer Retention. Surveys to develop satisfied customers for life: Customer Profiles and all the background required to make customers your apostles.

This “New Quest Service Management Level I” provides a broad base introduction to Service Management for the 21st Century. It is intended for Service Lead hands, Instore Sales Lead hands, Supervisors, Managers and Executives. The material covers all management and operational disciplines of a Professional Service Manager.

Parts Management – Unit I March 19th – 20th, 2012

The “New” Quest Parts Management – Unit I

What it looks like when it is Right

 A more professional, productive and profitable Parts Operation is necessary for the distributors in the Capitals Goods Industries to be successful. To assist in the development of this Parts Management team we have designed a new series of training courses aimed at enhancing the skills of those charged with this responsibility. The “New Quest Parts Management Unit I” consists of 4 elements presented during a two day seminar.

The Principles of Management

The Basic Principles of Management – what we call the Pursuit of Performance: Planning, Organizing and Control; Job Descriptions and Responsibilities, Performance Standards and Targets – what it looks like when it is right; Employee counseling with praise and constructive criticism in Personnel Management; Time Management to set yourself free; The Business of Change and how to overcome resistance to change; How to survive in spite of ourselves.

Introduction to Accounting & Finance for Parts Personnel

Understand Financial Statements from the Parts Department Perspective.  Clear and understandable definitions of the main financial terminology a supervisor/manager must have. Learn the Dealership Financial Fitness Model; and Profitability Pyramid. Asset Management and the value of Return On Assets. Pricing and Return on Capital Employed (ROCE) Discover new truths about the famous “Discount” and the consequences of it on the customer and the business.

The Operational and Process Foundation

Balancing Inventory Requirements with Customer Service: The impossible made understandable. Order Points and Order Quantities; Lead Times and the EOQ; Order Cost and Carrying Cost. Unleash your true power of knowledge by learning the theory of Inventory Control in all its glory. In physical distribution – the job everyone thinks they can do is easy but no one wants to do: Storage systems, transportation logistics; Shipping & Receiving; Parts Office, Sales Counter and Instore Merchandising Design and Layout that makes sense.

It’s All about Customers

Satisfying everyone’s requirements and developing relationships: “Up Selling”, Product knowledge, Features & Benefits selling, and effective telephone techniques. How you should use price as a marketing tool. Instore displays and merchandising; Value added selling; and the value of Customer Retention. Surveys to develop satisfied customers for life: Customer Profiles and all the background required to make customers your apostles.

This “New Quest Parts Management Unit I” provides a broad base introduction to Parts Management for the 21st Century. It is intended for Parts Lead hands, Instore Sales Lead hands, Supervisors, Managers and Executives. The material covers all of the management and operational disciplines required of a Professional Parts Manager.

I HATE DISCOUNTS

The people that know me and have worked with me in any capacity of the past forty plus years know that I HATE DISCOUNTS.

I know you have to offer some special pricing every now and again. However, too many people just change the price on an item in a transaction and that leaves a bad impression in the mind of the customer. Oh I get it. The customer feels good about getting a reduced price. Until, that is, they think about it. Sooner or later they begin to understand that if you changed the price on that item one time, without requiring anything more from the customer – well your price must have been too high.

If you have to change a price you must change something else in the transaction in order to justify the reduction in the price. Increase the quantity. Place it on a stock order and have the customer wait for it – anything that makes sense.

Why do I HATE DISCOUNTS??

Well look at this example from a typical service department…

Sell Price              100         Discounted         90

Cost Price              35                                     35

Gross Profit            65                                     55

Expenses               40                                     40

Net Income            25                                     15

A 10% discount on the selling price becomes a 15% reduction in the gross profit and a 40% reduction in the operating profit. I HATE DISCOUNTS.

I know you have to make adjustments from time to time. It is important that everyone understand the implication of a small discount in selling price. It becomes huge at the operating net income line. The time is now.

Adding Parts to Inventory

Since we started this blog we have written on inventory management three times. Once on variable lead times, once on economic order quantities and once on the only part that matters. They have each received a lot of reads.  Thank you.

Let me introduce a fourth line of attack on managing the inventory – when do you add a part to stock. For years if not decades we have added parts on the basis on two calls in six months or three calls in a year add the part to your stocking inventory. This has been the “norm” since I entered the Industry in 1969. It hasn’t really changed at all. How about we use probability theory in determining when to add a part to stock and yes when to drop a part out of the stock inventory.

  • Time Between Calls        # Calls Last 12 Months                                    Probability of 1 Call
  •                                  0             1             2             3             4             5+
  • 3 Mths                  2%          7%          14%        19%        20%        38%        98%
  • 4 Mths                  5%          15%        22%        22%        17%        19%        95%
  • 5 Mths                  9%          21%        26%        21%        13%        10%        91%
  • 6 Mths                  13%        27%        27%        18%          9%          6%        87%
  • 7 Mths                  18%        31%        26%        15%          6%          4%        82%
  • 8 Mths                  22%        33%        25%        13%          5%          2%        78%
  • 9 Mths                  26%        35%        24%        11%          4%          0%        74%
  • 10 Mths                30%        36%        22%          9%          3%          0%        70%
  • 11 Mths                34%        37%        20%          7%          2%          0%        66%
  • 12 Mths                36%        37%        19%          6%          2%          0%        64%
  • 15 Mths                44%        36%        15%          4%          1%          0%        56%
  • 18 Mths                51%        34%        12%          3%          0%          0%        49%

The above table shows the probabilities of future events based on the time between the last two events.  Take the first line “3 MONTHS”. The columns as headed 0, 1, 2, 3, 4, 5+. That is the number of calls in the coming twelve months. So under 0 is 2%, 7% under 1, 14% under 3 etc. Those represent the probability of the number of calls in the coming twelve months. Si there is a 7% probability that there will be 1 sale in the coming twelve months- or a 20% probability of 4 sales in the coming twelve months.

This is quite a good barometer to use for determining when to add a part to stock. If the last two calls are three months apart there is a 98% probability that you will sell at least one part in the coming year – 87% probability of at least one sale if the last two sales were 6 months apart etc… Don’t you think you should use this type of statistical truth in establishing when you want to add a part to your inventory? The time is now.

Webinars

Don’t forget. Dont’ miss this opportunity.

Two webinars on Service Management Monday

Two webinars on Service Managment Tuesday

You can register at www.rjslee.com under the Learning tab.

I look forward to having you with us.