It’s impossible to ignore the competition. Like the forces of market supply, recessions, economic recovery, and upticks in energy prices, competitors influence your business environment. Extending further, competition varies from market to market and even territories within the market. While not paying attention to competition sounds high minded, noble, and customer-centric, it won’t help you make more money.
COMPETITION IS SPECIFIC AND LOCAL
Except for Amazon, your competition is manifested in the form of a specific person or team of people. They need not live in your community, but they are assigned to one of your accounts, which makes them local to you. Again, with the exception of Amazon, these folks have names, faces, and personal idiosyncrasies. Yet, when I talk to distributor salespeople about their competition, I commonly hear the name of a brand sold by several distributors in the market.
The brand or technologies provided by the distributor have bearing on the sale in instances where:
• The customer has standardized on a specific brand of product. If you are a distributor who doesn’t represent these products, you may as well be out of the race before it starts.
• The customer has a national contract with a specific supplier-manufacturer which is served by the combination of the supplier and distributor sales team.
• Your company’s line card lacks the technology desired by the customer. For instance, the customer has a strong preference for Wi-Fi enabled widgets and none of your current suppliers offer a Wi-Fi widget.
The real competition typically comes from another distributor. Even with national chains, the behavior of the competitor is probably localized. Our experience points to differences in market strengths, strategies, and selling behavior across territories of even smaller distributors with one location. The nationals, in spite of what is broadcast, are just as diverse in their methodology. As a side note, I personally believe this difference in service and approach to the market demonstrates the weak level of process employed in distributor sales groups, but that’s another article.
COMPETITION IS PERSONAL
It pays to know the competitive distributor salespeople calling on your accounts. They have names. You might even recognize them as the guys you sometimes see. If you know who they are and have access to the guest register, you can find out if they are talking to people you don’t know. Additionally, if you observe and ask a few well thought out questions, you might identify who their allies are within your customer.
Here is a short list of helpful things to discover about these people we call competitors:
• Do they have the habit of leading with price? I know a guy who everyone in his market calls “five percent Pete.” If you are dealing head to head with him, you’ve got to figure out a way to get the customer off the purchase price and onto the long term cost of ownership.
• Do they understand their products or rely on others to provide technical support?
• Do they provide good support on the mundane stuff, like handling paperwork, returns, and other bits of business which can irritate customers?
• Where else do they call? Could this competitor have discovered a sleeper account in your territory?
Before we jump from this subject to the next, allow me to throw out a final thought on competitors. Salespeople relocate, change jobs, retire, and, sadly, sometimes they die. Each of these are disruptive events at their accounts. Further, as a group, distributors do a poor job of transitioning when a salesperson goes away. I can think of at least a dozen times that sharp salespeople made significant gains based on competitive retirements alone.
BEHAVIOR IS COMPANY DRIVEN
Companies often encourage specific behaviors with accounts. Once you understand how they operate, it’s easy to take advantage of their habits. For a moment let’s pick on an automation sensor manufacturer who decided going to market direct was a great idea. Instead of seasoned distributor sellers they have an ever churning cadre of freshly graduated engineers. These new “kids” are pressured to quote and close a certain number of orders every month. Sadly, the business world doesn’t always work that way. If this rookie direct force quotes something on the 12th of the month and hasn’t received an order by the 25th, they call the customer and start deeply discounting the price. If the customer refuses to issue a purchase order by month end, the discounting goes away.
This phenomenon isn’t limited to manufacturer’s trying their hand at direct sales. There are distributors who are notorious for offering up consigned inventory even if the customer doesn’t want it. Some distributors excel at packaging products from several different manufacturers and only offer pricing bundles. Then there are distributors who use a top down sales process; skipping over the “worker bees” and focusing attention and a financially bent sales pitch on C-level management types.
PARTING THOUGHTS
Looking back at these examples, we can position our efforts to minimize competitive impact and maximize your own advantage. Many times, the actions of competitors are predictable. If you give up the advantage of understanding and counteracting the competitors best moves, you will certainly be less effective than you could have been.
Publication date: 8/11/2017