Sales & Marketing Management - November/December 2007 - (Page 24)

the BRAINSbehindtheBRAWN Dow Corning sold high-end silicone products through an expert sales force into a variety of downstream markets. The skill and know-how that the sales force delivered to customers was a critical part of the offering, and the value of those extras was captured in higher prices— often premium prices—for the company. But there were always customers who wanted Dow Corning Silicones at lower prices because they didn’t need “the extras.” As the case was related at the ISBM member meeting, these “customers you love to hate” put the salespeople in a quandary. Often they went to competitors for the lower-priced product which gave competitors an opportunity to move up the chain and gain a foothold for selling their own higher-priced offerings. In a bold move, Dow Corning decided that they could and should sell to these customers. They created a new channel and new brand (Xiameter), which allowed customers to buy Dow Corning silicones online. This new channel had no extras or frills, which enabled them to sell at greatly reduced and highly competitive prices. They cut all the extras and created a tight set of terms and conditions, such as separate part and lot numbers, and different delivery terms and conditions. It worked. They were able to hold their high-end customers, cost-effectively serve the low price seekers and reported that although a few customers tried to “game the system” overall, the new approach was quite successful. Salespeople benefited from being able to extend the relationship to keep customers they might otherwise have lost, as well as to up-sell to higher-end solutions when new applications came along. the BRAINS “Sometimes the solution isn’t something you can change in your own company, no matter how hard you try,” Oliva says. “It’s important to look at a problem from different angles, especially from the customer’s viewpoint.” Another example involved an American firm that sold turned-metal parts to air conditioning manufacturers. The company was on the verge of losing a valued customer because the aforementioned Chinese had entered the market with lower prices. So the firm set up a meeting to learn more about the air conditioning 24 SALES &MARKETING MANAGEMENT NOVEMBER/DECEMBER 2007 manufacturer’s business challenges, one of which was that it was heavily burdened with fixed-goods inventory because it had to buy compressors in bulk to hit its cost numbers. As luck would have it, the American firm had tremendous purchasing power and realized it could buy and assemble those compressors for the same price its customer was paying. And suddenly the company—through a discussion that had absolutely nothing to do with its own products—came up with a brilliant solution: The customer would send its build orders directly to the parts manufacturer’s computers each night, and the next morning when they opened their doors, a truck would be waiting for them, loaded with everything they needed to do that day’s work. Not only did that eliminate the high expense of maintaining the inventory, the excess compressors could be sold off to provide an influx of much-needed capital. The customer not only continued to buy from the American firm, but they created a deep and lasting business partnership. That’s how creativity and a simple shift in perspective can change a problem—how do we compete with cheaper parts from China?—into a rock-solid, profitable business relationship. “Marketers and salespeople need to understand that there’s more than one way to grow the top line, just as CFOs need to understand that there’s more than one way to grow the bottom line,” Oliva says. “Sometimes you have to think in a fundamentally different way about how you go to market. Maybe you need to put your own product in the background and help your customer be successful before you can achieve success yourself. “If the only way you can meet your sales numbers is by cutting prices at the end of every quarter, you really should come see us. You might be able hit your targets for a while, but you’re never going to find success by cutting yourself to growth … not in today’s markets,” he concludes. s&mm FOR MORE INFORMATION: Contact the Institute for the Study of Business Markets (ISBM), Smeal College of Business, The Pennsylvania State University, 484 Business Building, University Park, PA 16802, (814) 863-2782, or visit www.isbm.org. www.salesandmarketing.com www.salesandmarketingmanagement.com http://www.isbm.org http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - November/December 2007

Sales & Marketing Management - November/December 2007 Contents Editor’s Letter Management Strategies What “Tell Me More,” Really Means Sales Strategy Marketing Management Motivation/Incentives Training Technology The Brains Behind the Brawn Are You a Bad Manager? Pipeline = Lifeline Feeling the Squeeze; The Foray Mobile Workmate; Seeking the Sights of Pittsburgh; Testing the Social Media Waters. Gadgets & Gear Books That Improve Strategic Thinking, People Skills and Sales Work/Life Take-Aways

Sales & Marketing Management - November/December 2007

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