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‘Relationship Selling’ Forges Strong Customer Ties and Increases Sales
Personal selling is the No. 1 sales method in the forest products industry.
By Tim Cox
Date Posted: 7/1/2002
Personal selling is the No. 1 sales method in the forest products industry. The personal selling process can be improved, however, by emphasizing ‘relationship selling.’
Bob Smith, associate professor-extension specialist and director of the Virginia Tech Center for Forest Products Marketing and Management, discussed sales strategy and relationship selling in a one-day sales training class for the wood products industry. The class was taught in conjunction with Expo Richmond.
Successful sales people don’t just sell wood, Bob noted. They demonstrate that they want to help other people. Furthermore, sales occur between people – not companies.
It takes new sales personnel up to two years to get established, he said. The reason is it takes that long to "make a friend" with a customer.
Advantages of personal selling include the ability to tailor marketing messages to individual customers, the perception of providing above-average service, immediate feedback and the ability to stay abreast of market changes.
Today’s forest products industry is marked by high stumpage prices, extreme volatility in some markets, maximizing production efficiencies, increased competition, environmental challenges, and other issues, such as providing just-in-time service and total quality management.
Other changes are impacting the forest products industry, including the marketing and selling of its products. Customers are smarter and demand more, and product innovation is faster. There are no secrets and competition has increased. More companies are offering value-added products and services. Some companies do business over the Internet. There is heightened public interest and involvement in forestry.
In terms of trends impacting the forest products industry, log prices will continue to remain high, Bob said. Also, technology will continue to increase recovery – to levels of 60-70%. The forest products industry is facing increased competition from foreign countries while wood composite products, engineered wood products and plastic and steel continue to jockey for more market share.
Forest products are changing, too. Hardwoods are finding markets in structural lumber and engineered wood products. Other product trends impacting the industry include the growth of ready-to-assemble products, plastic and composite lumber, plastic and composites in pallets, and the use of oriented strand board in furniture. I-beams are replacing floor joists and more recycled lumber is being used in pallets and other applications.
Markets are changing, too. One of the most noticeable changes is the growth of furniture production in China, which has replaced Canada as the No. 1 exporter to the U.S.
It is important to stay abreast of changes and trends that impact the forest products industry, said Bob. He pointed to the voluntary phase-out of wood preservatives containing arsenic and also the new global standard for solid wood packaging. Staying on top of fast-developing changes allows the salesman and his company to react quickly to market changes, develop new product ideas and service customers better. Sources of information include customers, government and industry reports, trade journals and trade associations.
A sales strategy is important, Bob noted, because increases in revenues can only occur in three ways: developing new markets or products, taking market share away from competitors, or buying competitors.
In evaluating a sales strategy, a company needs to assess who is currently responsible for sales and how sales success is measured. Are clear sales objectives set for each salesman? Who are the company’s major accounts? It is important to identify them, because the sales strategy should be geared to them.
"You don’t want to spend much time" with accounts that generate little revenue, noted Bob. "They’re costing you too much money."
A company or salesman’s customers can be characterized as A, B or C accounts, depending on how much business they bring. The top 30% "like you already," said Bob, and one strategy should be to "up-sell them" – to sell them more products and higher-revenue products. In addition, "The cost of losing one of those in the top 30 percent is much more" than losing a customer in the second or third tier, he noted.
A company also should assess how it developed its existing customer base. Do you have a clear, defined competitive advantage? When do you review your customer base? Where do you want your sales to be by product category?
The No. 1 goal of a sales strategy should be a satisfied customer, said Bob. And the sales strategy must be implemented by regular contact with customers and prospects, listening more and talking less. "That’s why we have two ears and one mouth," he added. Provide solutions to customers. Be loyal to them. Be honest and sincere, and generate ideas that can benefit them.
In the past, selling techniques focused on establishing rapport, building business, talking, selling a product, market share, local markets, the seller vs. buyer relationship, and closing sales. By contrast, modern selling techniques focus on long-term relationships, building the customer’s business, listening and solving the customer’s problems, share of customers, global markets, strategic partnerships and on-going relationships.
"You can differentiate yourself through the personal selling process," said Bob. "Someone has to deliver the message. You deliver the message."
A good tool for building relationships with customers is to invite them to your plant, said Bob. Give them a tour of your company’s operations and allow some additional time to socialize with them or have some recreation.
Sales personnel should place a high priority on managing their time well. More effective use of time allows a salesman to engage in more contacts with customers and prospects, to increase the quality of those contacts, and to improve customer relationships – which leads to more sales.
The most productive sales professionals are those who spend about 30% more time in front of their customers than the average salesmen, who are with customers about 50% of the time. So top producers devote about 80% of their time to customer contact.
In order to manage time more effectively, projects should be broken down into manageable components. Meetings can be big time wasters; meetings should have a clear objective, agenda, and generally be limited to one hour. Sales personnel should minimize interruptions of their time by having a ‘closed door’ policy, and colleagues and co-workers should respect these requirements. "Don’t carry on a conversation with people who walk in the door," Bob advised. Avoid small talk and be silent after answering a question. Plan and set time aside when it is necessary to confer with others. Delegate non-selling activities.
Sales personnel should conduct an audit of their own time by keeping a log of their activities. Keeping a log will help figure out how much time is actually spent with customers.
Documents and paperwork should be handled only once: discard it, file it, act on it, or prioritize it.
In addition to managing their time well, sales professionals must have good communication skills, good listening skills, and possess a positive attitude, honesty and creativity. They must exhibit the following behavior: show commitment, deliver on promises, flexibility, enthusiasm, honesty and promptness.
The number one way to get new customers, Bob said, is to obtain referrals from existing customers. Other sources of new customers are trade dhows, networking, trade associations, government or industry directories, the Yellow Pages, and individuals who can influence others with their recommendations, such as association leaders.
Preparation for a sales presentation includes time spent determining someone’s objections and how to overcome them. The presentation can be divided into three segments: gathering information, presenting information about your product features and benefits, and closing the sale. In the information gathering stage, salesmen should be friendly and sincere and demonstrate a desire to help. They should ask open-ended questions and spend the majority of the time listening in order to uncover the customer’s needs and turn product attributes into buying benefits.
In developing a competitive advantage, a valuable source of information is current customers. Bob suggested identifying the top 10 accounts, determine why you have been successful with them, contact them and confirm the reasons for your success, and use that information when building a competitive advantage with other companies.
Retaining good customers is equally important and requires regular communication with them. Be willing to help them find solutions to their problems and to go to bat for them. In addition, always thank customers.
Bob recommended meeting prospects and customers by appointment. It shows you value their time and also allows the salesman to prepare adequately. Get to know the ‘gate keepers’ – secretaries and receptionists, for example – because they can be valuable sources of information. And a friendly relationship with these employees can help the salesperson obtain access to decision makers.
Once a sales presentation has been completed and the meeting is coming to a close, a salesman should always ask the following question, said Bob: "Is there anything else I can help you with?" Asking this question at the close of every sales call can increase production 20%, he said. The reason is this question can spur the customer along an entirely new train of thought.
Managing the selling process is important because there is little difference among manufacturers as far as their raw material, manufacturing technologies, products and markets. The difference between companies is in the quality of their work force, sales staff, sales support staff, and management – how a company manages the overall sales process.
Relationship selling, focusing on people, long-term commitment and service, warrants attention because 70% of an average mill’s revenues come from only 30% of its customers. In addition, it costs as much as six times more to acquire a new customer as it does to keep an existing account. Finally, over 90% of individuals that are dissatisfied with a supplier will not buy again and will tell others about their displeasure. A goal of relationship selling should be helping to grow the customer’s business.
Understanding the personality of a customer enables a salesman to build a better long-term relationship and allows the salesman to make adjustments in his presentation style. Behavioral scientists recognize four basic types of personality behavior; people are either direct or indirect, and open or self-contained. Depending where they are on those two spectrums, their personalities or behaviors can be characterized accordingly. For example, a person who is strongly open and also very direct would be characterized as a socializer.
Sales personnel can learn to recognize these behavioral styles from conversations with customers, nonverbal communication signals, and other factors, such as the furnishings and layout of their office, and tailor their relationship to them to a certain degree. "People like to buy from people like them," said Bob. Understanding the customer and adjusting selling style will make customers more willing to create a long-term relationship.
Effective communication improves sales, Bob noted, but information is not the same as communication.
E-commerce can be a valuable tool for communications, just like a cellular phone, Bob noted. However, using the Internet does not establish a personal relationship with a customer. The value of the Internet is in freeing up a salesman’s time to allow him to spend more time with customers. "High tech is not high touch," he added.
"If you have a problem with an account, you don’t want to send him an e-mail, write him a letter or send him a fax," said Bob. "You want to pick up the phone and talk to him one-to-one. It is the salesman’s responsibility to solve the problem."
"Everything you do sends a message," he added.
‘Reading’ nonverbal communication signals the customer gives off can help the salesman determine if the customer is engaged in the selling process. Non-attentive listening would be exhibited by glances sideways, leaning away, sighing, staring, yawning, frowning, fidgeting, head shaking, interruptions, crossing arms or legs, or jingling change in a pocket. "If you see this going on, you’re got to change something," said Bob, "because they’re not engaged in the selling process."
Bob also discussed successful negotiation skills and the importance of sales professionals to have a positive attitude in their work and in dealing with their customers.
(Editor’s Note: Virginia Tech will offer a two-day short course on selling forest products Sept. 18-19 on its campus in Blacksburg, Va. The course will be taught by Bob and another faculty member, Robert Bush. For more information or to register, contact Bob at (540) 231-5876, fax (540) 231-8868, or e-mail firstname.lastname@example.org. In addition, the Virginia Tech Center for Forest Products Marketing and Management now offers an online training course in selling forest products. The course is conducted over the Internet and may be completed in 6-8 hours; it combines streaming video content (audio-only format also available), slides, self-assessment quizzes and take-home exercises. For more information or to register for the online course, visit the center’s Web site at www.woodscience.vt.edu/cfpmm/index.htm.)