Delivering Happiness! Zappo's

Zappo's is one of the hottest and most innovative companies around. This is an inspirational presentations by Tony Hsieh, their CEO. There are important lessons in this for any business professional.

Zappos - Startup2Startup - 03-26-09

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If Your Suppliers Are In Trouble, Then You Are In Bigger Trouble!

I usually direct this blog to sales and business professionals, focusing many of the discussions on the "sell" side issues. For this post, however, I want to focus on the "buy side."

A few weeks ago in Moving Beyond Selling To Building Collaborative Relationships, I cited a PWC CEO Survey in which 71% of CEO's believed collaborative business relationships were critical with customers, yet only 40% felt these relationships were important for their suppliers?

Talk to any sales person and you will find they are being hammered in their negotiations. Talk to any business professional and they will complain about extended payment terms, returns, defaults, other things.

We're always able to talk about the great difficulty and challenges business face in working with customers, closing business, and developing true value based relationships. We seek understanding, trust and openness with our customers, so that we can sell them more stuff (I'm only being slightly sarcastic).

Yet, look at the other side of the organization, and we are treating our suppliers in the same manner. We are hammering them, making marginally tenable business deals. To respond, they are reducing service levels, may be reducing quality, reducing delivery commitments, doing everything they can to reduce their costs.

I am all for very tough negotiations and for seeking the most effectiveness and efficiency in the supply chain. But we have to recognize, if it's a bad (or even marginal) deal for our suppliers, ultimately, it will be a bad deal for us!

As a sales executive, this notion terrifies me---there goes much of the value and differentiation I provide my customers! My ability to compete plummets. As a business executive, this terrifies me, if we aren't able to design, develop, and build quality product and services, because our suppliers are reducing their service levels and commitments to us, how do we grow the business?

I am distressed by the lack of leadership and insight demonstrated by the respondents in the PWC CEO Survey/ Over 30% of the CEO's don't value their suppliers -- at least in terms of establishing close relationships! If they don't value this in the supply chain, how can they expect to develop these with their customers?

I think this is an area in which sales executives can provide some leadership within their own organization. The strength of your supply chain relationships is critical to your own growth and success.

Maybe I should end: "Do Unto Your Suppliers As You Would Have Your Customers Do Unto You."

Social Media/Sales 2.0 --- Are The Right People Listening?

I've been involved in a few debates over the past few months that seem to be "Old School Sales" versus "New School Sales." They are odd debates.

The debates are carried out in the "blogosphere," which, I think, is one of the newer school vehicles. They seem to be carried out by individuals that are actively engaged in using or experimenting with the new tools. Everyone trying to learn about how to leverage these tools to displace old tools or complement them (I won't get into that debate right now).

The odd thing is these discussions/arguments are among people who have already "drunk the Kool Aid," and are asking for second helpings.

The more odd thing is the people that should be really hearing/listening to these debates will never hear them, because they aren't here.

Many of my customers are still learning how to spell www (OK, I'm exaggerating a little). When I talk to them, very few are reading blogs. Very few are leveraging tools like LinkedIn--except when they lose their jobs then try to expand their networks, not really leveraging LinkedIn for what it can do. They are not driving business strategies that embrace and exploit the power of these tools.

Those are the people we need to be talking to, and we need to reach them where they are at --- and it's not here.

We can't afford to ignore them, they represent the bulk of the business community.

So these debates in the "blogosphere" about who gets it and who doesn't always strike me as odd. Clearly, we all get it, but may have differing positions. Wouldn't we all be better served by spending our time trying to figure out how to reach out to the people who aren't here and get them here and engaged?

Thoughts, ideas?

What Commoditized Products Can Teach Us About Selling

I have a confession, I grew up selling high tech systems, software and complex solutions. I spent much of my career in selling very complex capital equipment. For years, I had an arrogance that real sales people sold these solutions, everything else was order taking.

A number of years ago, several companies having commoditized products managed to overlook my arrogance and asked me to help improve their sales processes. I think may have gotten more from them than they may have gotten from me.

For so many years, we systems guys relied on great products. We would go to great pains to differentiate the features, GUI’s, and whatever product capabilities we had to win deals. Imagine the plight of the sales professional who sells a commoditized product. One tank of chemicals from one company is pretty much the same as another tank of the same chemical from another company, isn’t it? One electronic component is pretty much the same across suppliers, right?

How do you differentiate yourself when the product is not differentiated? I’ve written a lot about needing to look outside the product---people who sell commoditized products know this as second nature. They look at how the customer uses the product, their processes, the logistics management systems, different packaging alternatives and many other things.

They look at the process of acquiring and using the product, finding ways to make this easier, more efficient and more cost effective for the customer.
They engage their customers in different conversations. They talk about partnerships in different ways. In working with basic materials companies, many of the sales people work with their customers in looking at “special formulations” that address the end customer in different ways.

For instance with a detergent company, the proposition might be, “can we work with you to develop unique formulation of your product to make ‘whites white, colors brighter?’” I worked with a client on this problem, they established great value with their customer by helping them use the “chemicals” more effectively, producing a better detergent product.

In the electronics components business, companies are taking more responsibility for design, development, along the way adding to the product content they sell to a customer and creating much greater value than the sum of the components they supply.

In this world, you can’t get past the price competition, it’s a given, you compete on milli-$’s in price difference. The great sales people I have met who sell commoditized products are creative in doing very sophisticated business analysis—note I didn’t say price analysis. They know their customers processes and the costs of using the commodities, they know how they can reduce customer costs, without reducing their price. They are very sophisticated in leveraging strong financial analysis as part of their negotiation process.

Customers buy value! Too many of us have focused just on the value of our products, not on other elements of value that are important to our customers. Those of us who have sold complex systems products can learn a lot from our peers that sell commoditized products. It helps you be even more competitive and differentiated.

As a side note to those who sell commoditized products, the reverse is true. There are great lessons you can learn from the “systems cowboys.” I’ll write later on this.