Thursday, 9 July 2009

Beware the ghost of the BS art

An interesting note by Clif Reichard (please click title to read it).

We are practitioners of sales and marketing and in our more limited experience (11 years) find that mostly sales persons today are being trained to fail.

We have been in the B 2 C space and deal with products that pass from the company to distributors and onto retailers before the consumer buys them.

The sales force is required to ensure the product is available at the distributor and then sold into the retailer by the distributor.

The distributor and retailer do not buy the product from the company for the reason that the end consumer does. The end consumer wants to feel beautiful. The distributor wants to feel rich.

In fast moving consumer goods (toothpastes etc), distributor gross margins in India are about 5%. Net margins are 2%. Unless his working capital rotates 12-15 times, the distributor is better off investing money in the stock market.

In this business, salesmen need to be trained in managing working capital and advising distributors and retailers in managing working capital. What stocks to order- how much- how to stock products-how to allocate costs to various products.

We have seem the same principles apply in the PC business and in the tire business. We believe it is universal. Simple xcel tools can help sales persons understand how their customers make money.

Yet few companies train their sales persons on anything more than product benefits. We are not surprised at all that the sales community is viewed with skepticism. They dont seem to speak a language relevant to their customers.

Most senior managers don't grasp the idea that the same principles that apply to their business, apply to their customers' business.

Ritu and Venkat

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