Our industry is shrinking. Not by dollars, not by the number of pets served, and not by the number of hospitals – our industry is contracting due to mergers and acquisitions amongst manufacturers, distributors, and even the ownership models of the existing practices. Many of the largest distribution companies are growing more rapidly through acquisition than they are through organic growth. The same holds true for several of the manufacturers. The options buying groups and management groups offer for hospitals are becoming more enticing as owner/practitioners look towards retirement and ponder exit strategies.
All this transition can seem very scary and unsettling. Where does that leave you, the inside and outside sales representatives? Have you identified the opportunities in today’s market?
What drove the good old days
I have recently been told that margins are tight for distributors. Incentive programs are not what they used to be, and the relations between manufacturers and distribution have become less friendly and far more formal. I have not directly experienced these changes, but I trust the opinions of my sources. Many have reported that they sure miss “the good old days.”
But what does that mean, really? I know what it means to me, but it can mean something different for everyone. How do we get back to “the good old days”?
When I think back to the drivers that fueled what I perceive as “the good old days,” they are the same drivers that are available today. Manufacturers and distributors alike paid for performance.The compensation may have looked a bit different than it does today with more tangible items, performance trips, and other incentives, but the driver was still performance. Maybe our territories were smaller or larger; maybe we had fewer competitors in key categories. While this may be true, the reality is that the driver for earning more and being successful was performance.It was sales driven at the company level and service driven at the customer level. In my dealing with many manufacturers and distributors, I have heard increased focus on the same drivers as “the good old days.” So, what does that do for you in this ever-changing environment?
The first thing to do is analyze your territory. We have talked about the data that is available through your own company and through external agencies. There is also an untapped resource within your individual customers. How many of those customers are thinking about joining a buying group or a practice management group? Which group are they looking into? Who is the primary distributor for that group, and what manufacturers do they outwardly promote?Determine how to assist your customers with the transition that they are being affected by just as much as you are. How many of your customers are considering an exit within the next ten years?Does your company provide resources that can help with clinic evaluations? You may have access to programs that help the practice to promote themselves differently to start to get that evaluation to look as good as it possibly can. These are just a few possibilities that solidify your relationship with your client and may even transcend to the next owner of that practice.
May I have your attention?
Successful reps stratify their customers and set an interaction schedule that focuses heavily on the folks that do the most business with them. This is common in almost every sales industry.The “A” practices get the most attention and the most visits to keep the competition at bay. The “B” practices get a large amount of attention in hopes that they may someday become an “A” level practice. The “C & D” level practices get sprinkled in when a rep is caught up with their normal workload, driving past to get to an “A” practice with a little extra time, or during the slower periods of the year. With territories expanding and competition consolidating it seems like this would be the best recipe for success. Is it?
Manufacturers have increased the number of sales reps that they have on the road to compete with one another and be more in charge of their own destiny. Representing their key products and then pulling them through distributors has become common place. Distributors have been driven to focus on key product categories that earn the most revenue for the company. It seems that the most successful reps would foster relationships with many of the manufacturer reps within their territory and introduce them to their “A & B” practices. With dual representation of key products within key categories, distribution reps are freer to work together with their team to start to learn more about the “C & D” practices. How many of those practices can you find that will purchase the same products as your “A & B” practices? The days of distributors promoting all brands to all practices are changing rapidly. Manufacturers are driving more focus through distribution via compensation models, while seeding the market with their own sales teams.Work in tandem where it makes sense.
Inside-outside team
Creating a team between inside and outside reps ensures that you both have much more success than you would if you try this alone. The best approach is a team approach based on the concept of “divide and conquer.” Inside and outside reps should talk frequently to establish who is going to focus on what and the tactics to be employed. Inside reps touch the customer far more frequently than the outside reps. So, outside reps should be conveying information about practices that are looking to join a buying group or looking for retirement options while the inside rep finds out more details and offers assistance with the practice’s focus.
Communication is key. Keep eachother up to date on who you are speaking with, what they say, and what you offer. By working more closely with the manufacturer reps in their territories, the outside reps may find the time to try and increase the visits to the “C & D” practices. In turn, the increased focus on key products within key categories as a result of the dual representation allows the distributor outside rep to work with their inside rep to grow those key products and key categories in the smaller practices.
This seems like a lot of work. It is all based on trust between reps and the practice and rep to rep.If executed properly, everyone involved will feel more unified. Sales will increase, commissions will increase, and customer loyalty will increase. Ten years from now, people might look back at today an call it “the good old
