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Prospecting for new sales is perhaps the most important part of the sales function

"PROSPECTING IS REALLY JUST HARD WORK," says Rusty Duncan. "Prepare for lots of rejection and keep going back to ask for another shot."

Duncan is the president of Minneapolis-based Industrial Market Information, Inc., a market research firm specializing in industrial markets. He says outside sales representatives need to spend more time developing existing customers.

"Prospecting is the easiest path to new sales," he says. "But many sales reps neglect prospecting for additional sales with existing accounts."

Duncan says that simply going out and selling is not enough. It is necessary for sales reps to focus their efforts.

"It is a methodical process involving determining which SIC codes match a distributor's product mix," says Duncan. "The idea is to increase effectiveness through better time management."

He says it is necessary to pre-qualify prospects because as many as half of the companies are not viable prospects. Many listed locations are just sales offices, or are inaccurately classified.

Services like those offered by IMI are a way to get better information and to simplify the process of pre-qualifying, he says. This increases the opportunities to find companies that purchase the products that distributors have to offer.

"Identify the companies that should be the best prospects," says Duncan. "The next step is to identify the contacts."

Sales reps need to make personal contacts such as the product manager and other employees that can influence purchasing, he says. The purchasing manager is often primarily concerned with price, adds Duncan.

"It's necessary to do more than just sell," he says. "You have to break down barriers. Speak to the manufacturers and get the local sales reps involved."

Manufacturers usually have marketing plans with their distributors, says Duncan. Distributors must work closely with their manufacturers to effectively bring these plans to fruition. They need to get down to specifics and follow through to increase sales, he says.

He points out that there is an overabundance of industrial products and numerous sources to purchase them.

Even though customers are always asking for the lowest prices, they are looking for solutions, says Duncan.

"When prospecting, the smart salesman won't even sell products," says Duncan. "He will say, 'I have baskets of solutions to these sorts of problems' and customers will listen. This removes the focus from selling on the basis of price."

Mining operations

"It's all about information," says Davis Controls CEO Neil Montgomery. "By utilizing past information, we can optimize the time spent in the field."

He says this was one of the reasons for adopting the Exact Macola enterprise resource planning system. Oakville, Ontario-based Davis Controls uses its customer database to mine for increased sales with existing customers, says Montgomery.

"All the information on customer sales history is in our Enterprise Resource Planning software," he says, "and is fully integrated with our CRM database, so they work hand-in-hand. When all the information is integrated, sales efforts are more effective."

Montgomery says prospecting is essentially cold calling. Mining, however, involves using information to develop accounts. Anything that salesmen discover about an account is added to the customer relationship management software.

"Before, we had separate databases," says Montgomery. "There was a disconnect where the left hand didn't know what the right hand was doing."

The inside sales staff couldn't readily access the financial and sales history of an account and opportunities were lost, he says. The picture is now more complete.

"Optimization is the name of the game," adds Montgomery. "It allows an ease of doing business up and down the supply chain. With better systems there are more opportunities with both customers and suppliers."

He says suppliers are concerned about coverage and whether distributors are devoting sufficient time and effort to their products. Suppliers can see from the software that there is no disconnect, says Montgomery.

Of course, Davis Controls doesn't limit its efforts to existing accounts.

"We pull names based on SIC codes for targeted marketing campaigns," says Montgomery. "We keep our name fresh in their mind."

Montgomery says information and account management allows for more efficient sales efforts. The company makes targeted marketing efforts to both prospects and existing customers. Better information allows the company to decide when to rely on direct mail and when to send a salesman, he says.

Market strategy

"Our sales strategy is like a stock market portfolio," says Specialty Bolt & Screw, Inc., sales manager Vincent Lanza. "It is important to keep a diverse account mix."

He says the Agawam, Mass.-based fastener distributor sells to New England's diverse business mix including the high-tech electronics, biomedical, machinery manufacturing, and defense industries.

"Prospecting is like a funnel where what goes in the top is as important as what comes out the bottom," says Lanza. "It is one of the most important sales functions."

He says the company uses its ACT software to provide visibility throughout the sales process.

"We look for trends and patterns, so we can direct sales efforts to companies that are similar to those where we are already successful," says Lanza. "This strategy has allowed nearly double-digit growth even in the current weak economy."

He says the company prefers to model its efforts on a stealth bomb in mature territories, targeting certain profitable accounts. However, Lanza suggests including the smaller customers in the same industrial park in the same sales effort. Sometimes it doesn't hurt to "carpet bomb" in a new territory, he adds.

"The salesperson's job is to make the phones ring," he says. "We trust that the rest of the organization will take care of all the details to take the sale to closure."

Specialty has resources that many fastener distributors do not. This assists in closing the sale, says Lanza. Specialty has a large inventory, a technical department to provide engineering support, and specializes in vendor managed programs.

He says another benefit Specialty brings to its sales efforts is its membership in the iPower Distribution Group, Inc. The memebership allows the company to offer the wide range of industrial supplies provided by the iPower partners while concentrating only on fasteners, says Lanza.

"The salespeople are measured on a point system that assigns values to the various sales activities," he says. "It concentrates on what they add to the funnel and what they do to move the sales and territory forward. A straight commission system tends to reward account maintenance more than efforts to develop new accounts."

Taking it to the street

"I make calls with one of the six outside salespeople four days out of the week," says Lanza. "We work together as a team and then we critique the sales call and try to find ways to do it better."

He says the outside sales force knows the company will have to keep the promises that the sales team makes. While the sales reps know the products, they are experts in selling and act as the face the company presents to the customer, he says. The company has other experts in product application and inventory management so the salesforce can devote its time to selling.

"It is important to have a salesforce that is driven by financial incentives as well as the desire to be successful," says Lanza. "The salespeople need to keep their finger on the pulse of their community to continually locate and qualify new prospects."

Sales representative Ben Perkins says prospecting is more important than ever and he devotes one day each week to it.

"It is important to keep finding new accounts, even in a mature territory," says Perkins. "Even with the best service and prices, some accounts will be lost. You need to make up for the lost accounts as well as increase sales."

To continue being successful after 23 years, he has to be genuinely interested in customers' businesses, he says.

"I need to be persistent without being an annoyance," says Perkins. "Sales cycles are getting longer, especially at larger accounts."

Cold calls are mostly an opportunity to get contact information and to get a feel for the company's products, he says. It is still easy for him to get appointments with decision makers and tours of the prospects' and customers' facilities whenever possible, he adds.

"I try to determine how we can be a valuable partner to the prospect," says Perkins. "If we can't be their OEM source, we can try to get their MRO business."

Perkins says he tries to gather information from as many sources as possible. He uses manufacturer directories, newspapers, the Internet, business journals and referrals as some of the sources for prospects. He also credits networking with contacts from his membership in professional organizations like the Institute for Supply Management.

"There is strong competition in the territory from other strong local distributors as well as a large national player," says Perkins. "We have to give prospects a good reason to change."

Perkins says offering strong local service, VMI options and engineering support are some of the services that allow Specialty to continually expand in his territory. He also gets leads from his dedicated inside sales representative, Dennis McKenna, with whom he has worked for most of the last 20 years.

"By communicating with inside sales, we can often get prospects for new customers or determine opportunities to increase penetration into existing accounts," says Perkins. "We make a great team."

The sales team is persistent and pursues accounts year after year, says McKenna. It often takes efforts of both inside and outside sales to close sales with prospects, he adds.

"It is a struggle, but we work well together," says McKenna. "Perkins generates a lot of requests for quotes and I can close some of these over the phone. For others, he has to make follow up calls until we finally get the sale."

He says he can often provide information on prospects. For example, when traditionally small accounts make a large order or a new company calls for a quote, he lets Perkins know. Any other customer information is shared across the sales team to best turn prospects into customers.

"A lot of prospecting is just common courtesy and common sense," says Perkins. "You get out of it what you put into it."

COPYRIGHT 2002 Reed Business Information in association with The Gale Group and LookSmart.