Moving the Deltas

Businesses traditionally focus on moving tons, barrels, cases, and carloads. When they become consultative sellers, they move the deltas—the differences between the improvement they can contribute to a customer's costs or revenues and their current amounts.

Consultative Selling is a strategy of incremental business improvement, delta by delta, over the commercial life of a customer partnership. Each PIP proposes an added delta, which is its product.

If a customer's current cost of carrying inventory is $2.5 million a year and a PIP proposes to reduce it to $2.0 million, the consultative seller's product is the delta of $0.5 million in savings. If a customer's current sales are $10 million and a PIP proposes to increase them to $15 million, the seller's product is the delta of $5 million of new revenues.

Each successive PIP must be tasked to improve the incremental gains of its predecessors. In this way, a customer's business improvement can be continuous, and that business's consultative sellers will never be out of work.

The incremental nature of consultative sales also affects customer investments. For the purposes of cost-benefit analysis, a customer whose current cost of sales is $100 million and who invests $5 million to reduce them is incurring an incremental cost of only the $5 million that is chargeable to the consultative seller. The customer is not liable for the total current cost; the seller's responsibility is to make the incremental investment of $5 million reduce the cost of sales more than it adds to it.

Defining a delta as an increment is not meant to minimize it. Deltas that are too small may not be considered compelling enough for a customer to fund. The return involved may not be worth the investment, even if if is only a little one that will be at risk for a short time. Nor may a small investment be worth allocating a manager's time against it.

On the other hand, blockbuster deltas that encompass several increments at once may not be considered credible or, if they are believed, manageable. Very few customer managers are experienced in realizing rates of return of several hundred percent.

Suppliers' deltas are their differentiators. Their cumulative average becomes the suppliers' norms. When they are repetitively achieved over time, they brand the suppliers' offerings by quantifying their value. Not only does this set them apart from the competition, but it also positions the suppliers' business in their markets. They come across as the number one or also-ran cost reducer or revenue gainer for the operations and lines of business to which they are dedicated.

In Consultative Selling terms, customer relationship management (CRM) is the management of a continuous stream of deltas moved into a customer's operations. No matter how many other ways suppliers relate to their customers, improving customer profits is the single most important transaction that can occur between them. All else is parsley around the steak.

Consultative Selling(c) The Hanan Formula for High-Margin Sales at High Levels
Consultative Selling: The Hanan Formula for High-Margin Sales at High Levels
ISBN: 081447215X
EAN: 2147483647
Year: 2003
Pages: 105
Authors: Mack Hanan © 2008-2017.
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