Cycling Continuous Improvement

How can you tell if customer managers are partners? If they give you leads by telling you where they hurt or what unrealized opportunities they fantasize about, they are partners. If they keep asking you, what next? or, what else can you do for us? or, where do we go from here? after each successful PIP project, they are partners. If they sell for you by going upstairs to get funds for your PIPs, they are partners.

A continuous improvement cycle is composed of consecutive PIPs. Each successive PIP is initiated while the preceding PIP is no more than halfway into its projected life. As soon as PIP #1 produces profits, a share of its gains can be allocated to fund a part or all of the investment required by PIP #2, and so on.

As PIP self-funding proceeds, a "partners' pool of funds" is created for you to draw on. This is the ultimate outcome of your partnering—a partnership that capitalizes itself to achieve financial autonomy, free from the need for third-party sponsorship of its investments in continuous profit improvement.

A business partnership is legitimized only when a partners' pool of funds is created. Up to that point, it is merely a relationship. Once a pool of funds is capitalized by the partners, they can dip into it at their discretion as if they were a miniature business. The customer manager ceases to be a customer and becomes a client. The consultative seller ceases to be a seller and becomes a comanager.

Partnering requires two choices. One is your selection of the customers you will grow. The second is made by your customers: Why should they partner with you? There are three reasons:

  1. You are an important source of their growth profits. The contribution of new profits that you can make to customers must be significant. Only then will your partnership be important enough to both of you to merit top-of-the-mind attention, both theirs and yours.

    To be an important source of growth for customers means that you must account for worthwhile incremental profits. You must also be able to deliver them in a timely fashion, recognizing the time value that money has for them. In this, you must be dependable. They must be able to count on you to improve their profits when you say you will and by the amounts you promise. Your importance to them will be in direct proportion to your reliability.

  2. You are one of their best investments in continuous profit growth. When partners do business with you, they must perceive the price they pay to be an investment rather than a cost. The distinction is vital, because only an investment yields a return. They must understand that they are not investing in your products or services or systems, not even in your solutions. They will be investing in new profits. The return they receive from their investment with you must be among the best yields they can make.

    Just how high do customers' returns on investing with you have to be? You must compare yourself with their options. Normally customers will invest in their own business in order to make profits. They have a "hurdle rate" that sets their minimum return. As their partner, you must offer them a better choice. You must make it more profitable for them to invest in your business. Either the investment they are required to make will be smaller yet yield a similar or faster return, or the return they receive from you will be larger, even though the investment may also be correspondingly larger.

  3. You both have the same competitors. When you sell products or services, positioning yourself as one of a customer's several alternate vendors, you are concerned only with defeating your own competitors—rival vendors. To be a business partner means that you must concentrate on defeating your customer's competitors. Unless you have the same objective, you cannot be partners.

    Customers' competitors are the constraints on their growth. They have two of them. One is their current costs, against which they compete every day and which they must reduce if they are to improve their profits. You must help them. Their second source of competition is in the area of sales opportunities. They compete for them every day too, trying to win customers against their competition. If they are going to improve their profits, they must increase their profitable market penetration. You must help them.

As your partners, your customers grow you if you can make three transformations in your relationships with them.

You must first transform yourself from a supplier of products and services to a supplier of profits. You must change from a manufacturing or service business into a supplier whose product is profits.

You must transform yourself from representing an added cost to representing continuous added value. You must change your basis for doing business from selling performance values at a price to returning dollar values on an investment. Otherwise, you may never have the chance to partner.

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.
If you may any questions please contact us: