Obsessing on Control

The Box Two mindset is obsessed with control. Every manager knows that costs must be controlled. So must sales, since too much demand that cannot be met can overwhelm manufacturing, inventory, and distribution just as seriously as too little demand can underwhelm them. If shipments get out of control, managers get into trouble. An uncontrolled rate of scrap or mean-time between downtime or repair and replacement under warranty, or market share that deviates from plan, is an ominous sign that managers are going to be off budget and off plan. This will bring them to the attention of Box One.

In most customer companies, deviations from plan call for Box One to "manage by exception"—to apply supervisory management practices and procedures to correct the exceptions and either get the manager back on plan or find a new manager who will be unexceptional. Box One's philosophy is often expressed like this: "When managers go off plan, I invite them to lunch. No one gets invited to lunch twice."

When customer managers partner with you, their purpose is to reduce the risk of being invited to a "box lunch" by Box One. That is why you must be sure that you can help them achieve the new contributions to profits, either by cost reductions or revenue increases, that you have proposed to them and that they can achieve them within the time you propose. Otherwise you will expose them to catastrophic risk.

To be "in control" means that a manager is on plan—on budget, on time, attaining each milestone on schedule—so that payback of Box One's investment can be made on or before its due date and so that the manager's return on investment reaches its projected rate. This is the way that your Box Two partners build their track record as good managers. As good managers, they will again be favored to manage the next cycle of investment, and you will again be favored to be their partner in replicating your mutual success. Together, you will become a reliable team.

All business is based on reliability. Customers prize reliability over every other attribute—in their people, their products and services, their operations, and their reputations for their own customers' satisfaction. To be out of control is to be unreliable, which means that the profit contribution you and your partner have proposed cannot be counted on any longer. You should take these words literally. The expression "counted on" is a quantitative measure of your value, and it says very clearly that you and your customer-partner will come in with new profits as scheduled or you and your partner may be out.

Making PIPs that can be counted on is your transcendent task. It is the basis for your partnered positioning. Take that away, and you have what the computer industry calls vaporware and the food industry calls empty calories—promise without performance, the essence of unreliability.

In order to be an acceptable partner for customers' Box Two managers, you must share their obsession with control. In consultative terms, control means two things: controlling clients' costs to help them maintain low-cost production, and controlling the flow of their revenues to help them maintain high margins or high market share.

To be admitted into a major client partnership depends on a single compelling requirement: Can you bring more money to the client's party than any other candidate for partnership?

If you "make partner," you can achieve control of the contributions to costs, revenues, and earnings in the clients' business functions and lines of business that you affect. They will place responsibility for controlling these contributions in your hands, either as a dedicated supplier or as a facility manager of their operations. As their partner, they will count on you—counting dollar by dollar, in the most literal sense—to deliver your contributions "on the money" and on time.

By controlling your contributions according to the proposals you make to your clients, you control the continuity of your business with them. If your contributions slow or falter, your partnerships will be in trouble. Every time you deliver a proposed contribution, you earn the right to propose again. If you lose control of your ability to improve a client's profits dependably, you will lose your client.

So what is it that you can actually control? It is not the client, nor is it the client's business. You can control only the contributions you make to it.

As a result, PIP control becomes essential for partnering. Your PIPs must be reliable contributors to customer profits. The best way to ensure this is to set up a three-phase process of PIP control:

  1. PIP previews. These enable each client-consultant team to preview the potential proposals in each account's fast-penetration plan, rank them in priority order of their perceived sureness in dollar value and timeliness, and then certify their value before presentation.

  2. PIP reviews. These enable each team to review each proposal after its acceptance to warrant its deliverability and to schedule its monitoring and measurement milestones to make certain that its full proposed value is progressively delivered.

  3. PIP overviews. These enable each team to agree on each PIP's contribution, to log it in their joint database, and to seek follow-on enhancements for it and natural migration opportunities in the near-term future. At each overview, the partnership's norms for improved customer profits can be updated to keep them current.

Accounts that get out of control are caused by PIP management processes that become uncontrollable. Through PIP management, you can always know where you stand in account control by asking questions like these:

  • Are we making the profit contributions we are proposing?

  • Are we measuring and monitoring them with our customers?

  • Are we keeping up enough "PIP flow" to earn our partnership all over again every day?

  • Are we maintaining our contributions above the level of the industry standard?

  • Are we generating a steady state of future leads from each completed proposal?

  • Are we making our competitors beat us in our norms or beat it?

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

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