Budgeting & Planning

Published in: IPA Bulletin, November/December 2003

Properly Implemented Are Not What They Appear

If you can't, as a supplier, make a positive contribution in your target customer's priorities, productivity, revenues, and objectives and goals, you may be pursuing the wrong profile account. Assigned sales representatives or customer service representatives should pursue understanding, "What are the sources of pain for this account? "

In the process of introducing myself to a prospective new client, I asked the CFO how she went about budgeting for the coming year.

Her response appeared typical. "We ask the sales people in early November what they plan to sell next year and develop our hour-rates for estimating and capital equipment budgeting from there." (As an observation, in changing and tough market conditions, that "typical" scenario can lead and even work to create disasters --- of multiple proportions.)

Follow-up and response from the vice president of sales and marketing revealed a similar scenario, "I ask the reps what they plan to sell, by account, and take their totals and give them to the CFO. Not too complicated, but it does take some time to get the final numbers from the sales representatives."

My follow-up questions to the vice president seemed to create a sense of discomfort: "How and when do you review expected sales your sales people submitted for next years budget? And is there any discussion regarding by what means they plan to make those results happen?"

As you probably have already guessed, the response to that last question was, "If their numbers are acceptable, we generally don't, unless the total revenues for the company start falling short from what was forecast."

As a business development specialist, it's encouraging to note that we are beginning to see glimmers of a different scenario from the apocryphal anecdote just presented. Twice in the last month we have facilitated a budgeting and forecasting process in which sales representatives and lead customer service representatives were required to present to their entire management team:

• Their revenue expectations, by target customer and prospect, for next year, and
• By what means they expect to accomplish those numbers --- in each account --- with a particular focus on the first 90 days of the coming year.

Though every company situation is a little different, here's a broad outline by which this process was facilitated.

Get With the Program

The process begins with management forwarding an outline to reps of what their "business development budgeting process" is expected to look like, including a formal group presentation. In some organizations, very capable customer service reps are also lead-account management personnel for important accounts, and so these customer service reps also participate in the process.

Review and Select Target Customers and Prospects

In too many organizations, management doesn't become involved in selecting target prospects, or which current accounts are to receive significant company resources for business development. This is a major, qualitative error, due to the fact that every company that wants to be more than the "low-priced supplier" needs to:

• Be proactively developing their market differentiation, and
• Subsequently, selecting which prospects and current customers are to be developed.

Additionally, with target prospects generally changing suppliers less often, and thus requiring greater investments to develop into customers, which prospects we select to develop have significant opportunity costs if the wrong or "less than optimum" prospects are pursued. In too many organizations, prospects are selected based on the sales representative's ability to sell the account quickly --- and thus impact his/her commissions. Such a strategy can be totally counterproductive to selecting a prospect the company can be valuable to over time, and who can generate meaningful contributions to the supplying company.

Identifying Key Influencers

Enlarged Buying Center --- The Buying Center has changed to include positions in a target account that are recognized to influence key buying decisions. These positions and their influence have grown as customer organizations downsize, and buyers are required to take on more responsibility, thus becoming more dependent on these positions for advice, guidance, and recommendations. Examples of these positions include director of marketing, president, CFO, directors of purchasing, art directors, and directors of information technology.

Missed Opportunity --- Don't miss an opportunity to connect with the Enlarged Buying Center. Be sure to identify persons who are serving in these positions, and make sure their names and titles are op your company's mailing list.

What Is Each Target Account's Expected Potential?

In a fiercely competitive marketplace, time is the uncontrollable enemy, so we should control what we do with our time. Too often, I experience sales reps and companies pursuing less than optimal target prospects or, equally as bad, giant prospects the supplier can never be important to except through repeatedly offering the ' ever-lowering market price. Volume for volume's sake can, over time, become a "company killer," and to allow a sales rep to invest a year or two pursuing "the big hit" --- to whom the supplier can never be important --- is a tactical waste of resources that can eventually become a strategic mistake.

What Are Each Target Account's Primary Sources of Pain?

I work from a philosophy that says, if you can't as a supplier make a positive contribution in your target customer's priorities, productivity, revenues, and objectives and goals, you may be pursuing the wrong profile account. Assigned sales reps or customer service reps should pursue understanding, "What are the sources of pain for this account?"

Then, and only then are you able to initially, and correctly position your company to the account's contact personnel. The key question your account contacts should be asking during first contacts is "What does this supplier have that I need, and don't already have?"

If the answer is, "Nothing," don't expect repeat appointments to be granted.

Other Helpful Information

Answers to the following questions can be especially meaningful for correctly positioning your company, and developing a successful business development strategy. Issues include but are not limited to:

1. What errors were committed by previous suppliers, who are no longer allowed to supply?
2. Historically what are the successes and philosophies of senior management?
3. Who are current suppliers?
4. What's happening in the account's target customer markets?
5. Does this account have well-defined objectives and goals? (If not, "low price wins" is probably the "order of the day.")
6. If "buyer turnover" is an issue, how should you proactively create a "New Buyer Opportunity Program" for the account? and
7. What does the "enlarged buying center" look like?

Group Presentation

Assembled for review of all presentations, in the most effective processes, should be your president, lead sales and marketing person, all sales reps, top manufacturing and finance officers and managers, lead customer service department managers, and at least one representative of ownership. Each sales rep is allowed 30 to 45 minutes to present target customers and prospects, what is known, and by what strategy and plan he/she intends to develop business.

An experienced, (preferably) neutral facilitator prompts post-presentation questions from anyone in attendance for up to ten minutes. The atmosphere should be supportive, and helpful. All suggestions or questions should have a positive tone and content. And each presenter is expected, subsequent to the question and answer segment, to "improve his/her plan" before it is handed-off to senior management for review, and subsequent follow-up, in at least a 90 day period.

Key Point

Target accounts are not a divine right for the assigned sales rep or lead customer service rep. Any target account in which follow-up and follow-through isn't occurring, should expect to be reassigned by management.

Customer and Business Development Strategy Opportunities

Activities that can make an impact for developing target accounts vary as widely as the accounts we pursue, and the diversity of our great industry. Some examples include:

• Periodic Business Reviews,
• Improved performance in areas where historical miscues have occurred,
• Customized buyer education and training programs,
• Introduction of senior management and/or customer service team players to target account personnel,
• Development of products and services customized for this account's needs,
• Copies of research about their markets and competitors,
• More frequent, substantive contact,
• Provision of timely, useful information, such as job or delivery status, to account personnel,
• Support for either a trade show or convention,
• Plant tour for account's new personnel,
• Provision of meaningful information about relevant samples,
• Expressions of appreciation for their business or opportunities for their business,
• Historical budget-type information that can assist your customer's budgeting process,
• White papers from your suppliers that can be meaningful, and
• Constant review and update of your company's mailing list from the target account's "enlarged buying center."

Summary

It's generally better to have a plan, that can be reviewed, tested, and adjusted, versus no plan.

Or, to paraphrase a powerful cliché, "If you don't know where you're going, and how you plan to get there, it's hard for anyone to know that you failed... and any destination will probably do."

Too many good companies in our great industry are operating without a business development plan --- note I did not say "budget" --- that is subject to systematic, organizational review by senior management.