Activity-based selling takes off at Slater
By Staff -- Industrial Distribution, 2/1/1998
Customers across southern California repeatedly made the point to Don Ernest and Bob Skidmore during the past five years or more. End users wanted to know how salesmen at Slater Industrial Supply, Inc. could save them money when sales compensation was tied to volume alone.The question nagged at Ernest, sales manager at Slater, a Cerritos, Calif.-based general line distributor that sells abrasives, and Skidmore, the company president. They realized that to continue growing, Slater needed to show customers how to save money with new products and systems improvements -- savings not resulting from slashed prices.
Last fall the sales force at Slater began making the switch to systems selling with a new activity-based incentives program. While still paid by commission, some of the company's seven salespeople also receive bonuses for initiating and reporting successful new product tests and improving processes at a customer's shop. The improvements range from making customers aware of non-woven abrasive wheels and belts that improve finishing processes to using Slater's bar coding and inventory replenishment systems. Salesmen may take home as much as an extra $250 for bringing in a new customer who uses this technology, for example. Ernest and Skidmore believe the new sales focus will help the company's sales -- which rose by 10 percent to $8 million in 1997 -- continue to grow.
"It's a very large advantage when you can go into a customer and say a large part of our salesperson's (compensation) package is for them to save money,'' Ernest says. "The average industrial distribution salesman often lacks an impetus to do real systems selling."
Skidmore says customers are "much more pleased that we're paying our people to find them cost savings opportunities than we're paying them to sell more stuff.''
Marty Abramson agrees wholeheartedly. A co-owner of Cardic Machine Corp., in Carson, Ca., Abramson recounts how Slater saleswoman Angie Gargano recently came out to his shop hoping he would test new carbide inserts. Abramson, whose company manufactures aircraft parts for McDonnell Douglas, had a large job about to start and told her he would give it a try.
"I said, 'If you want me to test your tools, it's got to be on my terms,'" he recalls. "I said if you have the parts ready today I'll use them.'' Gargano delivered them herself the same day and the new inserts improved the production run, saving time and improving accuracy.
Gargano and a manufacturer's representative returned to the Cardic shop a few weeks later to document how the new carbide insert improved production efficiency. Test reports typically compare old and new cycle times, the numbers of parts made per cutting edge and, to some extent, estimate improvements in quality. Salespeople receive an extra $50 for each completed report of a successful product test, copies of which are provided to the end user and manufacturer, Ernest says.
Besides the savings the new product brought to his company, Abramson also was impressed by the technical follow up from Gargano and the manufacturer's representative. They checked things such as depths of cut, surface speeds and put it in writing so he could do a formal cost-benefit analysis if needed. The team also offered to return promptly if any problems arose.
"I can just look at it and say it's done better,'' he says of the new tool. "I see it because the part comes in faster and I talk to the guys out there. Even if it's the same cost, if I get twice the tool life it brings me ahead.''
It's a better way than just pushing a line as far as I'm concerned,'' Abramson adds. "It makes sense.''
Phil Herbert, an applications engineer who represents several manufacturers, says Slater's bonus plan is a boon to everyone involved. "I don't know of anyone who has a formal incentive like Slater does. To go out and actively, aggressively improve the customer's process by getting the manufacturers involved...that benefits everybody. It benefits the end user and it benefits me.''
"Now you're adding a value,'' Herbert continues. "You're not just a supplier but actually supplying some expertise in their process.''I
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