Pushing all the right buttons

Distributors are turning to sales force automation to streamline the selling process

By -- Industrial Distribution, 6/1/2000

A series of well-planned keystrokes helped Omni Services, a Worcester, Mass.-based hose, tubing and connector distributor, land a $1 million account.

Company president Chuck Connors said a sales representative used a 45-frame MicrosoftrPowerPointrpresentation to land the seven figure account for the $20 million company. After showing the customer the ins and outs of the proposal, the salesperson popped the disc out of the laptop and gave it to the customer.

"It helped us to psychologically distance ourselves from the competition," Connors said. "What company of any consequence doesn't have PCs?"

Distributorships like Omni are embracing sales force automation tools and techniques to improve customer relationships. Using a network of laptop computers, personal digital assistants and sophisticated telephone systems that perform functions like paging sales representatives when they get a voicemail message, companies are coordinating information and tasks among inside and outside sales representatives and back office staff.

Having a secretary type and fax a quotation the following day used to be considered a fast response, but instant information is the norm in today's business environment. Ken Jackson, president of Dudley C. Jackson, Inc., agreed that a professional quotation produced on the spot could lead to the immediate reception of an order. The Helena, Ala.-based company has seven outside sales representatives and specializes in pumping and paint finishing equipment, lubrication systems and adhesive and sealant dispensing systems.

"To be able to bring data effectively to customers is critical," Jackson said.

Dave Witwer, the general manager of Reserve Motion Control, said sales force automation helped the company manage a nine or 10 month process of landing a $230,000 order. The drive, motor and sensor distributorship has annual sales of just under $5 million with a headquarters in Chicago and locations in northern Ohio and western Pennsylvania.

"The use of sales force automation just made it so simple for the inside and outside sales people to keep track of the steps that were going on in the process and what was required to do next," Witwer said. "As inside sales did something, the outside person was able to immediately follow up on it. Also, the salesperson who was on the road was able to relay the information back."

Working together

Sales force automation isn't just about impressing customers. A well-chosen and implemented system can also keep all departments on the same page. Witwer said the system helped employees catch mistakes quickly and change quotes before they were sent out. Kent Ethridge, a sales specialist in the adhesive and sealant application division at Dudley C. Jackson, Inc. and the company's top producing salesperson last year, also said sales force automation helps him spot errors. In one case, Ethridge took an order while he was on the road for the company and saw a mistake on the system the next day.

"I looked at the order on the screen and it didn't match," Ethridge said. "I was able to correct it before it became a problem. We would have shipped the wrong equipment."

Bill Beaver, the vice president of sales and marketing for Curtis Industries in Mayfield Heights, Ohio, said sales force automation eliminates one to three days of cycle time. The international distributor serves the automotive after-market and a broad range of industrial segments like mining and the ground service equipment facilities for the airline industry.

Previously, sales reps would take notes by hand, then fax or mail the order to the home office at night. Now, sales reps upload orders to the company system each night and picking tickets are sent to the warehouse by 4 a.m. Mark Knight, director of product marketing for Curtis, said the system also reduces delays caused by human nature.

"It wasn't unusual for salespeople to accumulate their orders for several days before sending them in," Knight said. "They wouldn't mail or fax them every day. When we looked at the written date or order date versus the ship date, it wasn't unusual for it to be five or seven days. We've cut a significant amount of time between when the order is taken and when it's fulfilled. Over 97 percent of orders are now shipped within 24 hours of receipt."

Another downstream effect is a more even workflow in the distribution centers, said Tony Morabito, Curtis' vice president of information systems. Instead of processing a large pile of orders after the arrival of each Monday's mail pouch, the order pickers/packers are working at a more even pace throughout the week.

Sales force automation can also facilitate real-time communication between the inside and outside sales staff. Witwer said Reserve's salespeople have real-time information by looking at a screen rather than fumbling through tons of paper. Originally, Reserve employees used the system mostly for contact management, but now they're familiar with other features of the customized software.

"It really started to become a way to coordinate our total marketing effort," Witwer said.

Connors recalled an instance when a new customer called the company and mentioned a quote from a salesperson for a large volume of conveyor belts. At the touch of a few buttons, the inside salesperson was able to confirm the information and send the order on its way.

All aboard

Despite its merits of creating greater efficiencies and seamless communication between employees, not all sales representatives are sold on computerized customer relationship management. Equally problematic is the tendency for some firms to rush headlong into the information technology game without considering the business needs of all departments. So how do companies effectively design a program and get everyone committed to it?

Although he believes sales force automation tools can make the salesperson 30 to 40 percent more efficient, that doesn't automatically translate into an equal increase in sales, Connors said.

"Unlike an inside sales person's job, the outside sales job is still to get knee to knee, eye to eye with qualified customers," Connors said. "Sales force automation is the tool, not the end."

Omni is trying to move staff beyond the handwritten daytimer, but Connors said the company sets very basic expectations for use of the laptop computer. Those with advanced computer skills can do more.

"The outside salesperson's job is still to sell, not to be a librarian," Connors said. "The first eight hours [a day] a salesman is working for a company, anything he does beyond eight hours is for his own earnings."

Although he hears a lot about sales force resistance to technology at I.D.A. conventions, Knight said sales force automation has been widely accepted at Curtis. In fact, the over 400 Curtis sales representatives using the system share in the cost of the program.

Dimitri Mantzouranis, chief marketing officer for Information Systems Marketing, Inc., a Bethesda, Md.-based consulting firm, said he advises clients that their decision isn't just about picking a software package. Issues like training, the company's sales and marketing strategy and resistance by sales and marketing professionals also come into play. Mantzouranis said he prefers sales departments to work in tandem with other departments for a unified, long-term approach.

"People and processes are about 80 percent of the puzzle," Mantzouranis said. "If we can get that straightened out picking a software package is easy."

Still, the chosen software has to get the job done. Omni learned this lesson the hard way after spending between $80,000 to $100,000 on the software package that didn't meet its needs.

"We bought what we thought was a good software, but it was tantamount to buying golf clubs at Walmart," Connors said. "Now we're investing another $80,000 to $100,000 in buying the proper contact management program. We're going to buy our golf clubs at the pro shop this time."

Cost-benefit analysis

Deciding what the sales force automation package needs to do is a solid first step, but most companies are constrained by money. Pricing depends on functionality, and to some extent customization, but ISM provides some guidelines. According to the eighth edition of a reference manual published by ISM this spring, "The Guide to Customer Relationship Management (CRM) Automation," a customized, high-end system may cost several hundred thousand dollars for a 100-user installation but a company can also purchase an enhanced contact management package for 50 users for about $15,000.

On the other end of the spectrum, the survey said 42 percent of the top 15 software packages for a five-user system are less than $10,000, 33 percent are between $10,000 to $20,000 and 25 percent are more than $20,000. Of the 15 remaining top 30 packages, 83 percent are priced between $10,000 to $20,000 and 17 percent are less than $10,000.

Servers can be an additional expense. Fifty-five percent of the top 15 software packages don't charge for the server, 27 percent charge more than $20,000 and 18 percent charge between $10,000 to $20,000. Of the 15 remaining top 30 software packages, 67 percent don't charge, 20 percent charge less than $10,000 and 13 percent charge between $10,000 to $20,000.

Companies interviewed by Industrial Distribution spent different amounts of money on packages. Beaver said Curtis Industries invested about $1 million in 1993 and 1994, and broke even in less than two years. Jackson said Dudley C. Jackson has spent about $200,000 in the last decade, including about $60,000 in 1998 for laptops, a server and PC upgrades. Witwer said Reserve's initial investment was $3,000 to $5,000 for software programming and hardware foreach laptop used by the outside reps. Beyond the cost of the software package, Connors said it costs Omni about $4,000 to equip each salesperson for home hookups.

Despite the possible implementation pitfalls and costs, companies are convinced of the value of sales force automation. Jackson said investment in technology has transformed Dudley C. Jackson from a $3 million company with 31 employees in 1988 to a $7 million company in 1999, with only 24 employees.

"A lot of efficiencies have taken place over the past 10 years," Jackson said. "In 1988 we weren't making money because the cost of doing business exceeded our revenues. Computers and technology have had a dramatic effect on profitability and productivity levels in this business."

What does sales force automation do?