Everything old is new again?

John Scilly

I’ve been around for a long time in fact I probably qualify as being an old fart. But whilst the degenerative aging process has drawbacks, longevity provides a unique opportunity to review “how things were” compared to “how things are now”. And this particularly applies to the marketing and selling of products or services.

Years ago, and I mean pre – internet, life was much simpler. Somebody had a bright idea; a product was developed; a business plan was written and that was pretty much that. If the marketing strategy was right and included a unique selling proposition (USP) that was attractive to the prospect, then you could reasonably expect to generate sales revenue.

Advertising meant choosing between electronic (TV or radio) or print media (newspapers, magazines, outdoor advertising) with a bit of direct mail thrown in. Sales brochures were essential and there was no such thing as social media or websites.

The commercial landscape was very different too. During the 60’s and 70’s there were squadrons of “sales reps” cruising around the country in company cars meeting with potential clients. In fact many industry sectors relied totally on face to face selling to generate revenue. Therefore, building relationships with prospects was key and sometimes it took several visits to a potential client before they trusted you enough to test you with a trial order.

Eventually, sales methodologies started to change. The costs of running a sales team like salaries, company cars and expense accounts were prohibitive. Was there another way? Eventually, some bright spark concluded that perhaps getting a third party to sell for you would be a good idea. Hence selling through a distributer was introduced as an alternative to selling direct to customers.

The idea was pretty simple. Products could be offered to the third party (distributor) at a discount to the recommended retail price (RRP). The discount could vary from 15-40% and the distributor would be allocated a specific geographic territory where they were required to promote sales and achieve budgeted sales targets.

By giving away a percentage of the gross sales revenue to a third party theoretically the company could relax and not worry about the excessive costs of running a sales team. The question was ”was it worth it?” The answer was “it depended”. On what? – you may ask.

Consider the pro’s and con’s.

Pro’s:

  • Selling through distributors meant that the company could reduce expenses associated with employing sales teams selling direct to customers.
  • Distribution costs were reduced by directing deliveries to a centralized distributor warehouse rather than making multiple deliveries to individual customers.
  • Distributors were based at strategic locations therefore urgent customer enquiries and orders could be serviced more quickly.
  • Because the distributor was permanently located in a specified area, they were better placed to tap into the local market. Hence, penetration of the market was more readily achieved.

Cons:

  • Did the savings made by reducing sales personnel offset the discount being given to the distributor? There had to be a net saving otherwise the exercise was pointless.
  • The distributor had to actively promote the product. They couldn’t just sit back and expect sales to pour in the door.
  • Was the distributor selling your product exclusively or did they have competitors’ products on the shelf too? They would obviously promote the product that makes them more money and if a competitor was giving them a larger discount yours may not get a look in.
  • All sales generated in a distributors area had to be directed back to the distributor. This included any sales received at Head Office. The only exceptions were those associated with “contracts or tenders” that had been negotiated with Governments or major corporations.
  • Providing the distributor was reaching their sales budgets you really had no access to their client base. Ultimately, if the business relationship went pear shaped you may not know who your customers were in the distributors area. This had be considered when the agreement was being discussed.

So, what was the answer? You decide. It could have been either depending on what best suited your business model. In fact, some international corporations used different models in different countries to suit the local market.

Then came the internet and social media and everything changed forever.

The advent of the internet has been the biggest disrupter of traditional sales and marketing practices in the history of commerce. Twenty years ago who’d have thought that anything you needed to know; anything you needed to buy; every question you even fleetingly thought of asking could be supplied, or answered, by sitting down in front of a screen and tapping a few buttons. The Internet has dramatically and permanently changed not only the way we conduct business but the way we conduct our lives. It’s pervasive and persuasive and can be considered as either, a massive boon that has made life much easier or an insidious invasion of privacy and perverter of everything that was considered civilized and normal. In truth it’s probably somewhere in the middle.

The adoption of the Internet as a sales and marketing tool was virtually instantaneous. Websites became the norm and sales brochures immediately became defunct. So indeed did the need for sales personnel, company cars and expense accounts. The whole market was available at the touch of a button and all you had to do was drive potential customers to your website. And that was the new challenge.

As a consequence of developing technology, and whilst the Internet was gaining momentum, two other factors came into play that would be absolute game changers; smart mobile phones and social media platforms. The integration of websites with smart phones and media platforms has now become the marketing “norm” and comprise the basis of most of the current marketing programs and strategies used in today’s commercial environment.

On reflection it would appear that there has been a dramatic shift in the way we do business today compared to how we did it in the past. But has it really changed that much? Years ago we relied on the four P’s i.e:

  • Prospecting : where do you find clients?
  • Planning: how do you present the sales case to them?
  • Presentation: making the sales presentation
  • Performance: ensuring your product gave the client what they paid for
  • Today these rules still apply and even though the methodology has changed the fundamentals have not.

So as an “old fart” how do I feel about that?

There is no doubt that today’s business environment is exciting, rapid, efficient and dynamic but is substantially lacking in its ability to build relationships. Technology is moving at such a pace that there is barely time to draw breath and the days of face to face meetings with customers seem to be over. I’m sad about that as developing a trusting, meaningful business relationship used to be as valuable as the sale itself . Regrettably, todays reality is that there is an overwhelming emphasis and reliance on technology and less appreciation of the value of putting a sales representative in front of a client.

It is generally recognized that the greatest potential source of increased sales revenue is from the existing client base. If that‘s the case surely, there must be a compelling reason for more personal contact with clients; particularly in this age of high tech, high speed, impersonal, mindless, soulless, online drudgery. Sadly though, customer relationship management by real people has largely been replaced by online marketing; the value of personal contact has been ignored and so has the opportunity for increasing client revenue.

However, yearning for the past is non-productive and what’s gone is gone and there’s no going back. And, in any event, would we want too? There is no doubt that doing so much on line is very convenient and saves time which in business is equivalent to saving money. So basically the new way is probably, on balance, the best way and if someone can find a way to inject SOUL into the mix it would be perfect.

John Scilly

November 2018

“If we open a quarrel between the past and the present we shall find that we have lost the future.”

Winston Churchill.

Leave a Reply

Your email address will not be published. Required fields are marked *