The
Internet has brought major changes to the way business is being done. Old-style
intermediaries are being replaced and relationship management is the key to
success.
Disintermediation
In
the past, information flowed through intermediaries who had direct access to
sources of products, services and information. For example, travel agents had
computer terminals to access airline schedules and pricing; and stockbrokers had
specialized information that was not normally available to their clients. In the
post-internet world, this type of intermediary is disappearing rapidly through
"disintermediation".
The
emergence of the Internet has brought easy information dissemination (through
the web), effective email communications (directly between customer and
supplier) and e-commerce (easy product selection and purchase). This puts
pressure on those who do nothing more than act as intermediaries – and their
functions simply disappear.
Intermediaries
must become Infomediaries
In
the industrial automation and controls business, the perspective is somewhat
different. Standard products are
used in relatively low quantities and with programming and modifications that
demand expertise. Many industrial users have special requirements for a wide
variety of different products and systems, needing significant amounts of
special applications knowledge and experience.
Manufacturers
(product suppliers) provide marketing (selection of customers and products),
engineering (design knowledge and resources), manufacturing (component assembly
into finished products) and inventory (availability). Their sales channels are
links with their customers – providing the coordination, selection,
communication and exchange functions.
It
must be noted that this reference to "sales channels" includes not
only independent Sales Representatives and Distributors, but also people in
larger organizations that do the sales and support functions. In many successful
industrial businesses, independent sales organizations are used instead of
direct employees when the services they provide are more effective, at a lower
cost.
To
be successful, sales representatives and distributors must provide applications
engineering, and facilitate availability of optimized solutions. They must
develop customer relationships that can make a significant difference in a
complex business environment. The best industrial automation sales channels are
not merely intermediaries – they are "infomediaries"
Sales
in the Internet age
The
prime targets of disintermediation are those distributors who still believe that
their own core competency and number-one selling technique is: "I've
got it in stock!" Today, it doesn't really matter on whose shelf
the product resides. The best sales rep always has a few units in stock, for
immediate delivery to the customer when needed. What really matters is making
sure that the customer has access to the optimized solutions they need, within
the expected timeframe. Good sales tactics make the transaction seamless for
customers and suppliers.
The
winning sales channels in industrial automation are those who deliver products
at the right price and the right time. Price & delivery includes providing
application-specific knowledge for trouble-free installation, painless
logistics, systems design, service, calibration, maintenance and upgrade. Smart
sales people provide consultative selling with a focus on applications
engineering and systems design expertise. They offer the best solution for the
customers' application.
Relationship
management
Leading-edge
industrial sales reps and distributors must move strongly towards knowledge and
relationship management. They must develop creative programs that help them
become extensions of the customers' technical staff. They must find ways to add
value to their customers' businesses through background knowledge, experience,
engineering and design abilities. They must use to their advantage the new
technology that conventional sales channels see as a threat. They must share
their knowledge with their suppliers and their customers, providing a close
relationship to all partners in the relationship. That must be their competitive
edge.
During
the past couple of years, large industrial-automation manufacturers who had
invested in new Internet sales-channels have found that the knowledge and
customer-relationships developed by their sales reps and distributors was hard
to replace, and so they have retreated. There are very few instances of success,
but always when the products needed very little intermediation and pricing had
already degraded to commodity status.
The
well-organized sales rep, or high-tech distributor can be the best sales channel
in the industrial automation and controls markets. With well-developed
relationship management, they can provide the highest value choice for customers
and suppliers alike.
There
is plenty of room at the top for good relationships - and for winners!
Jim
Pinto
31
May 2002
Jim@JimPinto.com
Jim
Pinto is an industry analyst and commentator, writer, technology entrepreneur,
investor and futurist.
