Print
Solutions June 2005
Strategic
Sales
By
Dick Gorelick
The
Curse of the Super Account
Having
a large client that’s a
household name makes you proud.
You feel special about cracking
that Fortune 500 company, and
you tell your friends and your
key suppliers about it. It’s
testimony to your perseverance,
ingenuity and salesmanship.
Enjoy
it while you can. This relationship
may be the business version of
a love affair, but it’s
unlikely to lead to marriage.
The
graphic arts industry is so fragmented
and segmented that most distributors’
and manufacturers’ highest-volume
customers are much larger than
they are. The large buyer has
disproportionate clout and, more
often than not, doesn’t
hesitate to use that clout to
hammer suppliers on price. And
never make the mistake of believing
that your relationship with a
large buyer is sufficiently solid
to lead to mercy and compassion.
Three
years ago, the Chrysler division
of DaimlerChrysler ran into profitability
problems. The new CEO said the
solution involved relationships
with suppliers. He matter-of-factly
announced that Chrysler would
pay its suppliers 10 percent less.
I’m
not suggesting that large clients
are crooked or evil. Public corporations
are driven to improve short-term
value to shareholders. In the
case of printing, large buying
organizations have the opportunity
to reduce costs when commoditization
occurs. It isn’t a plot
by malevolent buyers. The attitude
is matter-of-fact. The print salesperson
is indeed at a disadvantage.
In
an ideal relationship, mutual
importance is an important issue.
If you return to your office tomorrow
morning and find a million-dollar
purchase order from IBM or General
Electric, that company will become
very important to your firm. But
it’s doubtful that IBM,
General Electric or another large
company will perceive your company
as important to it. The purchasing
people, and others throughout
those organizations, believe they
have the clout to hammer most
suppliers for price concessions
and other extraordinary demands.
More often than not, they are
correct.
The
print volume purchased by these
large organizations can be substantial
and greatly appreciated, especially
in difficult economic times. But
don’t make the mistake of
believing that the relationship
is likely to lead to a true partnership
or a “commercial marriage,”
even if you and your daily contact(s)
at the buying organization get
along famously. All print suppliers
are vulnerable to new corporate
mandates or to new purchasing
managers seeking to climb the
corporate ladder.
By
all means, accept the business
from these large organizations,
but be wary of becoming overly
dependent on them. There is symmetry,
an appropriateness, in a healthy
long-term relationship. The buyer
and seller are important to each
other. The unit of measurement
for a distributor, or any seller,
is the market share within an
account. (Academicians and business
writers use the awful term “share
of wallet” to describe this.)
In
a second-tier or third-tier buying
organization, it’s usually
possible for a supplier to achieve
a large, even a majority, market
share. There may be an opportunity
to negotiate a long-term agreement
or contract, bringing stability
and an assured flow of work to
a print supplier. An important
supplier usually has access to
a buying organization’s
senior management.
In
many of the print buyer surveys
we conduct for print companies,
we include the question, “Please
indicate the level of importance
of XYZ Print Company to your company.”
A scale ranging from “Unimportant”
to “Indispensable”
is used. Over a period of many
years, a direct correlation has
been found between print companies’
profits and the percentage of
ratings at the top of the scale.
This
phenomenon points out the difference
between selling jobs and selling
customers. The lifetime value
and profitability emanating from
second-tier and third-tier accounts
are sometimes overlooked in the
rush to generate sales volume.
