Scott walked into Christine’s office on a January Monday morning with no idea what to expect. When you’re a sales rep and the branch sales manager asks if you have some time to meet with her, you make the time. So here he was.
“Hi, Scott. Grab a chair,” Christine said, gesturing at six seats surrounding the small, round conference table she used for informal meetings. “How’s it going?”
“Can’t complain,” he said. “New year, same battle.”
Scott was a bit intimidated by Christine, but he respected her more than any manager he’d known. She was all business, but she certainly knew her stuff. When she joined the company a year ago, she had persuaded the powers-that-be at corporate headquarters to introduce a new sales system called Action Selling. As far as Scott was concerned, Action Selling was the best thing that ever happened to his career. And he wasn’t alone. Sales reps around the country regarded the new system as a gift from heaven. Christine was a rising star at Partner Dental Supply, expected to move up in the company and fast.
Characteristically, Christine wasted no time but got straight to the point. “I’ve been going over your numbers,” she said, indicating a printout on the table in front of her. “You increased your volume by 10 percent last year. And it looks like you picked up, what, seven net new customers?”
“Eight,” Scott said proudly.
“That’s great,” Christine said. “Congratulations. But here’s what I’m wondering: In the prior year, you had almost exactly $1 million in sales. Last year you boosted it to $1.1 million. There’s your 10 percent rise in volume.”
“But while your volume went up,” Christine continued, “your margins slipped by 3.5 percent. In the prior year your average gross margin was 35 percent, right in line with our branch norms. Last year your territory dropped to 31.5 percent.”
“Our competitors are killing me on price. All of them.”
Scott stopped smiling. Like I didn’t know that? he thought. “Tell me about it,” he groaned. “Our competitors are killing me on price. All of them.”
“But company-wide, margins actually increased by 1 percent last year,” Christine said.
“They did?” Scott was genuinely astonished.
“I just received the year-end numbers,” she said. “Nationally, margins are up 1 percent. But margins for the Los Angeles branch rose only 0.8 percent. That puts us slightly behind the company average. And your territory accounts for most of the shortfall.”
“I have to match competitor’s prices or lose my customer’s business.”
Scott shifted nervously in his chair. “Well, I don’t know what’s going on with our other sales reps, but it can’t be what’s happening to me,” he said. “All of my clients are cutting costs. Every day I have to fight like a dog to save my accounts from cut-rate offers from competitors trying to get in the door. I have to match their prices or lose my customers’ business.”
“Do you?” Christine asked. The question hung in the air. I’ll just tell that to the Western regional manager when he calls me on the carpet to explain why my branch can’t keep up, she thought. “Well, Gary, I’ve got a rep named Scott who has no choice but to discount whenever he runs into price competition. Nothing to be done about it, you know.” Yeah, that’ll get me where I want to go in this company.
Scott didn’t like the look on Christine’s face. For a long moment, she appeared to be wondering whether to terminate him. Then she collected herself and grabbed a notepad…
About Duane Sparks
Duane Sparks is founder and chairman of The Sales Board, the authoritative source of practical and leading-edge information about the art and science of selling. He has created Action Selling sales training products and learning systems that transform sales organizations. Duane is author of these best-selling books: Action Selling, Selling Your Price, Questions (the Answer to Sales), Masters of Loyalty (How to turn your sales force into a loyalty force), and Sales Strategy from the Inside Out (How complex selling really works).
Discover how the best sales training process can make spectacular improvements in sales skills. Action Selling: How to Sell Like a Professional (Even If You Think You are One).