What are the three rules that all buyers in a national account role follow?
1. Don’t make any changes that could get you fired.
* People in charge of purchasing for national accounts wake up every morning with one thought – Don’t make any changes to the status quo today that could hurt the company’s brand and get them fired. (I realize that is a drastic oversimplification and they are literally doing dozens of calculations on the benefits and risks of every decision.) They didn’t get this high up in a Fortune 500 company by being reckless and taking chances. Put yourself in their shoes for a minute. They are often in charge of purchasing millions of dollars worth goods and services that need to maintain their company’s quality, brand and reputation. Yet they could spend every minute of every day taking meetings from new companies like yours that are fighting for a test order.
* In my own naiveté, I thought saving a company 15-20%, while delivering faster service would be a no-brainer sale. I was dead wrong. In my first company, Comm-Works, we sold and serviced business phone systems and computer connections. We would install, repair and maintain technology equipment around the country. My job was to convince the big companies to take a chance on an unproven group from Minneapolis that no one had ever heard of. Communications technology is a lot like oxygen. You don’t notice 99.9% of the time, until you don’t have it. People don’t like being cut off from either one. That made it even tougher for people to agree to give us a trial run. I’ll tell you how we did it later in the article.
* Don’t kid yourself. People get fired every day by trying something new and different even if it has the promise of being cheaper, better, faster. Here are a few examples you may recognize:
* Denver Airport 1995 – Tries out a new, unproven and complex baggage handling system that never really works. Big PR disaster and finally shut down the failing luggage system all together in 2005.
* Firestone 1972 – changed to new process and materials in its tire manufacturing. Accidents and pressure from consumer advocacy groups lead to recall of over 10 million tires. Company was bought out by Bridgestone.
* Frito-Lay 1998 – Came up with “Wow! chips made with Olestra, and artificial fat. After a dazzling array of gastrointestinal side effects, followed by lawsuits, the product was pulled.
* Iphone 2014 – The iPhone 6 was supposed to have an unbreakable Sapphire screens. Both the process to make them (a month of baking in a furnace,) as well as Apple’s unrelenting demand for speed to mass produce killed it early.
2. Make the boss look good.
* If you can’t ensure you have guaranteed rule #1, don’t bother with rule #2. They are not interchangeable.
* Making the boss look good on a regular basis is how people in big companies get promoted. Not everyone in a big company is out to climb the corporate ladder, but if you have one of those people as your contact, then legitimately helping them to let their boss take a victory lap could give you that tiny opening for a trial run with their company.
* If you have them feeling secure that working with your company will not get them fired; If what you are selling has been successfully used for a while by other companies; and if those other companies look and act like they do. Then you may have a chance to get your trial run. But don’t expect a national contract out of the gate.
3. Know how big your sandbox is.
* Every person who makes purchasing decisions in a big company has an authority limit. Usually it’s measured in dollars, but it could be geography, product line or other major criteria.
* Making decisions beyond their authority (outside of their sandbox,) is never, I repeat never, good for their career. Unless they are specifically asked by their boss or boss’s boss for help, they will be stepping on someone’s toes. There are two ways they can lose here:
* They can do poorly which makes their boss look bad and violate rule #2, which could quickly violate rule #1.
* They can do well which makes their peer look incompetent and now they have an enemy. Something they generally avoid.
* I once cold called the Chief Technology Officer (CTO) of 3M, a multi-billion dollar company, early on when their were less than 10 of us in the company. I had heard of a $300,000 project that 3M was going to put out for bid from another contractor. When I called the CTO, surprisingly he answered his own phone. After verbally fumbling for a few seconds, I got up the courage to ask him if we could bid on the project. He wasn’t sure which one I was talking about, but he gave me some advice that has stuck with me ever since,
“Son, I don’t even get out of bed for projects that are less than $300 million. You sound like a nice kid, but you should really do some homework before you pick up the phone. You may not get a second chance.”
I quickly dropped down a few rungs in the org chart to talk to someone on a project manager level. Things got a lot better when I correctly matched the size of our offering and skills to the size of their authority. (Today Comm-Works regularly has strategic meetings with CTO’s, but that doesn’t happen overnight.)
What will National Accounts tell you when they blow you off?
* “Come back when you have other national accounts that look like us.” (we don’t want to go first.)
* “We would like you to make some changes to your… (software, process or product).” Customize it in a way that they might use in the future. By the time you get it done the way you hope they like it, they will have changed their mind again.
* “Call me back in nine months. The contract will come up for renewal then.” That may be the truth. But even if it is, by the time the contract is within six months of renewal, they will have already had their finalist groups in to pitch and will be negotiation heavily with the final two or three. 90% of the time, the incumbent will win again. Like re-electing South Carolina Senator Strom Thrumond who served nearly 50 years, they stick with what works for them.
What did we learn about National Accounts?
If you are a startup or you want to expand your business into the world of national accounts try this:
* Start small – get a few wins under your belt that makes for a good business case study. Before you take on Home Depot, maybe you should try a few locally owned hardware stores that only have 3-5 locations.
* Win on something other than price – Price is a race to the bottom and it is rarely sustainable. Know and understand what your Defensible Differentiators are for your company and play on those traits.
* Make the business case – Don’t win on novelty. If it hasn’t jumped out at you yet, let me say it plainly, national account buyers are not fans of new and different. They would be constantly changing the roadmap of the company that others will have to follow. Consistently helps them look and act like a national account so that they can deliver on their promises to their clients that their Coke Classic will look, smell and taste exactly the same from Minneapolis to Mumbai.
* Be patient – All national accounts work on contracts. They don’t have the time or interest in shopping every single project with untested vendors that haven’t even secured a vendor number through their purchasing department. For some companies, this process alone can take years. Learn and understand when those contracts are due to come up.
* First meetings – If you are fortunate and persistent enough to get an introductory meeting, there are a few simple rules to make it go well:
* Be on time, actually be early.
* Be prepared. (Laptops will break, batteries will die and projectors will blow out their bulbs. Expect all of these things and have some hard copies of everything you are going to talk about and sell.)
* Practice. How much? Until you can’t get it wrong.
* Get to the point early.
* Maintain contact by sending new and helpful information– The average shelf life for people that make the buying decisions in our world of national account technology is 18 months. That means they move to a new position in the company or switch companies all together every year and a half. That is only marginally better than company changes for over-the-road truckers. Keep in touch with them by sending them news and information that will be helpful to their business lives improving or at least interesting. Avoid the “just wanted to keep in touch” emails that are sent to them by the hundreds every week.
* Exceptions to the Rules:
* New product line or division is being opened up.
* This is one time where people are allowed some latitude to try something new and different. If what you offer can give them a new look or edge in their marketplace, this is the time to put your best foot forward.
* They have recently acquired another company.
* Quite often the individual equipment and processes of the acquired company are different from the national account’s. It doesn’t always make financial sense to change more than the business cards of that company one day one. Another excellent chance if you can bridge that gap and support what was already working.
* They are performing a turnaround.
* That means whatever they were doing for that division isn’t working and someone has already gotten fired. This is a great chance to help the new person keep the promise of rules #1 and #2.
* Play on the edges – When we were just launching Comm-Works, Al Lampe, Geoffrey Jacob and myself were a three man company playing against the billion dollar giants like AT&T and IBM. Not great odds. After getting the phone slammed in our ears for the thousandth time, we changed tactics. Rather than waiting forever to bid on the contracts that only came up every 3-5 years and changed vendors about as often as they elect a new Pope, we started calling with a simple proposition, “Give us your worst”. Give us the problem you were dealing with that hadn’t been fixed by IBM in the last 3 months. Now some VP regional operations was tearing them a new one every other day to get it fixed.
We won an early client by fixing a problem in a manufacturing plant in Osage, IA overnight. That technology problem had been making the plant manager irate for the last year. Once we solved that, they gave us another. Then another. We started to gain their confidence and over the years, became their go-to company around the county. It wasn’t sexy, but it was repeatable and allowed us to get paid, gain credibility and win bigger business as we moved along together.
* Best of all, no one got fired. They made their boss look good. And we helped a lot of our contacts get promoted so they could play in bigger sandboxes.
If you have read this far, thank you. While you are here, you may want to see where your company lands on the DYNASTY CURVE.