Relationship Management

Relationship management

By : Jim Pinto,
San Diego, CA.
USA

The Internet has brought major changes to the way business is being done. Old-style intermediaries are being replaced by infomediaries. Relationship management is the key to success.

This article was published by:

Automation.com, June 2002

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 only 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 still 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!

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