Speaker 1 0:20

Welcome to the Toilet Paper Salesman Podcast. My name is Mike Merarki, I'm your host. I'm thrilled to have you back again, and today we're going to be talking about territory management. We're going to be talking about how you manage your territory, how you rank your customers. There's a lot of good stuff in the episode. Today we're going to start off by talking about how we learn and how we grow.

Speaker 1 0:43

When I wrestled, I would find that there would be times where I would be on a kind of a plateau, where I didn't feel like I was growing. I was working hard, I was trying to get better, but there was no growth. And then, all of a sudden, I would feel like I'm leveled up a step or I've leveled up, and that's kind of how growth works. Growth doesn't go in a straight line. Growth kind of goes in steps. So you work and you go along, and then the next thing, you know, you realize you're up a level and then you go along, and then you realize you're up a level and that's how growth works. So today, in the same way with our sales territory, we have this territory and we find that new reps especially, they'll go out, they'll open up a bunch of new accounts, they'll get a bunch of business, and then they hit a wall. And then what do you do after that? So that's what we're going to get into today.

Growth Comes in Steps

Speaker 1 1:31

You have to take ownership of your territory. There's two ways to look at this. You could be above the line or below the line. You could take ownership, accountability or responsibility, or you can be below the line, which is blame, excuses and denial, and there's lots of that. When salespeople don't succeed they're not able to open new business, they're not able to grow their territory you end up getting a lot of blame, excuses and denials. This is hard. I don't know how to do it. Whatever it is, you have to take responsibility for your territory and for your sales success, and that is by going out, doing the work, getting better, working on your skills, and then you go from there. What would you do if your sales manager came to you and asked that you double your sales within the next year? The question that you need to ask is how am I going to do that? Because when you ask that question, how am I going to do that? Because when you ask that question, how am I going to do that? Then the answers start coming. If you're just saying I can't do that, that's impossible, there's no way to do that, then you'll never get the answer. If you answer that question by how am I going to do that, then the answers will start to come, and that's really what you need to look at.

Ranking Your Customers by Criteria

Speaker 1 2:40

As you grow your territory, as you're growing your territory, you need to create space, because as you become a new salesperson, you grow your territory. Even veteran salespeople run into this as well. You're growing your sales to your business. Your sales are going at a nice clip and then, all of a sudden, you hit a wall. When you hit a wall, you need to adjust at that point and you need to do something to create space. Creating space is really critical in helping you to continue to grow beyond what your current sales are to the next level. It's like a glass of water. You cannot put more water in a full glass. You have to empty some water out. What are you going to do with your territory? Is you're going to take some of your customers that maybe aren't desirable and you're going to drop them off and you're going to create some space? Now the thing is, when you create space, you also create a vacuum, and when you create a vacuum, it's going to be filled automatically by something. One of the things you need to remember is, when you create a vacuum by pouring out some water, you need to fill it with something, and you need to make sure that you're filling it with something that is productive and that is good.

Speaker 1 3:52

Calling on better customers and learning about customers and we're going to learn about that today how do you rank your customers? Let's talk about how do you rank your customers. I look generally at four criteria. I look at the volume of a customer is a criteria. The margin of a customer is a criteria. How they pay their bills is a huge criteria. And then the last one is PETA paying in the you-know-what. Those are the four criteria, and if you take your customers and you rank them by giving a point for each one and actually I would say two points for pay, then you start to be able to rank your customer. Let's talk about volume Now. You can set the parameters at whatever you want for these criteria, because you know your business better than anybody. So you can set the volume, the margin and the other criteria paydays and all those other things when you rank your customers, when you look at the volume. Is the volume over this criteria? If it is, they get a point. If it's not, they don't get a point. How about the margin? If your margins are over the criteria set, they get a point. If the margin is under the criteria set, they don't get them.

Speaker 1 5:08

Let's talk about pay, and the one thing I talk about for new reps especially is that you're going to largely ignore this in the beginning. Other than pay, pay is always important. If the customer doesn't pay their bill, you have nothing. And, frankly, when somebody says they have a sale, I say no, you have an expensive loan. It's not a sale until the customer pays his bills. If you think about it, you open up a brand new customer. You give them a line of credit. They place an order, say, place a $10,000 order. That's fantastic. You have a $10,000 loan, not a $10,000 order, because and it's worse than that, because not only did you loan the customer the money, he has the product too, so it's almost a double whammy right. So it's a sale. When the customer pays the bill, then it's a sale.

Speaker 1 5:50

Pay is the most important thing, and when you talk about pay, you really need to talk upfront with your customers early on how do you pay your bills. You really need to understand and establish that criteria, because if it's a customer that doesn't pay their bills on time, how much time do you really want to spend with this customer? Is this a customer that's going to be a long-term growth type of customer? Is this going to be a customer that's going to be the type of customer that you're going to want to spend your time on that you're ultimately going to grow your business? And the answer generally is no, a customer who, for whatever reason, doesn't pay their bill on time.

Speaker 1 6:27

Some customers have this idea that they can suck 60 days out of a vendor. Then they think they're getting something, but what they're getting is lower quality service. What they're getting is when you go through a pandemic, like we just did five years ago, they're not going to get the product, they're not going to get the service, they're not going to get the best reps, because the best reps don't want to deal with customers who pay their bills in 60 days. It's just flat out. The best reps will not deal with those customers. If you are a customer and you have this idea that paying your bills late is somehow a good thing, I would suggest that you rethink that thought. And, by the way, why don't you take any kind of discount that you can get, because it's free money. Why wouldn't you take advantage of that?

Pay Your Bills: The Foundation

Speaker 1 7:10

For a new rep, I would say don't worry about the other criteria that we're going to talk about today, but worry about pay. You always worry about pay. Is the credit department your friend or your foe? And I've learned this through the years. Is the credit department your friend or your foe? And I've learned this through the years. One of my absolute policies is I will never stick my neck out for a customer when it comes to paying their bills. I just will not do it, because I've seen it happen so many times where a sales rep will say, oh, I'll vouch for this customer, they're good, I know this customer for a long time and then they end up getting burnt.

Speaker 1 7:46

I had a customer for a long, long time, great customer, one of my best customers, and all of a sudden they started creeping out and creeping out and creeping out on their bills and they were out to close to 60 days. Talk to them and yeah, yeah, we're going to do this and we're going to do that, and nothing happened. And then finally, credit was like man, I don't feel comfortable with this situation. We want certified checks. So when I had to present this to the customer, the customer freaked out. It's like we've been doing business all these years. You're going to put me on certified check. So we did it. It was hard to do, it was one of the harder things to do, but fortunately we did that, because right after that they went out of business.

Speaker 1 8:18

You have to trust what your credit department is telling you and you have to work with them. I think you're always going to be better off siding with credit, even though it means you might not get a sale. Generally, credit knows what you don't and you're looking at it through a credit eye, not a sales eye. We look at our business through a sales eye and it's a different take. That's. The third criteria is pay, and the fourth criteria is PETA.

Speaker 1 8:41

Now let's talk about PETA, because PETA is something that is. Peta is someone who constantly calling you, constantly hammering you on price, constantly. There's always a problem, everything is wrong, there's something going on all the time with these customers. We call them a PETA, and so PETA customers are really, really challenging from the standpoint of just the amount of time, sheer time, that they take up out of your day and it could mean that they buy a lot of product, and that's why you have the four criteria. Sure, they buy a lot of volume. Their margin's probably low because they're beating you up on price all the time. They pay their bill, maybe okay, but man, they're a PETA.

Speaker 1 9:24

How do you rank that customer? That customer is a two, two points. That means that they would be a C customer. And that's what you have to do is you have to look at PETA how they pay their bills, their margin and their volume, and then you can determine and rank them A, b, c or D. If you have four points, that's an A customer. Their volume's great, their margin's good, they pay their bills and they're not a PETA. That's a great customer. You want those all day long. So that would be considered an A customer. B customer is a three-point customer. There's something there. Now, if it's pay, I take two off for pay, so pay is two points off.

Speaker 1 10:02

If they don't pay their bills on time, they may be high volume, say. The margin's low, lower than you like. They pay their bills. They're not a PETA, that's a B customer. They're the backbone of your business. B customers are good customers. Those are ones that you want because they truly are the backbone. Let's say the volume's low, the margin's good, they pay their bills and they're a PETA. That's two out of four. That makes them a C customer. C customers either need to go to a B or you need to weed them out at some point, because in this scenario, where the volume's not good and they're a PETA, you need to either get their volume up or you need to get them under control to become less of a PETA, which is not easy to do, by the way.

PETAs and Customer Classification

Speaker 1 10:50

Let's talk about D customers. D customers are. That would be one point. So, for example, the volume's not good, margins not good, they pay their bills and they're a pain in the butt. That's a D customer that would be considered a donkey, really not a good customer, not one that you would want to have. Again, I would move them to the competition or minimize them or give them to someone else whose time's better spent dealing with customers that are D customers.

Speaker 1 11:25

You have your zero customers. Their volume's not good, their margin's not good, they don't pay their bills and they're a PETA. That's a zero. And those are are you kidding me customers? Are you kidding me that you have customers? But you know what I guarantee you as a salesperson if you go and use this criteria and you rank your customers, you're going to have some zero customers. But you know what I guarantee you as a salesperson if you go and use this criteria and you rank your customers, you're going to have some zero customers.

Speaker 1 11:50

My recommendation to you is with zero customers, give them to your competition. Fire them immediately, let your competitors deal with them and let them have the headaches and let them have them take up all their time, and I would even almost say that with your D customers, move on from them, give them to somebody else, let somebody else handle them. You need to create space so that you can call them better A and B customers if you really want to be a top salesperson. If you don't want to be a top salesperson and your guy's your friend for forever and you want to deal with the guy and he's a D or a zero customer, then okay, that's your choice, but I would highly recommend against it.

Speaker 1 12:30

If you want to grow this is really what we're talking about when you're ranking your customers you want to focus and what happens is, a lot of salespeople spend 100% of their time on 100% of their customers. They spend time on their book. But actually it's worse than that, because most of them, if they take that approach, they're spending 80% of their time on their bottom 20% of their customers, because the bottom 20% of their customers are the ones that take up the most time and create the most problems. If you take 80% of your time and focus on your top 20% of your customers, then you're going to maximize your results because you're going to be focusing all your time on your best customers, or 80% of it anyway. If you think about it, I can go in and make a sale on a customer and get a $1,000 order. Or I can make a call on an A customer and get a hundred thousand dollars piece of business, just like that. It's the same call, same presentation, same call. You get a thousand dollar order and you lose it the next week because they priced it out to somebody else. Or you build a program for somebody and you get a hundred thousand dollar piece of business. What would you rather do? And so if you're taking your time and you're focusing on those best customers and you're actually helping them to grow their business, then you're going to really be in a place where your business is going to grow dramatically.

Speaker 1 13:55

Once you now understand that there's an A, a, b, a C and a D customer and you've taken your customer base and you've ranked them based on the criteria, now what you want to do is you want to sit down on a piece of paper and you want to write down who your perfect customer is. Be as specific as possible. You want to write down all the attributes of those customers that you find perfect for you. And, of course, they're going to be an A customer. They're going to have high volume. Their margin is going to be good. They're going to pay their bill. They're going to have high volume. Their margin is going to be good. They're going to pay their bill. They're not going to be a PETA, that goes without saying. But what else about that customer? And get specific as you can. Nothing is out of bounds when you get specific about your customers. And let me tell you how this works. It's based off of the law of attraction, which is a very interesting law, and I can give you an example.

Speaker 1 14:43

When I was doing business coaching, I was working with a customer who was looking for a specific person to hire and they had specific criteria about this person. They wanted somebody who can sell, somebody who could do construction. You know they had all these criteria and so what we did is we had them write down. I had them write down all of that criteria on a piece of paper. That was on a Monday. On a Wednesday I got a phone call from a guy who was interested in coming in for an interview and he happened to open the phone book backwards and this was a customer that started with a V, so he was at the back of the phone book and they found my client at the back of the phone book and gave him a call and said, hey, I'm interested in a job Are you looking to hire? And so they started asking him questions and they started checking all the boxes off their list and they said, yeah, come on in for a Friday or interview. And they were thinking he won't even show up because most people don't show up. But he did show up and he clicked off every one of those boxes. He showed up for them.

Speaker 1 15:45

You understand what a perfect customer is and you identify that. You activate your reticular activating system, your RAS, and what that is. You automatically set your radar and recognize things where you've defined them. So it's like if you buy a car and it's say it's a blue honda accord, and you buy a blue honda accord and you drive it off the lot and what happens? You see nothing but blue honda accords. You couldn't imagine there were so many blue honda accords on the road. That's your reticular activating system and it's the same with your customers.

Creating Space for Better Customers

Speaker 1 16:20

If you identify and write down the attributes of a perfect customer, you will automatically start to notice them right out of the gate and consequently, you'll also notice the ones who aren't. So you're sitting with a customer and you say hey, you know, our terms are 1%, 10, net 30. We're pretty strict on our receivables. The customer says oh well, I pay in 60 days. I can't. You know, my customers pay me in 60 days, so I have to pay you in 60 days. Oh, right away. That's a red flag. If you don't have it written down, you might not notice it like that, but when you do have it written down, you know specifically what is an A customer. That immediately raises a red flag. And now, all of a sudden, you're rethinking whether or not you should sell to this customer.

Speaker 1 17:09

Now that you've got your customers ranked, how do you manage your territory? How do you actually take a territory which is maybe larger, to say it's a regional territory, say it's got four cities in it, for example? How do you manage that territory? And what I tell reps to do is to break your counts down by area, break it into four quadrants, if you have, say you have four cities that you deal with or four areas. Break it down into four quadrants and so you're going to list all those customers and ranked by your best customers to your worst in each of those quadrants. And then you're going to go into a quadrant, say for a week or for a few days, and then you're going to go to the next quadrant and to the next quadrant and to the next quadrant, systematically calling on your customers based on area.

Speaker 1 17:59

A lot of times salespeople will shotgun their territory. It'll go quadrant one one week, in quadrant four one week, and quadrant four the next day, and quadrant three the next day and quadrant two, instead of focusing in an area and calling on all of those distributors at the same time. If you're right there, you might as well batch them up and call on them while you're in the area. So that's the method that I use and have used for area. So that's the method that I use and have used for I don't know 30, 40 years to maximize your territory. And then what happens is, as your schedule fills up now you got to create space, now you got to knock off some of the guys at the bottom, move them to other reps. Do what you have to do create space so that you can open more A and B customers. That will keep your business growing 30% a year. You want to grow 30% a year.

Managing Your Territory Effectively

Speaker 1 18:47

You have to constantly be looking to refine your territory and to pour out some water out of your glass to help it to grow. You just do. It's the difference between an abundance mentality and a scarcity mentality. A scarcity mentality is someone who hangs on to every account. They don't want to leave any account go, even if they're small, even if they're not good. They could be a donkey account, they could be a zero. They want to hang on to it because they don't feel like there's any more out there. A salesperson with an abundance mentality is someone who understands that they need to let some of the lower customers go. Pour out some water so that they can fill their glass with better customers. And those salespeople and I've done this for a long time that have the abundance mentality are the ones that grow the best and grow the fastest and have the most success in sales.

Speaker 1 19:41

Finally, my father-in-law had a saying bend over backwards for your customers. Never bow down. In other words, don't be subservient to your customers. You have a relationship with your customers. You're the owner of your business. If you're a salesperson, in any manner, you own that. You own your business and you need to act as if you are an owner. You're never subservient to your customer. You're never better than your customer. You're always on the same playing field, and that's what any employee, that's what anybody that you deal with. You're always on the same level. You're never above anybody and you're never below anybody, and if you have that philosophy, you will be successful for a long time in your career. That's all I've got for today. If you like this podcast, if you get something good out of it, like and subscribe to the podcast. Who says selling toilet paper isn't glamorous? Thanks a lot and have a great day.