Table of Contents
Clients
To sell, you need to understand exactly what you are selling. To understand what you are selling, you need to know who your customer is. For example, we produce beer. Who is our customer? Uncle Vasya from the neighboring building? Not at all. Our customer is the supermarket that sells beer, and our product is not the beer itself, but the conditions that motivate the supermarket to buy that beer. The situation:
In every regional center of Ukraine, there is a brewery producing wonderful local beer. I won’t name any brands here, but anyone who has traveled around Ukraine will confirm my words. This beer is inexpensive, not heavily advertised, often unpasteurized, and very tasty. However, if you get the idea to take a couple of bottles of local beer with you to treat your friends back home, the worst way to go about it would be to buy the beer at a supermarket. One might think that a supermarket would be interested in such a product—local goods that don’t need to be transported from afar, with a steady demand from regular consumers and fundamentally preferred by true connoisseurs. It turns out that it is not profitable for supermarkets to sell such beer for a number of simple reasons:
- cheap (results in lower income from the shelf);
- it spoils quickly, which means we need to work more precisely with deliveries and generally classify it as perishable, like milk or meat;
- not advertised;
- Local brewers are not wealthy enough to offer retailers terms that are more enticing than those provided by large breweries.
For a brewery, the customer is not the beer consumer, but the retailer. Therefore, when selling beer, you need to speak the language and think like a retailer. All those bubbles rising inside the frosted glass on the poster are a fiction, which is also intended… no, not for Uncle Vasya, but for the same retailer: “Look, this product won’t sit on your shelves because we spare no expense on advertising!”
What should a local brewer do in such a situation to achieve their goal? Obviously:
- Raise the price of beer, settling the issue with the supermarket’s income.
- Use the “extra” money for advertising and merchandising. The issue with perishable goods can be resolved by refining logistics procedures.
Right now, a seller of a certain Kyiv beer in a local supermarket is operating exactly on this model, managing to sell his draft beer at twice the price of the same beer in bottles. Everyone is happy, including the customer who is willing to pay for “live” beer. And it doesn’t matter that the brewery saved on pasteurization, transportation, and packaging. What matters is that the beer is “live,” and the draft point inside the supermarket is profitable for both the supermarket and the brewer.
This example illustrates not only the necessity of understanding who our client is and what their needs are, but also challenges the classic stereotype of businesspeople who somehow believe that cheaper is always better. In a world driven by profit, where the entire supply chain relies on sales commissions, cheaper often means worse.
The price, contrary to the established stereotype, is not a decisive factor from the consumer’s perspective either. Just think about it: how many items in your home were purchased simply because they were the cheapest option among similar products? People buy not just products, but the benefits they provide. A customer also purchases not just a product, but the benefits, and while price does matter when choosing the benefits they want, it is certainly not the most important factor.
Who the client really is can be seen in the following example.
Recently, the director of a highly respected insurance company approached me with an idea for a new insurance product, similar to auto comprehensive coverage, but significantly simpler to manage, completely eliminating internal fraud and easily sold in a “box” format. His question was straightforward: “Come up with a new sales channel for this product.” Naturally, it had to be a place where drivers go. The condition was that the sales channel should be new and not require any investment. This meant that banks, brokers, state inspection points, and retail outlets were out of the question.
After some time, we identified a sales channel: auto parts stores, service stations, especially branded ones, and car dealerships with their own service centers. However, the key discovery was not just finding a sales channel, but also identifying a non-trivial benefit for it. Commissions no longer surprise anyone. The benefit we found was that the insurance allowed the payout for a broken part to be spent specifically at that service station or dealership. This somewhat protected the insurer from external fraud—no cash payouts meant there was no incentive to commit fraud—and it provided a significant advantage to the parts dealer, as they would be guaranteed a customer for the next year.
In other words, the discussion wasn’t about how to make this product appealing to car owners—there will always be a buyer for every item. It was about how to make the product attractive to the actual customer—the auto parts store.
Sales channels
Recently, the term “Sales Channel” has become quite trendy. It often conjures up the image that we provide our product to someone who sells it, and we don’t do anything else. If we do something ourselves, then it’s no longer a “sales channel,” but rather our own sales. It’s also common to divide sales channels into “dependent” and “independent,” with “dependent” channels including our own sales system, and “independent” channels comprising various intermediaries, traders, and businesses that need our services for their end consumers. For example, a supermarket needs your plastic bags, or a bank needs your collateral insurance.
If we are making plastic bags for a supermarket, then our client is the supermarket, not the shopper, and the bag will feature the supermarket’s logo. If we are providing insurance for bank borrowers, then the insurance will be tailored to the bank’s needs, not the borrower’s.
When we use the word “seller,” I generally mean not the person behind the counter, but someone who makes sales. In other words, if you are involved in the manufacturing or supply of ceramic tiles, your “sellers” will be your sales managers, the people who negotiate with your clients—retail stores and construction companies. If your business is related to the production of so-called FMCG (Fast-Moving Consumer Goods) products…Fast Moving Consumer Goods— everyday consumer goods), which includes absolutely everything that is on the shelves of supermarkets, your salespeople, and there should be many of them, will be engaged in negotiations with these supermarkets, supermarket chains, stores, restaurants, and hotels. Salespeople can also be considered those who stand behind the counter or communicate directly with the end consumer. If you are a chain of kiosks, then your salespeople are in those kiosks. And if you are in the insurance business, then your salespeople are agents. If you are a participant in the real estate market, then your salespeople are brokers.