|
Electric Utility Applies Lessons of Value-Added Selling to Meet Challenges of Industry Deregulation
Beveridge Success Story
OG&E, Oklahoma’s largest electrical utility, learns to compete in era of deregulation. Working with the Beveridge Consulting Group, it achieved 30% growth in unit sales and 40% growth in Net Present Value (NPV) sales. This growth happened while the utility eliminated a variety of rebates.
OG&E Electric Services, the state’s largest electric utility with 677,000 retail customers and a coverage area of 30,000 square miles, recognized that its industry was facing a critical transition from a government-regulated to a deregulated, competitive market. Activity at both the state and federal levels to deregulate electric utilities was moving ahead quickly and bringing significant challenges to both the country’s electric companies and their employees.
Bill Scribner heads OG&E residential sales and marketing team, whose job is to convince home builders, heating, ventilation and air conditioning, and plumbing contractors to select OG&E as the electric provider and energy-efficient electrical equipment that will meet the customer’s needs. The goal of Scribner’s team is to act as a consultant to builders and developers to choose OG&E as the electric provider and to help contractors sell energy-efficient electrical equipment to the homeowner. Their competition is from natural gas companies and other electric utilities.
Recognizing a Need
As utility industry deregulation was appearing on the landscape, Scribner recognized that his team of 30 sales managers, sales consultants, and marketing personnel needed to learn a whole new set of skills to help them succeed in this new environment. Scribner began to look at ways to change the team’s selling focus from the product to the customer and developed vision statements featuring the concepts of profitability, identifying and satisfying customer needs and being proactive, being value-focused and highly skilled.
Early on in this effort, Scribner and several members of his management team attended a McKinsey & Associates marketing school program. McKinsey helped the team to reorganize and then recommended that Scribner work with a consultant organization. That organization did some customized work with OG&E and then recommended The Beveridge Consulting Group and its President, Dirk Beveridge, creator of the Business Operating System Standard (BOSS), a unique eight-step methodology created to increase companies’ profitability. BOSS provides companies with a guide for thriving in the new millennium by focusing on eight critical success factors: customer focus, competitive products, value-added support services, expertise-based skill sets, the marketing of unique systems that continually raise the bar, continuing improvement philosophy, and a unique in-house entrepreneurship methodology.
"We read Dirk’s book and then signed up for his sales management development program," Scribner said. "We explained to him that we needed someone to help us develop the skills to enable our sales force to function well in a regulated environment, but also have the flexibility to work in a competitive marketplace. We also wanted to work with a consultant who did not have specific experience in the utility industry, in the hope that the organization would bring a fresh perspective to the job."
Says Dirk, "The OG&E team was doing a great job in a regulated industry. But they were comfortable in that environment; they thought they were doing a good job based upon historical results in a relatively protected marketplace. They were preparing to enter a battle for their lives because they had not yet put in place the basic skills, requirements, and standards that successful, competitive businesses have in place."
Creating a Plan
Beveridge and Scribner’s management team together developed a working plan for moving forward to implement the concept of "value-added selling." The Beveridge Consulting Group conducted an extensive needs survey by interviewing key members of the OG&E team and then fleshed out a detailed proposal for implementing its plan.
The goal was to formalize and integrate the design of the OG&E sales management system, which included the methodology and tools to allow for the needed improvement in the sales management function. Objectives included selling OG&E services at a profit, helping the sales team improve customer relationships through the selling of solutions and use of a "value-focused" approach rather than "giveaways", and the implementation of value-focused selling through the complete integration of a cutting edge system.
The system included: defining sales management objectives and sales representative needs; creating a recruiting process; developing and communicating standards, implementing a coaching process, and continual measurement of challenging standards. Critical tools were created including job descriptions, coaching tools, training guides, performing tracking and sales strategy worksheets.
The program combined both formal training courses conducted by Dirk Beveridge as well as more informal sessions in which OG&E sales managers coached their salespeople in the field. Scribner commissioned the production of Beveridge-produced videotapes of the training sessions, which continue to be used by managers during sales meetings to review techniques, as well as by new hires brought aboard. The Beveridge Consulting Group also worked with OG&E to develop a complete value-added selling system manual which is used extensively by the sales team. Finally, sales team members regularly attend off-site training courses conducted by The Beveridge Consulting Group.
The Results
"At first, many of our team members were skeptical," Scribner says in describing the results of the Beveridge program. "They felt they were doing fine and thought that this was just ‘another program.’ Midway through the first year, however, they began to recognize the importance of value-added selling. But they still had difficulty moving from a product to a customer focus.
"By the second year of the program, we were seeing exceptional results. It’s a slow process that takes a great deal of focus and reinforcement. Classroom training alone does not accomplish the task. It needs to be applied in the field," Scribner says.
He continues, "Now that we have been working with Dirk for 18 months, we have a number of people who are very enthusiastic about our value-added selling program. Some are employing it from the heart and some just because it is required, but we’re seeing results and enthusiasm is growing."
Scribner points to several specific results of the new sales focus:
- The residential marketing team has repositioned itself in the minds of builders and contractors as a company that will help their business;
- Because of their new focus on serving the customer’s needs, OG&E has been able to eliminate the cash rebates that were endemic to the utility industry. This has led to dramatic reductions in the cost of sales. At the same time, however, OG&E’s sales and market share have increased.
- There has been a dramatic improvement in teamwork with the sales force. Historically, sales and marketing personnel had a lack of respect for each other’s abilities, according to Schribner. Now, he says he has a unified team with a solid direction in which every member has his or her own role and the team as a whole has specific goals and objectives.
"We didn't just get a canned program from The Beveridge group. They practice what they preach in terms of providing customized solutions and are committed to helping us achieve results," Schribner says. "Initially we signed with Dirk for a 12-month plan, but now, the Beveridge Consulting Group is taking us to another level as we refine our value-added selling model even further." |
