UPS Builds Billions in Sales

If someone appraised the value of UPS’s using the process jewelers use to appraise the value of a diamond, what would they look at? They may first look at the corporate colors. While IBM’s color is blue, ADP favors red, and SAP sports a yellow logo, UPS’s corporate identity is brown. While brown is an earthy and modest color, in recent years, brown-colored diamonds have outstripped the value of clear diamonds.

Next, the appraiser would measure the weight (or carat) of the diamond. Counting the 88,000 brown vehicles and 582 brown airplanes moving more than 13.6 million packages and documents a day, UPS is fully justified in playing the role of Big Brown. UPS is the largest package delivery company in the world, and with $33.5 billion in sales it is the 42nd largest company in the U.S.

The third part of a diamond’s value is clarity. UPS runs its business on a transparent information platform that allows customers to track the movement of every package at any moment from pickup to delivery. UPS.com gets more than 115 million hits per day, including an average of 9.1 million daily online-tracking requests. It is the clarity with which UPS moves information that has quietly turned the company into a global leader of supply chain services offering an impressive range of options for synchronizing the movement of goods, information and funds.

The fourth driver of value in the diamond business is the cut. The experience and vision of the master diamond cutter transforms the raw diamond into a brilliant object that reflects light in a most fascinating and mesmerizing way. At UPS an army of 357,000 employees are busy polishing the diamond, and every one of its facets is a reflection of their passion for creating a satisfied customer with every transaction. The total value of the diamond called UPS is approximately 80 billion, which is the current market cap of the company as of May 2004.

FROM MOVING PACKAGES TO MOVING INFORMATION

UPS is busy reinventing itself. Picture this: You fly into a distant city, and on the drive over to see your prospect you pop into The UPS Store (there are 3,300 in the U.S. plus 400 Mail Boxes Etc.s) where you can log into a WiFi network. You download last minute updates to your proposal and get your document printed, collated and assembled into an attractive binder. Fast forward a few hours – you’ve closed the deal, but the client needs a few contract changes. On the way back to the airport you stop in The UPS Store, print out amended contracts, overnight versions to the client and your home office — and while you’re at it, you download your email for reading on the flight home. Easy. “Wherever you are, we are. The power is in the network. We want you to make our brick and mortar, your brick and mortar,” says Nick Costides, corporate strategy and retail technology group manager for UPS.

Guess what: that scenario already is in place for many salespeople today (UPS is deploying WiFi to all its stores) and – importantly – this is just a tiny part of the transformation of the Atlanta-based UPS from a small package delivery company into a global leader in synchronizing what the company sees as the trinity of global business – goods, information and money. The company calls what it does “synchronizing the world of commerce,” but from a selling point of view a lot more is happening, because UPS is a company with an ambition to insinuate itself everywhere. A business has inventory in China and a need for enhanced cash flow in the U.S.? UPS might offer an inventory-based loan. A small business has some packages that need delivering? A smart-eyed UPS driver might note that and put into process the getting of a new customer for Brown. A mid-size enterprise has a supply chain that stretches from Siberia to Santiago with hundreds of points in between? UPS has the tools to manage and improve that supply chain. To make all these internal parts coalesce into a smooth organization, UPS relies on a polished, high-powered sales force that is well trained and capable of analyzing a company’s business flow to make UPS’s sales grow.

For starters, consider the daunting scope of UPS’s sales mission. FORTUNE 500 companies have relationships with UPS. But UPS’s sweet spot is with smaller companies. “Domestically we have 1.8 million customers, of which 75 percent are small to medium-size enterprises,” says Rich Bradshaw, vice president, sales for UPS Capital.

How to get up close and personal with such a diffuse target as UPS, which has aggressively expanded into Europe, Asia and elsewhere around the globe? That is the very question that stays top of mind for senior UPS sales executives, who readily share insights into how Big Brown is trying to make sure it expands sales far beyond the traditional package delivery services.

But UPS’s transformation just may be emblematic of what is happening in many sales organizations as companies reposition themselves to better compete in the 21st century. UPS doesn’t expect to miss a beat as it sends out a newly invigorated, multidimensional sales force that knows its goal is to come back to base with ever more effective solutions for moving packages, information and capital.

Selling Smart

How? Carl Strenger, vice president of E-commerce Technology Sales for UPS, reveals exactly the way UPS goes after a customer for its new products and services: “It’s a consultative sale that requires discussion across the supply chain. Our sales force looks at the customer’s business and tries to find ways to reduce costs or raise revenues. We go in and we learn about the business. We talk to the functional people — IT, finance and so on. Once we decide what’s important to this customer, we come up with a bundle of solutions to grow their top-line or reduce their bottom-line costs.” Keep in mind that Strenger’s mission is to connect customers with UPS’s suite of e-commerce tools that make it easier to process, track and log packages and other goods — but never think package delivery is out of mind. “We usually couple our other ideas with a proposal to handle the customer’s small packages. We put all this together,” says Strenger, “and we underline the true dollars the customer will receive by going with UPS’s services.”

Why is UPS getting so involved in complicated areas that seem to have little relationship to the old-fashioned movement of a package from A to B? Because, says Strenger, the company has no choice: “We want to drive deep relationships with our customers, and to do that we need these other components. We can no longer just handle small packages. Our customers are looking beyond that, and we have to, too.”

Facing the Skeptics

With all transformation comes the pain of change. Many UPS package customers don’t know about the many value-added services UPS can deliver. They don’t know that when someone orders a new camcorder from a Website, it may be a UPS site processing the order; it may be UPS handling the credit card and shipping the item from a UPS warehouse. They don’t know that UPS warehouses store and ship everything from auto and computer parts to sneakers and life-saving medical devices.

In the field, UPS salespeople face customer disbelief daily. One of their key challenges is convincing prospects that the company that moves their boxes also can offer critical insights on maximizing efficiencies of the supply chain — and a first-blush customer response often is skepticism, admits John Haack, UPS vice president, supply chain solutions. But he adds, “We don’t have problems once we get in. Once we go through our capabilities — and our systems engineers are very good at weeding their way through a supply chain and finding places to improve — we can convince customers of our capabilities.”

Haack personally oversees a lot of those extended capabilities because his group, he explains, provides everything except the brown vehicles and touches everything except the small packages on those vehicles. “We provide everything outside that. Air freight, ocean freight, warehousing, distribution, custom-house brokerage — it’s really the whole of the supply chain when you couple what we do with the small packages.”

In 2003, supply chain solutions created a $2.3 billion revenue stream for UPS. How does Haack’s team stay on the cutting edge? He believes in cross-fertilizing the sales organization’s skills. “We mix people up. We put small-package salespeople and supply chain salespeople in the same classes, to raise joint awareness of each other’s skills,” he says.

But this pairing goes a big step forward: “We’ll send them out on sales calls together,” says Haack. “We also try to leverage accounts. We might have a supply chain customer who doesn’t make heavy use of our small package solutions, so we try to work together to provide broader solutions. And of course the reverse is true too.”

UPS – THE LITTLE KNOWN BANKER

But perhaps the swiftest way UPS silences skeptics about its new dimensions is with cash – and money still talks, but it talks especially loudly at UPS Capital, which has aggressively entered the financial services marketplace with a target audience of medium and small enterprises that don’t always have easy access to conventional capital. “We combine capital with transportation solutions,” says UPS’s Rich Bradshaw, who heads the comparatively new, 100-person UPS Capital sales team. A plus for UPS — traditional lenders such as banks still shy away from small to medium-size enterprise, which often operate with substantial cash-flow constraints precisely because capital isn’t available, says Bradshaw.

UPS is keen to alter that equation for two reasons. First — and this is key — the company has deep insights into potential borrowers’ business processes, and in many cases UPS even knows exactly where the raw materials and finished goods are, because it is UPS that moves those goods. That boosts UPS’s confidence in lending.

The other key is that, across the board, UPS sees money lending as a tool to augment the package shipment and supply-chain management aspects of the business. In most instances, too, UPS Capital sells in close coordination with sales executives from the package side. “We work to align with them,” says Bradshaw. “We prescreen their target list, to make sure we are pursuing targets that make sense from a capital standpoint. We’ll talk with the package account executive to gather intelligence, and frequently we’ll jointly call on the company.”

Haack adds that his message quickly gets target executives listening: “We tell them we want to help enhance their cash flow. We want them worrying about margins, not about cash flow or transportation needs. That’s where we will help them. We’ll take those issues off the table for them.” And that’s a hard message for prospects to brush off.

SELLING TO THE “C-LEVEL”

But all this innovation and brand extension raises two key questions — how does UPS keep its message consistent and straight as the sale has become more complex? And how does the company keep its sales force ready to handle a more analytical sales challenge?

Dale Hayes, UPS vice president of sales, explained how the role of the UPS salesperson had to be elevated to the level of a trusted advisor who — with the assistance of the expert staff — will help direct the synchronization of the three flows of commerce — packages, information and money. To Hayes, these strands obviously come together. “Historically we offered transportation to customers, but now we offer solutions to customers that include transportation as a core component. But we are also blending together information and financial solutions so that the product gets to the right place at the right time.”

Something has changed, however, and that is the contact person who now is buying the UPS solution. Some years ago, the buyer was a logistics manager, often not particularly high up the food chain. Now UPS is aiming for a wholly different buyer. “As we offer supply-chain solutions, it is the CFO or CEO who becomes involved. C-level executives now are very interested in what we are offering,” says Hayes, “staying on top of that is a core mission for us and for C-level execs.”

How does UPS retool its sales force so that it can successfully sell to the highest levels of an organization? The key strategy is segmentation. UPS sends highly specialized teams into the market — supply chain experts, e-commerce pros, lending experts, and of course small-package transportation salespeople.

The next step is “extensive training,” says Hayes. “That’s how the UPS message stays consistent. When we come out with new solutions for customers, we have an entire sales-training group that helps put these solutions into a context that highlights customer solutions. We provide consistent training all across the U.S. and, in fact, the world.” UPS training is not only delivered in classrooms. Says Hayes, “We embrace technology. Our salespeople have laptops and they receive training over their laptops.”

THE HIDDEN ADVANTAGE

Hayes stresses that UPS sales reps go into meetings with one key advantage that just may help close many prospects before the first meeting even takes place: trust. “This is a trust we have built over 96 years of delivering packages,” says Hayes. And it’s a trust that recently was spotlighted when Harris Interactive and the Reputation Institute ranked UPS its second most trusted organization (in a ranking of 60 highly visible entities). Customers come to trust UPS to deliver packages, and from there, it’s a small step into much bigger things. “They trust us to understand their business enterprise, and they trust us to help them improve their business processes,” says Hayes. “This is one of our greatest strengths.”

With steady gains in business both domestically and globally, UPS has shown that there is no limit to how much a company can grow if it is able to leverage the customer’s trust while mastering change. UPS CEO Mike Eskew recognized the simple fact that there is a clear ceiling to the package delivery business, but there is no set limit to selling e-commerce and supply management solutions. While he keeps his eyes focused on the future, Eskew doesn’t want UPS employees to forget their earthy, humble roots. He says, “Dirt under the fingernails has more staying power than ink on a check.”

UPS MANAGEMENT SECRETS

In 1907 there was a great need in America for private messenger and delivery services. To help meet this need, an enterprising 19-year-old, James E. (“Jim”) Casey, borrowed $100 from a friend and established the American Messenger Company in Seattle, WA. Casey, who died in 1983 at the age of 95, provided the management and leadership philosophies that have stood the test of time, and they may well explain the secret to the consistent success of UPS over the past 97 years.

Today UPS ranks fourth among Fortune 500 companies when measured by the number of its 355,000 employees. UPS employees are well trained; they follow a strong work ethic and enjoy the opportunity to grow with the company for decades. Casey rewarded talented, inspiring and effective managers with greater responsibilities and higher ranks. It’s not surprising that many top UPS executives started as part-time drivers. For example, senior VP of Worldwide Sales and Marketing John Beystehner joined UPS as a part-time audit clerk in February 1971 while attending Boston College. The UPS sales force has one of the lowest turnover rates among all sales organizations listed in the Selling Power 500.