Chasing dreams, creating nightmares
Chasing new customers without fully analysing the needs of a prospect can result in more hassle than the business is worth, according to Quickslide’s Adrian Barraclough.
We talk about the best sales people having drive and motivation to succeed. Surely it is implicit in such roles? But the best, in my experience, are also intelligent and thoughtful and, great at planning and analysis. All too often however, the drive from the company, let alone the staff, is flawed, if it exists at all.
Too many companies drive their sales operations with prospect conversion as the primary goal; taking on a new account, especially if it has been taken from a competitor, is the core driver.
Price is usually at the core of the negotiations, the assumption being that the ability to supply high quality products on time and in full has been established. Supply begins and within weeks it becomes clear that, even though you realised the prices were tight, you’ve ‘bought’ the business and, actually, the cost of transport alone to Outer Fiddlefuddle within the terms agreed is losing you money.
The truth is that very few businesses are brave enough to actually walk away from a deal, always assuming of course, that they have the systems and intelligence to analyse the true cost of supplying individual customers.
All too often, the business model is based upon such basic criteria that it is impossible to truly analyse all the relevant data in order to come to a decision as to whether even pursuing a customer will be profitable.
We are often in awe of those that drive relentlessly to get a new account on board. But how many new accounts has your firm taken on that have truly become the account that you always believed them to be? And how many of those did you know, deep down, wouldn’t be worth it in the long run?
The desire to secure new business, whatever the size, shape or potential of the company is often driven by competitive instinct – the will to win – and is often exacerbated by a desire to beat a competitor under any circumstances; the thought process being that if you take something from them then your competitor will automatically be weakened. Actually, you may be doing them a big favour.
Many managers believe that the last 10% or 20% must be extra margin and profit. But every account must be considered and analysed in its own right as it can only be profitable if it generates more money than it costs to service and supply. However, taking business from competitors is often done by promising the earth and undercutting prices. Even if a margin is maintained in theory, it’s frequently so close to the bone that any variation of supply will plunge the account into deficit.
So what should a business do? The first and perhaps most difficult task is to change the company’s philosophy towards sales. After years of singing the company anthem, and rousing the team at the end of each quarter’s sales meeting (or yelling down the phone at the rep because he didn’t nick the sale from your arch-rival) you have to instil an atmosphere within which sales people accept that the only good business is profitable business.
The primary benefits of a more disciplined approach to sales are two-fold: the first, of course, is that you make money. But just as importantly is that the customers you do take on will enjoy a quality of service that you can afford to sustain and continuously improve upon, rather than wince every time they call.
We bit this particular bullet some time back at Quickslide. And, when we are approached by customers that have a fixed idea of what they want to pay for a deal that would leave us out of pocket, we politely decline their business. And we have even been known to suggest an alternative supplier that might be able to do the job at the price demanded. All of which means that the customers we do welcome, know that they will receive the very best products and service because that’s what we can afford to give them.