Managing business better

Many companies still allow sales people to keep their own client lists and record activity in their own personal systems. This is a major business risk. All that information belongs to the business and should be kept in a central database where it can be maintained, analysed and backed up.

Having made a decision to centralise that data the business has to decide on the information it needs to keep against those customers in order to help develop additional business for your company. How are you going to categorise them, market sectors, potential spend, size of business, geographical area? This will enable you to target these categories with specific marketing activity.

The way you classify your contacts within these customers is also important as it will enable you to tailor your communication messages according to the position they hold within the customer. It is vital that only one or two people are given the responsibility of entering the data into the database, as the quality and accuracy of that data is key to your sales and marketing success.

Having got your database together you then face the challenge of ensuring all key customer activity is recorded in it. Sales and Customer Service people must record key activity against their customers. If they don’t, how can you analyse what you are doing with your customers?

I believe the role of the field sales person is diminishing. A lot of their traditional sales activities can be handled by an internal sales/account handler. Your field based sales person is an expensive resource and should be targeted at developing new business from customers who have not done business with you before. Their role is to develop those relationships until they get to a point where they place orders with you. Once they have done that they should hand over the customer to the business, so that it can manage and maximise the potential of the customer from that point.

The person who will build the strongest relationship with the customer will be the account handler, who talks to them on a regular basis as they handle their work. It is the account handler who should be trained to identify and exploit opportunities with existing customers, not the field based sales person. If there is a good relationship with the customer the phone is a fantastic communication tool. It is highly cost effective and environmentally friendly!

Now that the sales team is working effectively it’s time to turn our attention to pricing strategies and the role of an effective estimating system in arriving at the right price.

I am often asked about this subject, so let’s get something straight right from the outset. Estimating systems are designed to calculate the likely cost of manufacturing a piece of manufactured material. Once they have done this they will provide some highly effective tools to the estimator, to uplift costs and apply margins to give a suggested price. However, price is determined by the interaction of supply with demand and in the current market that translates to reduced demand working with over-capacity, leading to lower prices.

The point here is that it is the market that determines the price, not your estimating system. The power of modern MIS is to deliver accurate estimated costs so that the person responsible for pricing understands fully the implications of going with the market price. Having accurate cost rates that are reviewed annually and manufacturing times that are continually measured and reviewed is key to giving real value to this data.

There are other variables equally as important as cost that have a significant influence on the pricing of work, such as who the client is, their potential, what our capacity is in the factory, and is it work we are good at?

Traditionally, converters have used good old ‘gut feel’, and there is no substitute for knowledge and experience. However, with market pressures as demanding as ever the margin between profit and loss, and success and failure is too small to rely on gut feel alone. Decisions must be based on sound management information. The quality and accuracy of that management information will make all the difference. Whatever you do, do not compromise on it.