Stop grinding out quotes and proposals

In this issue: Stop grinding out quotes and proposals
by Eric Albertson (with inspiration from Jeffrey Mayer)

Jim called me because he was frustrated. He was sending out lots of quotes and proposals, but very few of them were turning into sales. He spent hours each day doing this, but he didn't make much money.

Jim's company manufactures electronic components. Every day, he receives three, five, ten or more incoming calls from people looking for a particular component, which Jim's company might, or might not, have in stock.

If Jim doesn't have exactly what the customer wants, the customer usually asks him to send a quote for what he may have as an alternative component.

More often than not, Jim says, "Sure, I'll be happy to send you a quote." He grabs an order form and begins asking the customer the basic questions: name, address phone, fax, and so on.
Then he says to his customer, "I'll put these numbers together and fax them to you later this afternoon."

Jim, thinking he's got a real prospect, drops everything. He pulls out his price sheet, checks his inventory, and calls the freight company to get shipping costs.

Then he types up his quote, faxes it off, and files it away for future follow-up.

I asked Jim what his closing ratio was: how many of these quotes he sold. He didn't know, but guessed maybe five percent. "What happened to the other 95 percent?" I asked.

Jim explained that he would go through his follow-up file and call people up, but more often than not, he forgot to make the calls because he was too busy. There were too many new quotes to get out.

When he did make the calls, he usually got voice mail. He left messages, but those calls were seldom returned.

"How many of your quotes were for alternative components because you didn't offer exactly what the customer was looking for?" I asked.

Probably 40 percent or 50 percent of his quotes were for alternative components, he said.

"How many of these quotes converted into closed business?"

"None."

"Then why do you do the quotes?"

Jim's answer was enlightening: "Because if I don't give them a quote for these components they won't think of me when they need more components. I don't want to be dropped from their bid list."

Jim's problem is similar to those of many of the sales people that I work with. They have forgotten what business they are in. They are in the business of closing sales, not of turning out quotes for anybody who asks for them.

Instead of being an order taker, Jim needs to ask better questions. Here are five strategies he should follow every time he speaks with a customer:

Who is he talking to?Who is the person Jim is talking to? Is he the president of the company, a senior level executive, the plant manager, or an administrative assistant?You need to know who you're talking with because it will tell you where they stand in their company's hierarchy. This will give you an idea of their decision-making authority.Don't spend your time talking with people who don't have the authority to make decisions.

Why do they need the components?Instead of talking about the components the customer is asking about, Jim needs to discover why they need the components in the first place.

Here are some questions to ask:
* What do you use them for?
* How do you use them?
* Why do you need them?
* What quantities do you need?
* When do you need them?
* What price have you paid for them in the past?
* Who have you purchased these components from in the past?
* Why are you calling me, instead of just placing an order with your current supplier? (I always have fun with that one.)

These questions help you learn all about their relationships with other venders or suppliers.
Who makes the decisions?It's of the utmost importance to know the customer's decision-making process. You want to be talking with decision-makers: people who have the authority to approve purchase orders and sign checks.

In the past, Jim would ask, "Are you the decision maker?" And everyone would always say yes. But when asked these people to place an order, nine out of ten said something like, "I've got to speak with so-and-so to get final approval."And nothing ever happened. The proper question to ask is, "In addition to yourself, who gets involved in the decision-making process?" When you get the information, write it down. Ask more specific details about who these people are and what they do. When you're told, "We've got a committee who makes these decisions." ask these four questions:

* Who is on the committee?
* Who is the chairman?
* What do the other members do?
* What is your position on the committee?

If you don't get the information you're looking for, the likelihood of closing the sale is small. Walk away from the situation. If you're not going to make the sale, it's better to learn early, than to spend 30, 60 or 90 days chasing someone who isn't going to buy.

How do they make the decisions?Once you've learned who the decision makers are, ask questions about how they make their decisions. What are the most important criteria they use to select a vendor?How important are delivery schedules? What about payment terms? How are refunds or credits handled? Is after-sale service or support important?If the only thing they're concerned with is price (the size of the check they'd be writing), then value, quality, service, knowledge, expertise, and anything else you have to offer, is of no interest to them. It's very difficult to develop a long-term client relationship with people interested only in price, because as soon as someone comes along with a lower price, your business disappears.
Don't fax the quoteYou're in the business of closing sales, not giving away free pricing information. You can't close a sale by sending a fax, e-mail or mailing a presentation.

You've got to speak with someone to close the deal. When you're asked to create a quote, say, "I can have this ready by [insert date and time]. Can we schedule a call to discuss it over the phone?"If they agree to scheduling a call, you've probably got a legitimate prospect. If they respond by saying something like, "I'm real busy. Just send it to me and I'll call you if I'm interested," you're probably wasting your time.Should the customer be asking for a rush quote, she probably needs your numbers because her boss asked for three quotes, and she needs your prices to justify giving the order to her preferred supplier. Don't take the bait.

If the prospect wouldn't schedule a call to discuss the quote, Jim declined the invitation to submit a quote.

When he learned he was speaking with a clerk who was gathering information for someone else, he asked her questions she couldn't answer. This helped him reach a decision-maker.
If the answers to his questions weren't what he thought they should be, he thanked them for their interest and moved on.

And, when he found someone who was a real prospect, he not only closed the sale, but laid the foundation for a long-term business relationship.

The beauty of this system is that Jim has saved himself a huge amount of time: two-to-three hours each day. He's creating fewer than 25 percent of the quotes he previously put together, but he's selling between 60 percent and 70 percent of the ones he does.

Now, Jim's got more time to aggressively seek new business. He's prospecting every day, attending networking events, conferences and conventions, and using the telephone to find more customers.

Cheers,

Eric Albertson
Portland, OR
March 26, 2007