Jim called me because he was frustrated. He was sending out lots of quotes and proposals but very few of them were converting into sales. He was spending hours of time each day doing this, but making little money.
Jim's company manufactures electronic components. Every day he receives three, five, ten or more incoming calls where people are looking for a particular component which Jim's company may, or may not, have in stock.
If Jim doesn't have exactly what the customer was looking for 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 i.e. her 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, or as soon as possible."
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 a cost for shipping the components to the customer's factory.
When he remembers he adds the person to his database. Sometimes he enters all of the customer's contact information, i.e. name, address phone, fax and so on. Other times he just writes down their name and phone number.
Then he types up his quote and faxes it off. The quote is then filed 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 5 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 be getting out.
When he did make the calls he usually got voice mail, but his 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.
Jim said that maybe 40 - 50 percent of his quotes were for alternative components.
"How many of these quotes converted into closed business?"
"Then why do you create the quotes?"
Jim's answer was very 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 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 the business of 'blindly giving out quotes to anybody who asks for one.'
Instead of being an order taker, Jim needs to ask better questions. Here are five strategies Jim needs to follow every time he speaks with a customer:
1. 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 within their company's hierarchy, and 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.
2. 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 four questions that should be asked:
- What do you use them for?
- How do you use them?
- Why do you need them?
- Who have you purchased these components from in the past?
I always have fun with this question:
"Why are you calling me instead of just placing an order with your current supplier?"
Here you learn all about their prior relationships with other venders or suppliers.
These three questions should also be asked:
- What quantities do you need?
- When do you need them?
- What price have you paid for them in the past?
3. 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 say yes. To approve a purchase order and sign a check.
In the past, Jim would ask, "Are you the decision maker?" And everyone would always say YES. But when he would ask these people to place an order, nine out of ten said, "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 else gets involved in the decision making process?" When she tells you, write down their names. 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 within 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.
4. 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?
When you're told "The Lowest Price," you can respond by asking, "How do you define price?"
If the only thing they're concerned about is price, i.e. the size of the check they're writing, then value, quality, service, knowledge, expertise, and anything else you have to offer is of no interest to them.
This is not how you develop a long term client relationship, because as soon as someone else comes along with a lower price, they get the business and you're out the door.
5. Don't Fax The Quote
You'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 3:00pm this afternoon, [insert date and time]. Can we schedule a call to discuss this over the phone?"
If they agree to scheduling a call you've probably got a legitimate prospect. If they respond by saying, "I'm real busy. Just send it to me and I'll call you if I'm interested." or some such non-answer, you're 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.
Asking Better Questions
Jim started asking better questions of his customers before he put a quote together. If he didn't have what they were looking for, he thanked them for calling and didn't offer an alternative product.
If they wouldn't schedule a call to discuss the quote, he declined the invitation to put a quote together.
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 get moved up to a decision maker.
If the answers to his questions didn't match up to what he thought they should be he once again 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 less than 25 percent of the quotes he previously put together, but is selling between 60 - 70 percent of them.
Now Jim's got more time to aggressively look for new business. He's prospecting every day, attending networking events, conferences and conventions, and using the telephone to find more customers.
His outlook has changed. The future is brighter. Now he sees opportunities for further growth and increased revenue. He wants to earn his MBA: Massive Bank Account.
Copyright 2003, Jeffrey J. Mayer
Jeffrey Mayer is a sales and time management expert who helps business owners, corporate executives and sales professionals, set their priorities, get focused, and achieve their goals; so they can grow their business, get ahead in life, and live their dreams.