It can be said for a free enterprise society that prohibiting access to competitive bidding for a specific segment of the marketplace will result for an economical downturn. Accordingly, growing firms need to be a sharp as possible on processes that enable full access to bidding opportunities. Smaller firms need to know what buyers look for in selecting new suppliers.
Emerging businesses are more frequently receiving fair access to contracting opportunities by corporate supply chain managers through improved evaluating practices. However, a number of business owners still find it difficult to gain profitable access to major public and private buying organizations.
Gaining a competitive position during a bid and proposal evaluation requires presenting specific techniques that build a favorable buyer-seller relationship. The sales ability of an emerging must show evidence within the promise to deliver, so that buyers see it as a purchasing model they can have confidence for adding an investment to the organization. This is part of the customer development strategy that motivates buyers, thereby raising the strength of your marketing position.
Selling is not a telling processing, but more of a motivating business. Giving a prospective customer a one sided sales job blocks them from doing their buying job. Buyers use the most responsive and lowest responsible pricing formula in the supply chain selection process. Prospective suppliers show evidence of;
- honest offerings for the prospective bid, to their employees, and to themselves,
- adequate plant facilities and abilities to provide materials that meet the buyer’s specifications in the quantities required and at the time promised,
- a sound financial position
- a reasonable pricing as compared to the market,
- progressive management policies,
- continuous improvement processes delivering products/services processes, and
- ready, willing and able to best serve the prospective customer.
Strong characteristics of a prospective supplier include:
- Someone who is realistic – buyers expect a sales presentation to show an understating that the end does not necessarily result in a final sale, whereas a presentation is solely an introductory exchange.
- Someone who bears no ill will toward a purchasing department for not having receive previous contracting opportunities. Buyers need to feel a comfort with working with suppliers and perceived as being fair to all prospective suppliers.
- Someone who views their buying organization, as well as other clients, with high esteem for their respective brand.
- Someone who views time as money, and conducts concise and effective meetings.
Valued points are given to those prospective suppliers that demonstrate;
- Quality products
- Transparency and accessibility
- Reasonable pricing
- Reputable service references
Likewise, buyers turn down opportunity from the following:
- No Confidence – from a lack of trustworthiness, dependability, or satisfactory product performance
- No Need – where the buyer does not see a potential match for the offer product within their organization
- No Budget – when their is no available funds to invest or pending purchasing requisitions
- No Urgency – as when the funds are available and confidence exist, buyers may postpone a purchase when their organization sees no c
To initially deal with rejection no confidence it is imperative not to challenge the buyer! Take notes, and attempt to learn why the buyer has no confidence, and regroup to resolve their objection for future opportunities. Re-approach this buyer after you can show evidence of improvements that resolve the identified issue(s).
To remedy the rejection from no need, uncover the buyer’s deepest desires and build a presentation around those specific needs. To get this information you will need to do some fact- finding, which is discussed later in this workbook under the section on Communications.
Where three is no budget, having no money is sometimes a smoke screen and should received as a temporary condition. Pursue the benefits of the product and make sure that the buyer learns about their values and benefits from the product.
Lastly, rejection from no urgency is a basic selling skill. If there is no value centering on the sooner rather than later, then a buyer acts prudently by delaying their decision, sometimes indefinitely. Accordingly, build value by showing where sooner is better than later.
A Buyer’s Sources for Identifying New Suppliers
Buyers use a multitude of resources to locate new suppliers. Most common is through referrals and cold calls from marketing representatives. Besides networking, the standard resources available to most buyers include:
- Catalogs (manufacturers, and jobbers’)
- Trade Registers and Directories (Thomas’ Register of American Manufacturers ‘ Trade Journals (advertisements in purchasing week, etc. )
- Internet/Yellow Pages
- Vendor Files* (purged periodically)
- Sales persons and Company Brochures/Catalogs
- Other Corporate Purchasing Departments
- Trade Shows
- Company Personnel (end-users)
Keep good records of supplier/vendor data bases that your company lists with. As your company grows you may move or change telephone numbers. Be sure to notify each data base reference to update their records, whether you have ever sold to them or not. Invalid data to a buyer means out-of-business.
Stay Current With Buyers
Networking supports the buyer’s standard resources for locating new suppliers, and therefore always network to be a part of their resource loop. Some companies forget to network with the technical/service support people within their own organization. Do not take these people for granted because they work with the end-users who can make recommendations to increase order size and/or make referrals to their colleagues.
Buyers for major organizations are subject to change positions for a variety of reasons. Buyers are subjected to company restructuring, relocating, their retirement, promotion, career/job change, long-term disability, layoff and an unfortunate death. Another thing that happens is when a new buyer gets in place, the outgoing buyer turnovers his/her files to their them. However, the new buyer needs new motivation, since they probably do not know you and/or already has a relationship with one of your competitors.
The general rule for personal marketing data files, particularly corporate buyers, is that it decreases 20% each year through this type of attrition. For example, let’s say you start with 20 good corporate buyer contacts on January 1 and do not add new ones during the year. By the time the next New Year’s day rolls around you will have 16 good contacts remaining.
The best way to stay current with buyers is to satisfy the buyer. Treating the buyer and end-user fairly is important not only to get and protect the account, but also to help insure your future success. A dissatisfied customer or weak relationship will cause them to not make any recommendations or push for continued business your way in their absence.
A buyer works under five (5) basic “Rights” when making a selection of a supplier. The buyer wants the right quality, right quantity of materials, at the right time and right price, from the right supplier. Buyers count heavily on the fifth right of supplier selection, which takes care of the other four rights, by simply selecting the right supplier. Unfortunately, this is where a subjective comfort pattern and complacency sets in with the buyer. At this point, the buyer goes to the same supplier for the same product and service repeatedly again. They feel safe (free of worry) that they are getting the right quality, quantity, price and delivery time consistently.
Buyers become willing to use a new supplier once they get a feel about the company’s Quality, Price and Service mix. Buyers review three areas of comparable competition with the supplier’s respective industry.
- Price Competition – lowest-cost producer.
- Quality/Technological competition – management of engineering, planning, design, materials’ production techniques and cost controls.
- Service Competition – added value above functional value (quality) and price.
Plant visits arc a good sign because it shows buyer interest. Once a buyer plans to make a visit to a perspective supplier’s facility, they usually are closely considering using the company. The buyer wants to see if the supplier is capable and motivated to meet the perspective contractual obligation. The buyer wants to see the adequacy of the supplier’s equipment, production control, quality control and cost controls. This overview includes a quantity of back orders and the supplier’s approach to handling such back orders. A buyer wants to see the competence of the technical and managerial staff members, including their morale. A buyer is curious about a supplier’s employees cooperative teamwork to get the work out to the customer.
The site visit must satisfy some legitimate concerns all buyers have to answer, including;
- Is the supplier’s equipment up-to-date, in good running condition with approved tolerance levels?
- Are production rates adequate to meet new demand?
- What are the special adaptations of the equipment?
- How well does the supplier maintain good housekeeping of his/her plant?
- How does the supplier view safety?
- What is the reason for any production bottleneck?
- How are inventory levels maintained and safeguarded?
Buyers need to know if a perspective supplier has adequate credit and working capital for taking on the appropriate sized job. This assessment by the buyer is to see if the seller has a reasonable debt for the type and size firm. Buyers commonly refer to the Dun and Bradstreet report, letters submitted by the supptier’s Bank and Annual Reports offered by the supplier.
A buyer is highly interested in a marketing person’s ability in knowing the product/service that they represent. Buyers expect the sales representative to understand their requirements. Buyers want to receive useful suggestions to help adjust to industry trends. Buyers want to meet marketing representatives who are committed to their product/service. Buyers expect consistent follow through.
Buyers are very interested in the training programs used by the perspective supplier. Particularly those training programs that strive to reduce costs or concentrate on research and development.
Buyers want to feel comfortable about a perspective supplier’s labor issues. Depending on the service being purchased, buyers need to know a supplier’s labor rates, where they are not proprietary. lt is important to buyers that they do not want to start work with a company suffering from labor relation problems. Buyers want to work with management that is honest to its employees.
A buyer’s perception about a supplier’s abilities centers on how well a supplier can meet promised due dates of delivery. How well do suppliers follow the specifications of the products ordered. Buyers view service as those suppliers who offer technical assistance for making the best use of the products that the supplier sells.
ln summary, buyers look for “Ready, Able and Passionate” suppliers.
- A ready supplier is one that has the infrastructure for swift delivery of said services.
- An able supplier shows prompt attention to send technical people to the buyer’s plant to discuss potential and actual problem area’s with the buyer’s technical team members. Buyers measure able suppliers by their actual performance.
- Passionate suppliers actively participate with the purchaser to develop suggestions and ideas with the hope that they will lead to improve products and reduce costs.
HOW TO BE THE RIGHT SUPPLIER
Selecting the right sized supplier for most buyers is to match the order size to the supplier’s capacity. Small orders go to small suppliers and large orders go to larger sized companies. As a newer supplier, you should educate the buyers on your current job order capacity.
Occasionally, buyers must size new suppliers against a single source competition. Competitive chances are best when new suppliers provide backup services to the single source in cases of work stoppage, earthquake or other catastrophic situations. occurrences like these may prevent the single source supplier from meeting customer demands.
When there is a heavy saturation of a competitive product, buyers often rotate the field of competitors to offer inclusion and opportunity. suppliers who are patient and understand the buyer’s position to stimulate vigorous performance and competition, will earn a position in the rotation of their suppliers’ bid list.
Understanding a buying company’s purchase and service requirements can turn up good opportunities to getting a new customer. Work with the buyer to find areas where non- competition or complacency exists. such as helping them to identify minor shifts in production and meet the demand required for low competitive areas. By doing so a buyer will readily include the helpful supplier gain entry into the bidding process.
Buyers are encouraged when they receive help in assessing the advantages in selecting the services of a new supplier. such as, buyers expect new suppliers to welcome smaller orders to start with. A newer supplier at first earning less than 20% of the work, allows the buyer a chance to evaluate the supplier’s performance abilities, while not risking the whole job.
Another example is a new supplier who has locations close in proximity to the buying company can show many advantages over their competitors who are located further away.
- Closer cooperation and communication capabilities between buyer and seller.
- Deliver dates are more certain as transportation is only a minor factor in the delivery equation.
- Lower prices can result from consolidated transportation and insurance charges.
- Local suppliers can take several local buyer orders in the same shipment.
- Shorter lead times can frequently allow reductions in inventory. In effect, the new supplier can offer to carry the potential buyer’s inventory.
- Rush orders are expeditiously filled.
- Disputes are usually more easily resolved.
- Meeting implied social responsibilities to the community.
Most corporate buyers work on the perception that a supplier who is more national in scope will benefit their company with the following advantage points.
- Economies of scale are more efficient and offer higher quality and better service at a lower price.
- National suppliers provide superior technical assistance.
- Large national companies have greater production capacity and therefore greater production flexibility to handle fluctuating demands.
- Shortages are less likely with a national company because it has broader markets.
Through competition, buyers now purchase fewer and fewer off- the-shelf commodities. Rather he/she buys the technical, financial, production, purchasing and managerial capabilities of the vendor to supply unique and highly specialized products, materials and service. To buy the capabilities properly requires a skillful evaluation of all the factors concerning source selection.
Accordingly, a buyer’s considerations for choosing a distributor over a manufacturer focuses on the particular functions that a distributor can do, such as;
- smaller quantities in varying sizes;
- immediate delivery;
- no carrying costs;
- billing flexibility – extended credit;
- drop shipment;
- technical service; and
- variety of manufactured items.
Section 1 – Supplier Responsibility
- Past Performance
Section 2 – Supplier’s Ability to Perform
- Frequency and/or volume of orders – A measurement to decide the importance of a new customer’s business
- Length of rime to Process orders – Meeting deadlines
- Delivery – sufficiency to get the product to customer’s site
- Quality/ Quality Control/ Quality Assurance/ Total Equality
- Management sufficiency to acquire and process materials
- Product/Service Expertise – Core vs. Side Business Order Backlog – Operating Efficiency
Section 3 – Offerer’s Organization and Management
- Senior Management commitment – Industry leadership
- Stability/Technical Competence – proud of Human Resources and/or acquired talent
- Training of Personnel – Documented training program
- Equipment capabilities & supporting Talent to operate it
- General Reputation/ Industry Status – References
- Customer Commitment – Partnership with client and willingness to offer support to customers
- Equal Employment Opportunity Commitment
- Subcontractor Management and audit procedures
Section 4 -Site Visits
- Management preparedness to offer cost cutting and production enhancing issues
- Lead Time
- Back Orders
- Late / Early / Over-Shipments
- Quality, as it pertains to rejection rates
- Placement of future business (Capacity)
The Buyer’s Philosophy on Supplier Service Buyers know that in the selection of competitive suppliers it is improbable for quality, service and price to be competitively equal. ln the selection of products it is likely to have identical quality at identical prices, but identical service is normality distinctly different and the deciding factor for selection.
There are six (6) factors buyers use for deciding when added service value exist. Whenever you can answer these questions and help the buyer understand, you wiil better position your company in the buyer’s mind.
No. 1 – Reliability
- Is the supplier reputable, stable, and financially strong?
- Is the supplie/s ability and integrity proven by past performance?
- Will the supplier’s delivery have adequate quality and performance?
- Does the supplier’s quality control program go beyond adherence to specifications and statistical sampling to strive for total quality management?
- Does the supplier have a value analysis program for his/her product, assesslng added features and economies of scale?
- ls the supplier capable of providing the buying company a savings along with product improvement?
- Does the supplier have a constructive labor-relations program that will serve the buying company’s best interests?
No. 2 – Technical Capabilities
- Does the supplier have a program of creative product development or materials’ improvement? what are the results?
- Will the supplier provide application engineering assistance?
- Will the supplier provide installation and service engineering assistance?
- Will the supplier provide analytical engineering that will help improve the efficiency of the buying “omiany,s basic processes?
- Will the supplier support training of the buying company’s operators?
- Will the supplier provide design assistance?
- Can the supplier handle special needs and designs?
- Does the supplier provide technical leadership that can benefit the buying company in the future, and assure that present offerings are up to date?
- Does the supplier contribute to general advancement through basic research?
No. 3 – After-Sale Service
- Does the supplier have a service group available when and where the buying company may need it?
- Does the supplier offer emergency service? ls the supplier’s after-sale service dependable and offered at a reasonable priced?
- Will renewal parts be available when the user department personnel needs them?
- Will the supplier help setup a preventive maintenance program for the equipment the buying company has purchased from the supplier?
No. 4 – Availability
- Will the supplier assure on-time delivery?
- Are the stocks available locally?
- On short notice?
- ls the supplier’s location an advantage to the buyer?
- Does the supplier have reserve production facilities to meet “emergency demands?”
- Does the supplier’s use of standardized or repetitive manufacturing procedure offer quicker delivery?
- Does the supplier have commitments to other customers that could effect my order?
- Does the supplier plan shipments to minimize the buying company’s inventory?
- ls the supplier dependable enough to provide a steady flow of products or materials?
- Will the supplier be in business on delivery date?
- When renewal parts or service is needed?
No. 5 – Buying Convenience
- Does the supplier offer a fill line of related products?
- ls the supplier capable of assuming full responsibility for coordinating systems and projects?
- Does the supplier offer suitable credit arrangements?
- Does the supplier package his product conveniently for the buying company’s use?
- Does the supplier have a local sales contact? ls he/she qualified to help the buyer?
- Can he/she call upon specialists to help with difficult problems?
- Will the supplier help the buyer reduce acquisition costs, such as qualifying visits, telephone calls, lab tests, incoming inspections, spoilage and waste, rejects, and complaints?
- Will the reputation of the supplier enhance acceptance of the buyer’s product when adding the supplier’s product as a component?
- Will the supplier provide selling aides?
- Does the supplier help develop mutual markets?
- Will the appearance of the supplier’s product enhance the appearance of the buyer’s own product?
A good supplier makes the buyer his/her confidant after they have been selected to deliver and perform. ln your post-selection period, update the buyer on your activity. often buyers feel that careful selection of a supplier from among the prospects ends their responsibility, at least for the time being. Buyers acquire the habit to wait for the using department to inform them whenever a supplier fails to rry out the terms and conditions of a contract. MAKE SURE THAT AS A NEWLY SELECTED SUPPLIER YOU INCLUDE THE BUYER ON ISSUES TO ENSURE NOTHING SHORT OF SUCCESS EQUALS BUYER SUCCESS.
Selecting Friends as Suppliers
It is human to want to favor friends. Friends can make unusually good suppliers. Friends are likely to respond to emergency needs more readily than suppliers without a strong tie of friendship.
A good supplier (friend) can help a buyer with responding to top management when there is pressure to favor another supplier. Clearly set forth in writing, the cost and other disadvantages that would result from the requested choice and explaining in detail the basis of keeping you — the best supplier.
Senior management will probably change their mind when they see the figures in print. Even if an objective recommendation made by a buyer is overruled, the file of such a memorandum provides an excellent record if problems with a poorly selected supplier materialize later.
TOTAL QUALITY MANAGEMENT
Total Quality Management (TQM) is the most frequently used purchasing acronym of the 1990’s. Listen to any buyer and you are likely to hear some reference to TQM. TQM has a variety of elements, themes and principles, but in the briefest possible summary, it is:
- A foundation for continuous improvement
- A philosophy for running a business
- An investment in knowledge
- Total people-empowerment
- A focus on the customer
- The right way to manage
Buyers are receiving training to think differently about their supplier/customer base and to develop a partnership with the supplier. TQM requires business to change its approach:
- From one of correcting defects & non-conformance, to one of establishing processes & procedures to prevent defects; ‘
- From one of using inspection to “correct” quality into the product, to one of using consensus to design and build quality into the product;
- From one of accepting a level of defect as normal practice, to one of establishing a culture of continuous improvement of the process; and
- From a win-lose mentality that involves “beating on” suppliers, to a win-win approach that involves trusting and working with suppliers.
OLD PARADIGM – If it ain’t Broke don’t fix it.
NEW PARADIGM – It it ain;t PERFECT continue to IMPROVE it.
Buyers and Sellers needing to find their respective comfort level regarding the nature of ethics has to only answer three questions of themselves.
- ls it legal?
- Do you feel good about yourself?
- How will it affect others?
No. 1 – ls lt Legal?
To help solve an ethical dilemma, first ask yourself if it is legal!? whenever the answer is no, then there is no reason to ask either of the other two questions. Legal does not simply mean civil or criminal law. lt also considers policy. All high volume procurement corporations/agencies have a Code of Ethics and/or Standard of conduct Policy. lt is not unreasonable to ask for a copy. Usually it is in the vendor/supplier information booklet given to companies wanting to become a supplier to the organization.
Every employee must follow the highest standards of honesty, integrity and fairness as stated in their corporate policy. In particular, those employees who conduct any activity with suppliers, customers and the public.
No. 2 – Do You Feel Good About Yourself?
Anyone contemplating an ethical decision should ask themselves: How will it make me feel about myself? Or, put another way: Would I like this published in the newspaper? The question is important because when something goes against your own sense of fair play, you must feel bad. No longer abstract, the dilemma becomes an issue of conduct and responsibility.
How will the it Affect Others?
Will the outcome be fair or will the decision favor one party over another in the short or long term? ln other words, if a supplier or buyer make a decision that benefits them, at the expense of someone else – it will eventually come back to haunt the them and/or their company.
ln terms of ethical behavior, be persistent and stick to your guns. It is keeping your commitment and making your actions consistent with your guiding principles. Being an ethical person means behaving ethically all the time-not only when it is convenient. Today it is even more important to act ethically when it is inconvenient or seemingly unpopular to do so.
To summarize ethics you may say, “ls it possible to stay competitive in business and still operate honestly and ethically? ” The simple fact is that honest and decent people who know the power of ethical management have to stand up and do the right thing. Business leaders must show others how to do things that are ethically sound and right. When entrepreneurs stay consistent with this action, they gain a psychological competitive edge from purchasing management personnel. Buyers appreciate such action and make a mental note. Although ethical behavior is not done for increased income, appreciation receives a reward in some way either through business referral, formal recognition or contracti ng opportunity.
- Gifts and Gratuities
- Gifts to buyers, intended to influence buying decisions have no place in a professional purchasing department or company.
- Lunches with buyers are not customarily considered gifts for influencing decisions. Usually they serve to allow more time for the seller and buyer to discuss business.
- Buyers are encouraged, instructed and/or either prohibited from accepting any gift beyond a simple meal. Buyers receive an expense budget to reciprocate and avoid the illusion of undue influence in this area.
Reciprocity and Trade Relations
A buyer’s supplier selection situation can seemingly give preference to suppliers who are also customers of their firm. They do so with the mutual understanding that where all things are equal, companies buy from customers. This is something that goes beyond quality, service and price. However, many buyers disapprove of reciprocity because it usually constrains the purchasing department’s opportunity to increase profits by reducing material costs.
Those buyers informed about the dangers of reciprocity agreements make more objective supplier selections. A list of eight (8) negative reciprocity business relationships are:
- False markets get started when companies later change their minds about doing business with that company.
- Reciprocity does not follow sound principles of buying and selling on the fundamental criteria of quality, service and price.
- Suppliers may relax their competitive efforts in technical and production areas because of reduced competition in the marketplace.
- Purchasing costs may be higher because of reduced competition.
- Conspiracy and restraint-of trade situations can develop, with consequential legal dangers.
- Sales departments may develop a false sense of security, resulting in inevitable deterioration of a firm’s selling effort.
- New suppliers and customers may be harder to find because of pre-established relationships with competitors.
- A company’s reputation can receive bad publicity from compromised reciprocity.
Companies that lean toward trade relations have active trade relations departments and are receptive to reciprocity, such as:
Transportation Petroleum Cement
lndustries with a high level of trade secrets or have franchised territories with a captive customer base are less receptive to reciprocity, such as:
Electronics/EDl Defense Utility
Listening to the Buyer
Effective listening is probably one of the hardest disciplines to master. You have to know what you are listening for and how it can help you best get new business from buyers. Listening promotes ideas on how to best position your product or service in the buyer’s mind. While listening, look for emotions behind the words–often what a prospective buyer feels has more impact on the buying decision than what he/she says.
To improve your listening abilities try and use the following tips:
- Listen to for little things – The little bits of information that buyers quickly impart to sales persons seem to slip away just as swiftly, but they are the basis of effective listening. When you start to piece together the bits of information, they start to build a bigger picture that provides you with the whole message.
- Be objective – Let the buyer state their program without judgement. Do not let their delivery affect your views. Pay attention and don’t interrupt.
- The three commandments – Are 1) content, 2) context, and 3) recall. Good leaders listen to the context of information being transmitted to them. When conversing with a buyer use their company environment as the background setting so that any questions stand out prominently. ln other words, you need to contrast information being communicated to you against the particulars of the prospective client’s environment such as service goals. This will help train your ear to recognize problems when you hear them.
- Listen for content that includes suggestions from buyers on the delivery of products and services. The content will offer the big picture of the buyer’s expectations. Do not expect to recall every detail of information. Stay tuned into context and content, then you can identify similarities and patterns.
- Verbal agreements. This is the act of checking your own observations and homework about the buyer’s environment with the verbal suggestions volunteered by the buyer. lf your observations match those of your prospects, it is time to enact a strategy designed to answer any questions or carry out your plan.
- Communication Clash. Rare, but sometime your observations concerning the context of the environment may not match the specific information imparted by the buyer. lf so then you have a clash that needs resolution. you may need to go back and ask more questions. Try to match the little things to make up the foundation for the big picture.
Effective listening is also a result of knowing when to talk and knowing when to listen. Let the buyer do most of the taking, because the less you talk, the more you can learn about the prospect’s needs.
When seeking information (power) from buyers let this happen as often as possible. when you start responding more often than the buyer, they stop listening. Your mind is engaged in other activity rather than the one it should be, which is listening.
Questions obtain the information you need to gain access. with the right questions you can qualify your prospective buyer about their likelihood, ability and authority level of buying. You also can decide who is involved in the buying decision, the time frame for the decision and any special requirements or restrictions.
Properly phrased, open-ended questions also will draw out the buyer’s goals as they relate to your product or service; identify specific desires; uncover problems that you can solve; and bring out the underlying reasons for the prospective buyer’s questions, delays and objections.
Questions keep the prospect actively involved. They can establish rapport and stimulate dialogue. Through thoughtful questioning, you can get a feeling for the customer’s personal style, so that you can interact with him/her accordingly. Questions will make customers feel significant in the selling process and will ensure that they pay attention and follow your thought process. SALES PEOPLE WHO TELL INSTEAD OF SELL. OFTEN FIND THEIR PROSPECTIVE BUYER’S MIND TENDING TO WANDER. Prospects who hear a lecture lose interest, while buyers allowed to participate in the marketing process stay interested.
Questions allow the salesperson to control the marketing situation. They will help you decide which product or service to present (if you offer more than one), find out which benefit(s) to stress, confirm your understanding of the prospect’s statements through feedback and evaluate the prospects’thinking about acceptance or rejection of products or services. Actually, finding out this information is the key to consultative selling. Finally, questions provide sellers with the means to use the buyer’s reasons to lead to the close.
Just remember that buyers do not buy because your product is good; they buy because your product is good for them. Prospects always want to know how they’ll benefit from a product. They want to be sure that the benefits they receive will outweigh the price they must pay.
To get to the facts you believe to be important to your marketing efforts, you will use one or a combination of these four types of questions.
- General Questions – These are questions designed to get a buyer to open and discuss their general goals, circumstances and problems.
- Specific Questions – These questions obtain concrete, specific information about situations attitudes and needs.
- Probing Questions – These questions uncover deep problems, wants & feelings. They pinpoint critical issues, some of which the customer may not even be aware of.
- Leading Questions – These questions will focus the buyer’s perceptions of wants, help the buyer articulate them, and prompt the buyer to make choices. Leading questions (as feedback) also can verifi7 your understanding of their needs.
During the fact finding portion of your buyer interview, structure your questions correctly. Here are some tips on how to phrase your questions for maximum effectiveness.
- Avoid close-ended questions early in the interview. Even when you are familiar with the answer to a question, it may be better to ask the buyer an open-ended question at the beginning to loosen things up. “Yes or No” type questions may make the buyer feel as though they are being interrogated.
[The six open-ended question-beginners are who, what, when, where, why and how. A common close-ended question is, “Have you heard about our product?” By adding an open-ended beginner you stimulate a more informative response. — “What have you heard about our product?” By asking it open-ended you not only confirm that the prospect has heard about your product, but you also find out exactly what he/she has heard.]
- Use caution in asking leading questions. A question like “Why do you think this equipment is good?” might set you up for an incomplete answer. The prospect might feel cornered and only describe the negative points about the equipment. Try an open-ended question instead, such as “What do you think about the equipment?” Don’t presume anything from buyers. Be as objective in your questioning as you expect them to be in their evaluation of your company’s product and service. (However, you will need to use leading questions to close a sale)
- Keep your question sentence structure short. Long questions can confuse prospective buyers. A question like this will not get the desired results; “lnorder for me to get a complete understanding of your needs and problems, could you describe the various reasons that prompted you to decide the course of action you agreed taking to overcome your obstacles? Simply try, “How did you solve your problem?”ln summary, fact finding questions always ask questions that encourage elaboration and do not manipulate the prospect. Ask objective and easy to answer questions. You will discover some very valuable facts that can help you close a profitable sale and build a lasting relationship.
ln your marketing efforts to obtain smaller orders to simply start out on and prove your worth, some organizations may not find it advantageous to break contracts into smaller ones for increased supplier inclusion. lf your firm does not have the capacity or technical expertise to handle the entire project, teaming and joint venturing with other companies may suit your interests to bid on these projects.
A “Joint Venture” happens a lot on a national and international scale. A Joint Venture is a legal marriage between two or more companies where each firm brings its own particular strengths to the market to make a final product a success. This is almost like a formal partnership on a larger scale. lt also suffers from some of the drawbacks that legal partnerships suffer from. The drawbacks may have the potential for conflict and a danger that one party may suffer more from a failure than the other(s). Therefore, just like in a maniage it is best to thoroughly know your partner before you formally join hands to complete a project together under a Joint Venture.
A buyer’s concern with any team relationship is to quickly identify one responsible person and company for the entire project, and will the team deliver as cohesively as one larger company. Do not assemble a team on quantitative value, because this is a negative value to a buyer. Their evaluation of this is to decide if it is cost inefficient and too labor intensive. A qualitative value must be the sole purpose for teaming. Buyers should be led to see the value in each team member distinct from the other members. Once you satisfy these two critical areas of responsibility and responsiveness, a team approach may be just the formula necessary to winning the larger corporate contracts.
Teams normally range in size from two to six companies. Teams any larger than six run the risk of looking unmanageable, awkward and incapable of delivering on-time. Whatever the size, the administrative functions are still a high requirement. When you cannot match companies to produce a team, identifying independent contractors and new employees represents a sound team approach. Either way, the project team chemistry is important to the success of the project. The project leader must be very aware of this requirement. Wherever you have included supervisory, technical or specialty roles, be sure to highlight it in the written and oral respond to the bid request.
lf you package your team right, it will meet a diverse level of expertise. By assembling specialists to satisfy the project, buyers who evaluate such teams appreciate the added value it brings to a project from the broad range of expertise. They feel they are benefiting with receiving a higher level of expertise from the special areas identified by each team member. lt takes more time to develop a team response than your competitors who respond solo. Team management must meet for more hours setting the engagement background and objectives and mapping clearly the roles that each team member will play in the project.
Presentations are common place for companies responding to formal request for proposals. Making the short list means there will be a probable need to verbally present the highlights from your written proposal before an evaluation committee. This is the time the evaluators want to feel your confidence that you can handle the proposed project.
Getting up in front of a group of strange people to speak, is a tough thing to do in business. we have seen company owners who normally can express their thoughts quite well, but when making a presentation appear and sound unsure of himself/herself.
The presentation is a way of selling your plan of product delivery. Like a sales pitch, a presentation should be lively and keep your audience’s attention. lt is a sales tool to speak your ideas that wilt meet your customer’s needs. Good sales people perfect their craft through preparation.
Planning the Presentation
Planning your presentation begins with the most basic organizational tool .. the outline. An outline forces you to organize your thoughts in a logical sequence that covers all the information you need to present.
Your next step in the preparation of your presentation is writing it. The level of detail is up to you, but writing makes it easier to deliver orally, than trying to remember from an outline. Writing your presentation will force you to think about your plan completely. writing will help you form specific thoughts that will aid you when making the presentation.
I. MARKET OVERVIEW OF THE RECYCLING INDUSTRY
A. Commercial vs. Residential Waste
- Curbside Pick-up Programs
a. Advantages of Mandatory Programs
b. Disadvantages of Mandatory Programs
B. Commercial Strategies
1. Educating the Haulers
2. lnforming the Company and Organizations
C. Residential Strategies
1. Educating the Customer
II. WASTE MANAGEMENT DISPOSAL SYSTEMS
Follow the flow of the subject matter as detailed in your oufline. Write in a conversational tone. This wilt help you stay loose when making the actual presentation. Remember to show some emotion, enthusiasm and spontaneity.
The introduction is where you want to present the theme and goals of the whole presentation. Keep in mind the audience, the goals of your proposal and whatever information necessary to cover potential counter arguments against your plan.
There are people who make a living at giving effective sales presentations. lt is not necessary to compete at that level for your presentations. What is important is to rehearse alone or with your team members where appropriate. To make your rehearsals as effective as possible, you should follow the general guidelines below:
- Be familiar with your oresentation. Know it inside and out so that it becomes a mental picture in your mind.
- Make sure that you know every signpost that will aid you in your presentation such as your outline, notes, visual aids and so on.
- Envision yourself delivering your presentation.
- Test yourself to learn if key words and symbols within your notes that will trigger recall of the elements within your presentation.
- Take special care to memorize your opening statement to your audience, any special quotes or similar material that you need to know verbatim and your closing statement.
- Be extremely familiar with the substance of each aid you are using.
- Practice the use of any equipment planned for use in the presentation.
- Try out any movements, gestures or other acts that will be a part of the presentation.
- Rehearse any demonstration that will be part of the presentation.
Be careful not to rehearse too much. There is a fine line between rehearsing and memorizing. lt is a good idea to memorize those items that absolutely need to be, but do not memorize your whole presentation. It may make you look stiff and ineffective as a natural to perform the job.
Presentation Words Used By Winners and Losers
Be careful of the words you choose to deliver your message. Remember that your words, if powerful enough, will hold the attention of the evaluating team members. Try not to use our favorite fillers like “umm.” Listen to what you say while you are speaking. Sometimes nervousness can make us speak without listening. Smile and project sincerity. Even though your presentation is a serious one, the evaluator(s) will be more receptive to your recommendations if you present yourself as being upbeat and hopeful. Bottom line for making your formal presentation is to give it your all. Use your energy to infuse forcefulness, power and conviction into your voice.
The following is a list of the common words that stick unfavorably in the evaluator’s mind about the presenters and their presentation.
Avoid These Negative Words in Presentations:
Frequently Use Positive Presentation Words:
There are ten (10) common elements that all winning presentations try to include wherever appropriate.
- List of current and previous satisfied product users. Build a list of satisfied customers by asking your customers if they would allow you to add their names to your list.
- Testimonial letters. Ask customers to write a letter spelling out the benefits they have received from using your product/service. Some may prefer to have you write the letter and they sign it, provided it is tastefully written.
- Third-person stories. Save all newspaper and magazine articles by experts about your product/service. Buyers place a lot more faith in what they see and hear in the media to acquaint them with a new supplier.
- Charts and Graphs. Prospective buyers love visual proof, such as growth charts or customer territory maps that support your reliability.
- Photographs. Photographs are good forms of proof depending on the product. One picture can be worth a thousand words.
- Guarantees. A guarantee from a reputable company can settle potential doubts and fears before they arise. warranties can help you build credibility for your promises.
- Exhibits. Exhibits are usually facts and statistics about your product/service. This type if information may ease a buyer’s skepticism on any product claims.
- Sales Literature. Buyers feel more secure with product information customized for the supplier, such as brochures, specification sheets and other sales aids that contain significant data to answer most of their questions.
- Samples. Sound proof is a sample, because it allows the buyer to pass it to the end-user to be the ultimate judge. A judge the buyer can trust and is responsible for servicing.
- Demonstrations. Whenever you can get a buyer to see your product in action and attest to its performance is the greatest proof you can offer. Because the time allotted for a presentation is usually too short for a complete demonstration.
Build a collection of evidence in your presentation, so that you can satisfy a broad range of evaluators who need proof of your confidence, imagination and sensitivity.
When you hold a meeting with a buyer, he/she will judge you by how well you conduct the meeting. Your ability to run the meeting as a leader is under evaluation. The way you handle the meeting and you, is a direct reflection on your ability to handle power, to lead other people effectively and your potential to deliver.
Whatever the purpose for conducting the meeting, it is a must to handle it effectively. Do not neglect your image. Wear conservative clothing as a general business rule. The tone of voice you use also leaves an indelible impression on the buyer. Your voice should be firm, energetic and confident. Use pauses, voice amplification and practice voice inflections so that you create the type of persona that represents a leader. Avoid at all costs a tone of voice that is indecisive, boring or weak.
Take the attitude that every meeting is your meeting whether you called it or not. After all, every meeting you attend takes time out of your schedule. So try to profit by it. Be an active participant. Do not be passive.
Always develop an agenda before hand and follow these suggestions.
- Make sure to include in the agenda any item the other participants wish to discuss at the meeting.
- Make sure you contact all your key allies before the meeting and place their items of concern toward the front so you build support for your goals and objectives.
- Make sure that the agenda gets distributed before the meeting
- Topics on the agenda that need further clarification should have reports attached to provide the proper background information.
The idea, when calling a meeting with a buyer is to make your objective the focus of the meeting. You can create an atmosphere where the objectives of the buyer(s) attending the meeting are your objectives. They have to think, “what can I do to help achieve this goal? ls there any constructive input I can share?” Allow the buyers to present their view if it corresponds to your goals. After they have presented their views, do not let them manipulate the meeting any further. Take control again.
When used properly, diversification is perhaps the most powerful growth strategy a company can pursue. Buyers are particularly interested in companies that are so sincere about customer satisfaction that they seek ways to fully maximize their production resources. Buyers look at diversification as intelligence, by expanding a company’s boundaries beyond the confines of its original conceptions, to open new horizons for the pursuit of profit.
Diversification creates a dynamic atmosphere within a company and encourages creative marketing and innovative research and development. There are several ways companies diversify. One is through the diversification of its product line(s). Another is through new geographical markets. While still another is to merge with another company or flat out purchase it.
The reason for sharing diversification in this marketing workshop is to help you explore a way to continually maintain and increase sales. Some other reasons may include.
- Declining sales. Maybe caused by a decline in demand, market saturation, or from competitive pressures. Diversification allows a potential boost in sales.
- Product obsolescence. Due from technological advances or environmental pressures. By diversifying you can avoid product obsolescence by attacking new markets.
- Seasonal sales patterns. Resulting from a strong relationship between the product or service and particular season of the year.
- Declining return on the rate of return. As the product life cycle approaches the end, the rate of return at which a re- investment is realized, begins to diminish. Diversification provides the opportunity to enter new markets where the life cycle is still in a growth stage.
- New challenges. Success in one industry often breeds the need to grow into other industries. Diversification fulfills that challenge.
Items that may pose potential risks include:
- Operating costs. whether the opportunity to diversify is related or unrelated, the costs involved are often parallel to starting a new business.
- Lack of synergy. For some companies, synergistic diversification may not be important, but for others, the lack of synergy can present negative results.
- Acquisition barriers. when integrating two separate organizations, there may be a problem carrying out a successful strategy although there exists a synergistic relationship. This may be due to a rack of ability by one of the organizations or just plain lack of motivation.
- Antitrust. ironically, the more synergistic a relationship as it pertains to a merger or acquisition, the greater the chance of violating antitrust laws.
- Unrelated diversification. Any time a business diversifies there is a certain amount of risk. when a business diversifies through products, markets or an acquisition that is totally unrelated to the core of the parent company, the risks are that much greater. when diversifying into unrelated fields, the investment in direct costs increases as do the potential losses from a failure.
Marketing Beyond Ownership exposed you to the necessary thinking patterns that major corporate buyers base their decisions regarding supplier selection. lt is also full of suggestions about how to better position yourself in the buyer’s mind as a good supplier, including teaming, communications, presentation techniques, leadership in meetings, ethics, total quality management and how to approach buyers to improve your business opportunities through added-value.
It’s no secret that if small businesses are to succeed in the long run, we must attract more loyal customers. The best and most economical way to attract and hold buyers loyal is through personal interface, to motivate and help them understand how they benefit from your service. The more energy you put into improving the quality of your relationship with your customer (the buyer), the more the good word will spread about the quality of your company’s service.
We extend our deepest appreciation to GTE of California, Southern California Edison and The Gas Company for requesting and sponsoring this workshop. The supptier relations’ departments within these three organizations are to be commended for taking the extra steps toward continuously building better business opportunities for ready, able and passionate supptiers.
ABOUT THE PRESENTER
Dean Jones is widely recognized and respected for his work to expand, retain, and attract enterprise to the greater southern California region. He is a notable business and labor engagement advocate currently operating the Southland Partnership Corporation, a nonprofit economic development corporation. In this capacity, he serves as the director for the POWER Collaborative Network (P.O.W.E.R. — Promoting Opportunities with Essential Resources), an independent human resources services organization delivering capacity building for workforce service providers in the non-profit sectors. Under his management, this inter-professional Los Angeles County network sponsors the www.IStartOnMonday.com, Jobobama.com, JobCollaborative.com, and Joblip.com community social services assistance web sites.
Similarly, he works with the African American Engagement Collaboration that supports better integration processes between small and large corporations. This collaborative is comprised of the Black Business Association, California Black Chamber of Commerce and National Black Business Council that targets emerging suppliers to enhance their request for proposal responses through improved estimating techniques. This collaborative manages two web sites; www.TheArtOfBidding.com and BlackSuppliers.com, each offering business tools to encourage, recruit and utilize black-owned and operated enterprises to access and supply products and services to major public and private organizations.
As a Certified Purchasing Manager (C.P.M.), his consulting services have extended best viable practices to a diverse range of major organizations, such as; Blue Cross of California, California Endowment, City of Compton CA, City of Long Beach CA, City of Los Angeles Department of Water and Power, City of Los Angeles Neighborhood Initiative, Comerica Bank, First American Title Corporation, GTE, Kaiser Permanente, Los Angeles Black Business Expo & Trade Show, Los Angeles Music Center, Los Angeles County Office of Education, Southern California Edison, Verizon Communications, West Coast Expo.
A second generation Angelino and Los Angeles Unified School District graduate, he earned a Bachelor of Science Degree in Business Administration – Accounting from San Jose State University. He has received a range of recognition and distinction awards for his work in support of socioeconomic programs, including a special recognition from the California State Legislature for his extensive service and contributions to the regulated utility corporation’s supplier diversity programs.