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How to Help Your Sales Team Quote with Clear Guidelines

by | Mar 16, 2016 | Uncategorized

This post originally appeared on INSIGHT2PROFIT.com

Does this sound familiar? A new customer promised they would place a $30,000 order, but only at an average price per unit of $0.16. The sales rep ran the requested price through their internal process, and because $0.16 was above the required 20 percent margin, the sales rep approved the discount. End of consideration.

But here’s where the story gets interesting. After looking at the average price points for the top 20 customers of this product, the pricing manager determined that significantly bigger customers – with purchase volumes in excess of $100,000 – were paying $0.18 to $0.22 per unit on average. In fact, the third largest customer, at $468,000 in volume, was paying a $0.22 average sale price.

What was the justification for the lower price for the smaller customer – other than the fact that the customer simply asked for it?

For many companies, pricing decisions are largely made in a vacuum, without regard to pricing data, market circumstances, product value or customer differentiation. The situation is usually exacerbated by a compensation structure that rewards revenue and volume over margins and profitability.

The solution, therefore, typically requires a completely new mindset for the sales team and organization—one focused on margins over top-line revenue.

It All Begins with Pricing Data Visibility

The beauty of the role of data in pricing decisions is that it lends an important clarity to difficult choices. A sales rep is naturally inclined to want to make the customer happy. But if you are armed with the right data, you can not only rationalize why a price discount might be a poor decision, you can also provide informed alternatives the sales rep can present to the customer – providing an opportunity for the sales rep to save face, the customer to get a great price and your organization to get the margin it needs.

In our story above, for example, you can start by showing the sales rep the list of average price points. This puts the requested price discount in an important context – that the discount amounts to asking the organization to offer better treatment to a relatively small customer than it offers to its third largest customer.

The Power of Informed Pricing Options

You can also take this reasoning a step further. Rather than saying “No” outright, you can provide alternatives. For instance, the sales rep could tell the customer that $0.16 is possible, but only with a certain volume of purchases. If the customer is willing to increase the size of its order, you’ll be happy to provide the more favorable price. Or, if the customer is unable to purchase more than the anticipated $30,000, the sales rep can offer a price in the range of $0.18 to $0.19 – still a significant discount, but more in line with the organization’s average selling prices.

Always Look at the Big Picture

When it comes to pricing, you should never make decisions without looking at the big picture. Think it through. Take the time to look at similar customer segments so you can see the prices and margins other customers are paying. And always make sure the volume justifies the price.

After all, the goal in business is not to just gain market share. It’s to gain profitable market share. Consistently offering a low-ball price eventually hurts everyone in the industry; ultimately, you’re creating pressure to make prices so low no one will be able to compete profitably – and everyone will lose. But with the right data, you can make more informed decisions and provide the options that will help your team win the sale without giving away the house.

Learn more about how top executives approach pricing decisions in our eBook: B2B Pricing without Fear.

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If Your Company Could Speak, What Would It Say?

by | Mar 15, 2016 | Marketing Tips, Uncategorized

Today, we have a guest post from Jeff Guritza on the importance of brand identity.

The market wants to know: who are you and what does your business stand for? Said differently, what is your brand promise, and how is your business perceived in the marketplace?

Go ahead and think for a minute about your organization. Take a moment and really ask yourself:

  • “Who the heck are we?!”
  • “How different is our company than the competition?”
  • “What makes working with us unique and compelling?”

All strong brands take a well-defined position, one cemented in a foundation of consistency and sincerity. It is from this position that market alliances are formed, customer relationships are fortified and market share is defended or expanded.

Does your company speak to the market in a clear, consistent manner?

This isn’t just about messaging. This isn’t about a value proposition or pithy mission statement. This is about being real. Proper branding is about having a long-standing, consistent, predictable and definable presence in the market.

“This Is How We Do Things Here”

I believe branding matters today more than ever. Your brand identity will exist whether you’re actively participating in its development or not. You’ve got to clearly define what you stand for, or you will end up standing for nothing at all.

No brand, yours included, will ever hold universal appeal, but that’s the beauty of it. As a successful business selling similar solutions as your competitors, it’s valuable to be able to say to a customer, “If you want to do business this way, then do business with us.” It’s up to you and your brand to define what this way means.

A strong brand opens doors to new customers while protecting the customers you already have. There’s an opportunity for brand building each and every time you engage a customer or potential customer.

It’s human nature to find comfort in the known. If both your brand and your behavior are consistent and predictable, you’re on to something. If you hire or fire with no process, randomly price products in a vacuum or acquire new lines or businesses without a clearly defined assimilation strategy, it’s a recipe for brand insignificance. The devil’s in the details of a finely crafted plan.

The Power Online

Today, customers can be more fickle as they have more options, more opinions and more channels from which to arrive at their buying decision. Years ago, you took someone’s word as to who was the best source for the products needed. Today, everything can be validated or refuted via an immediate, online search.

Buying a new car? Jump online and you’ll instantly compare makes, models, trim levels, dealerships, reliability reports, reviews, recall notices and prices. After an hour’s effort, you’ll become a quasi-expert on virtually every aspect of the planned purchase: what you need, where to buy and what to pay.

When was the last time you talked to an Amazon representative or outside sales person? How about never? Amazon’s face-to-the-customer is devoid of humanity: no names, emails, etc. When you think about it, their “brand” is basically a logo, web address and your online account.

The information superhighway has forced leaders to reassess how they go to market (externally) and how they run their business (internally.) The transparency today leaves little place to hide; employees and customers alike have phones with broadband connections to instantly share their opinions with the planet. Your best defense? A strong brand that’s clearly defined and omnipresent.

Brand Building Isn’t For Sissies

Brand building isn’t like building a house. When building a house, you can delegate some of the work. And as needed, you can make quick executive decisions that cut costs or save time.

Brand building is more like training for a marathon. With true brand building, there are no shortcuts or steps to skip. Either you commit to it fully, or you don’t. Everything matters.

Like marathon running, brand building requires relentless and sustainable dedication, focus, vision and patience. Skipping a few runs and eating poorly has a negative impact on your training. Similarly, neglecting your brand via undisciplined communications, mediocre account management, and misaligned strategies produces poor results.

Here’s a five-step exercise to help get you more refined in your branding discipline:

1. Assess your brand situation/status. Take time to understand the current state of your brand. Are you as committed to your organization’s brand as you can be? Remember: you must always behave/operate in accordance with your brand’s promise. If you’re known for speedy service, you can’t slow-pay vendors.

2. Latch on to a story, and tell it. Every company has a history and a story. This story is the foundation of your brand. Be sure you have that story established, mastered, and shared by every customer-facing associate. Be direct and avoid ambiguity.

3. Think broadly. A brand’s impact and influence is far-reaching. Do not limit your thinking to any existing, narrow-cast set of parameters. Expand your vision beyond the present and explore unchartered markets, pricing models, corporate structures, and product groups.

4. Think digitally. In this era of online everything, at a bare minimum you can’t forget the digital user interface (UI) and the overall digital user experience (UX.) Know that e-mail footers, web sites, invoice templates, etc. are all branding opportunities. Social media has us all interconnected; your brand must tap into this.

5. Be consistently present in the marketplace. Attend industry events. Walk around at trade shows. Hire new associates with fresh ideas.  Blog about your vision for your business or industry. Sponsor community events.  Bottom line: make sure you become a master of brand continuity in the minds of your customers.

Branding Is The W-H-Y

Which leads me to my point: why do customers do business with you? Why do folks choose you over your competition? Why do people pay the prices you charge?

It’s because of your brand. It’s having your people, your processes and your products all strategically wrapped into a compelling, original and authentic package. Proper branding gives an organization its soul. Without a soul, companies tend to behave in awkward and uninspired ways. And this ultimately leads to irrelevance.

Branding requires relentless customer centricity, unwavering internal controls, leadership accountability, laser-focus on corporate metrics and a steady, positive attitude. Your brand is why you matter to your customers. Therefore your brand matters.

Don’t become irrelevant.

Now with The M. K. Morse Company, Jeff Guritza has successfully led sales, marketing and product management initiatives within global organizations and markets for more than 20 years. His work involves creative branding strategies tied to product launches, channel development, structured training programs, corporate acquisitions, and executive long-range planning.

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Over 21,000 Industry Recognized Skill Credentials Issued by NIMS in 2015

by | Mar 9, 2016 | Uncategorized

By Miles Free of PMPA. This post originally appeared on pmpaspeakingofprecision.com and is reposted with permission.

21,420 to be exact. This is a 20% increase in the number of credentials issued in the United States from 2014. It is a great start toward the 100,000 skilled jobs that industry will need to fill over the next decade…

20% more credentials issued in 2015 over 2014

PMPA is an original founding partner of NIMS, and continues to support its mission to develop and certify industry recognized credentials for our workforce through consensus skill standards.

NIMS has developed skills standards ranging from entry-level to master-level that cover the breadth of metalworking operations and industrial technology maintenance. NIMS certifies individuals’ skills against these national standards via credentials that companies can use to recruit, hire, place, and promote individual workers. Schools and employer training programs incorporate the credentials as performance and completion measures to deliver high quality training to industry standards. NIMS will soon add credentials in Industrial Technology Maintenance and Computer-Aided Manufacturing (CAM) to its portfolio of offerings in 2016-2017.

NIMS works to ensure all individuals entering the workforce are equipped with the skills needed to be successful on the job from day one.

“Executives from PMPA member shops all tell us that they would hire people with skills -even if they did not have an immediate opening,”  says Bernie Nagle, Executive Director of PMPA. “Our support of NIMS, and the RIGHT SKILLS NOW program is one way that PMPA and our members are addressing the issue of lack of skilled workforce. We congratulate NIMS, and their entire team, on the growth in credentials issued in 2015.”

PMPA congratulates NIMS, all of its partner and sponsoring organizations, and the professionals doing the work that made 2015 a record year for credentials issued. This record is evidence of both the commitment  and achievement of developing a competitive workforce through our NIMS community.

For more information about NIMS : NIMS READY

For more information about Right Skills Now: Right Skills Now

For more information about a career in Precision Machining: Career Overview

Career fact sheet

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Communicating Price Increases to Your Customers Without Losing Business

by | Feb 17, 2016 | Uncategorized

This post originally appeared on INSIGHT2PROFIT.com

Recently, INSIGHT2PROFIT worked with a manufacturer that had not executed a price increase in nearly three years. There had been individual negotiations, but overall, pricing had remained relatively flat. While the company was a market leader, it was ignoring the pricing lever for profitability.

Our team worked with theirs to determine a plan for strategic price increases, as well as a process for conditioning customers to expect those increases. Here are the steps we took, which you can utilize to ensure your own success in communicating price increases to your customers without losing business.

Step 1: Start Addressing the Issue Informally First

You know sales is all about building relationships, so leverage yours. Instead of waiting for a letter to be sent to everybody, which does not make anyone feel like a priority, start reaching out. Whether it is over the phone or over lunch, start the conversation: “I wanted to let you know we are looking at a pricing initiative to better reflect the value our organization is providing.”

The more you can do to ensure your customers are not surprised with a price increase, the more successful you will be. Taking that a step further, developing a cadence for price increases can help guarantee pricing excellence: Communicating with your customers to an extent that they expect a price increase every year or six months (or whatever period fits your business model), the conversation shifts from “why are you raising prices?” to “what is the price increase?”

Step 2: Create Supporting Documentation

Given that it had been several years before the organization’s sales team had gone before a customer and said, “We’re going to raise our prices,” INSIGHT2PROFIT helped to build an extensive communication package. It covered a draft of the letter that would communicate the change to customers, as well as a sales script and FAQs personnel could use to combat concerns.

The purpose was not for reps to read the script or answers word-for-word, but rather to instill confidence in their responses. When the sales team used their own wording but projected the agreed upon message, fewer customers questioned the change.

Step 3: Role Play, Role Play, Role Play

If you have not completed a price increase in a number of years, you haven’t had that difficult conversation in a long time, and it can be hard to handle. That is why we insisted on a lot of role-playing with the company’s customer-facing staff members.

We got them into the room and said, “I’m the purchasing manager, you are the sales rep. Tell me why I’m getting an increase,” and they practiced. The first round was less than ideal. By the third iteration, the team had gained confidence and were incredibly convincing. Several of the staff told us how powerful the preparation was and that they knew exactly what to say when faced with an unhappy customer. Ultimately, they were confident enough to go into the marketplace and deliver the increase.

When practicing with your team, cover these bases:

  • Read through the sales scripts, encouraging staff to use their own words
  • Role play questions and answers
  • Reiterate selling based on value, not price

After doing so, our client began getting 90 percent of what they asked for when, in the past, they historically achieved just 50 percent of their ask.

Step 4: Don’t Back Down

Continuing to educate and condition customers regarding your pricing initiatives is just as important as training your staff. The first time you cave when a customer pushes back, threatening to take their business elsewhere, you have set a precedent that will ultimately set your pricing initiative up for failure.

Think of it like giving in to a child because they were crying after being told “no.” If you roll prices back even once, you have taught your customer not to take your increases seriously. The better behavior is to remain respectful and professional while sticking to the increase.

There is obviously risk, and you may even lose a small amount of business. But we believe the bigger risk is backing off and setting a precedent for price locks.

The Bottom Line

While every industry’s preferred communication and tolerance for price increases differ, we often favor open communication, stating your case for value. Price increases do not need to be scary. To begin raising prices fearlessly, get our free eBook, “B2B Pricing Without Fear” by clicking here.

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Seven Things to Do with a Database of U.S. Vocational Education Programs

by | Feb 9, 2016 | Uncategorized

By Rachel Kerstetter, PR Architect, Sonnhalter

974_4338603We did the legwork to identify more than 20,000 vocational programs at schools all across the United States, so that you don’t have to. All you have to do is download it.

But once you’ve downloaded the Excel spreadsheet, what can you do with it?

Here are seven different ways you can use our database:

  1. Build your network. Locate the programs in your area, and connect with the folks that run them. You never know when having a connection in those training programs could be beneficial.
  2. Become a resource for them. Whether it’s offering to send someone from your organization to speak to a class or volunteering to host a facility tour, the next generation of tradespeople won’t be able to be trained properly without support from the industry.
  3. Hire their students. Use the programs in your area as places to recruit skilled employees, co-ops, interns or apprentices.
  4. Supply them. If you offer a product or service that’s of use in a training program, supply these programs either through donations of your products or heavily discounted equipment, students will be more likely to use the equipment they’re familiar with from school once they get into the workforce. This grassroots strategy has long-term benefits; an ongoing relationship with a vo-ed program will provide exposure for you for each new class.
  5. Learn them. Get to know the next generation better. Millennials as a generation seem to frighten marketers and managers, but there’s no reason to be scared. Millennials are bright, technologically inclined and learn quickly; the sooner you engage with this young talent, the better.
  6. Get your distributors involved. Your distribution network can amplify your efforts to combat the skills gap. They can reach into areas far from your headquarters and help train the next generation.
  7. Share. Please share our list with anyone that it may help, whether it’s a colleague in the industry or someone who is looking for a rewarding career path.

It will take teamwork and effective communication to help close the skills gap that the industry is facing. Support for vocational training programs is crucial, and it should come from those within the industry. This list is just one tool that can help facilitate those efforts.

Visit sonnhalter.com/vocational to download the database and get started.

And of course, don’t hesitate to contact us if you need help getting started.

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What is the State of the Manufacturing Economy?

by | Feb 3, 2016 | Uncategorized

By Miles Free of PMPA. This post originally appears on pmpaspeakingofprecision.com and is reposted with permission.

Today our growth is limited by our inability to acquire skilled workers. In the last recession, we were held back by lack of demand for our customer’s end products. Today, we cannot find the skilled people that we require to operate new high tech equipment that is needed to make the high precision parts we produce. 

Our shops are tackling this issue in a number of ways. Some are setting up internal training programs, some apprenticeships.  Several of our member companies are creating on-site schools to teach skills needed. As an industry we helped to create, and are supporting initiatives like Right Skills Now. Right Skills Now uses National Institute for Metalworking Skills (NIMS) credentials to create the skilled workforce that manufacturers require to remain competitive in today’s global markets.

Claim: The President had this to say about employment and manufacturing:

“More than 14 million new jobs; the strongest two years of job growth since the ’90s; an unemployment rate cut in half. Our auto industry just had its best year ever. Manufacturing has created nearly 900,000 new jobs in the past six years. And we’ve done all this while cutting our deficits by almost three-quarters. We’ve launched next-generation manufacturing hubs, and online tools that give an entrepreneur everything he or she needs to start a business in a single day.”

Response: We haven’t won this one yet.

“…there has been a gain of 878,000 jobs since February 2010. But Bureau of Labor Statistics data show that the number of manufacturing jobs is still 230,000 fewer than…in the depths of the recession — and 1.4 million fewer than when the recession began in December 2007. Indeed, the United States only gained 30,000 manufacturing jobs in all of 2015.” – Washington Post

Question: Why do we have a skilled workforce shortage when we are at the lowest labor participation rate in ten years?

Work yet to be done on unemployment

Regulatory Hostility (more…)

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