Nov 26, 2020
By Frank Hurtte
Since launching out in my journey as a consultant, writer, and speaker, I have been told at least a hundred times to not use sports analogies. Sound advice and a good rule to follow? Maybe, but if following the rules was my strong suit, I probably would not be a good consultant. So, let the rule-breaking begin.
We are well into November. The pandemic has been a tough opponent. We’re behind and it’s time for what my old football coach called the “two-minute game.” We need to score, and we need points right now. Here are a few ideas you might want to consider.
Do any of your customers have money they need to spend now?
Believe it or not, many larger companies and governmental organizations have funds that fall into the category of spend it this year or lose it forever. Since some projects for 2020 were delayed due to the pandemic, they may need a place to spend this money. Training funds, product recalibration, spare parts, tools, equipment, and tons of other stuff fall into this bucket.
Tapping into these dollars is a bit tricky and requires a bit of finesse. I recommend broaching the subject with comments like this:
• Are there any projects that you wish you could get into this calendar year?
• There are people whose training was delayed because of COVID, how does your training budget work?
• Do you have any purchases that need to be made before the end of the year?
• Do you have any demos that need to be pushed into this year?
• Do any of your customers have projects ready to go but they are delaying?
Here is the situation. Your customer has been working on a project for a long time. They have identified the problem, worked out the cost justification, and put a lot of thought into the engineering, but for some reason, they have not placed the order. The project will happen, and right now it is just a matter of time. All indicators point to you getting the order at some point. The only issue is when.
Understanding the situation, you might discover one of the following reasons for not pulling the trigger:
• Workload. Your customer is waiting to finish another project before getting started on this one.
• Final approval held up by someone in the organization. This is quite common in larger companies. The work is approved but finds its way to the desk of someone at headquarters and gets stuck while they decide if they want to spend the money now or later.
• Uncertainty in the customer’s financial situation. Nothing says uncertainty like a global pandemic. Many companies have projects in the queue which could go, but they want to make sure it does not stress their finances.
• Delays with your customer’s customer. This one has shown up in companies providing special machines in the automotive industry. The machine builder has the order, but their customers are telling them to hold off until something happens. Further, if the machine builder’s customer is shut down because of some governmental regulation, they simply may not have anyone there to offload the new machine.
• A competitor making promises. This one officially cannot be happening because we were operating under the assumption the order was yours, but it does happen. A competitor is late to the game. They have a champion within the customer organization. The competitor brings in a different proposal. The price is better, and your customer is analyzing the quote trying to determine if the competition is fair.
Armed with this information let us examine our options:
1. Many times, a gentle inquiry can move the order forward.
2. In many industries, manufacturers announce price increases near the end of the year (typically November). Armed with this some customers will move forward with the order.
3. Offering some kind of special terms might push the order forward. A word of warning, this can impact profitability, so proceed with caution.
4. A special pricing bundle might work. We know of several companies who flat out offer their customers special discounts to drive orders forward. Again, this requires a great deal of thought because it could impact future business.
Is your open order list/report clean?
While this sounds strange, many distributors are lax about going through their open order report. For those unfamiliar, this is the report on orders which are not complete. Sometimes this issue arises when orders are marked “ship complete” and one or two parts experience delivery delays.
We recommend reviewing open orders at least once per week, but the end of the year is the time to go over them with a fine-tooth comb. If one or two minor items are holding up the order, now is a good time to expedite them. If expediting will not get them in on time, a conversation with the customer may get you special permission to ship with one or two things missing.
Are you waiting for delivery from a supplier?
We already touched on the expediting thing. Most manufacturers attempt to push out as much product as possible at the end of their months. They do this for the same reasons we do; to maximize their factory billings for the month.
However, there are often delays in letting you know a product has shipped. We recommend carefully following orders which are set to ship close to the end of the year. If the order is shipping directly to the customer, most consider it fair for you to bill the day it leaves the factory.
A final thought
None of this is rocket science. You may have used these techniques before, and there is a particularly good possibility you have some of your own. However, when money is concerned, it pays to err on the side of caution.
Finally, another sports analogy. Distribution is normally a game of inches. A little financial gain here and a bit more there can make the difference between a champion performer and an also-ran. At the same time, there is darn little time left in this year’s game. Grabbing all the orders possible in the next few weeks will make a big difference later.
Frank Hurtte is the Founding Partner of River Heights Consulting. He combines the battle scars of 28 years of front line “in the trenches” experience with over 13 years of service to knowledge-based distributors and their manufacturer partners. Email or call today to make these virus-driven times work for you: www.RiverHeightsConsulting.com.