Fax Machine Erodes Margins … Increases Need for Training

Usage of the fax machine began to peak in the late 1980s and continued into the early 2000s, with email becoming prevalent in 1993.

Now, why mention this?

Consider about 35+ years ago.  Fax machines were not too prevalent. Contractors, and others,
had to pick up the phone or visit a distributor to get a quote on a bill of materials.  The distributor either quoted based upon their inventory, experience or had to call the manufacturer … who had to return the call.  Eventually the quote made its way back to the contractor who then presented it to the customer. By necessity, due to time, contractors limited the number of distributors they interacted with.

The advent, and popularity, of the fax machine enabled this process to be compressed … and contractors could put distributors on the same speed dial and therefore send the same quote to more distributors. More distributors competing for the same piece of business eroded distributor margins as they fought for market share.

Fast forward more recently and email, and the internet, enable contractors to reach more distributors to request a quote as well as solicit pricing online. The process has further compressed … and margins erode as share is still the name of the game.

I’m not saying that the genie needs to go back into the bottle as it obviously can’t.

So, what got me thinking about this?

Last week I was talking to a rep who has been around “awhile”. A distributor asked me to contact them to gain the rep’s perception of the distributor as part of a branding project we’re working on.  The rep started talking about the business in the ’70s and ’80s.  The context related to pricing and how a greater percentage of the business is now SPAs than ever before between customer specific SPAs, customer category SPAs, geographic SPAs and others … essentially list and into-stock pricing doesn’t mean much. He commented that “the fax could have been the downfall of pricing” in the electrical industry. He felt that there is less salesmanship, in many instances, than years ago and that many salespeople don’t follow-up with their customers and “ask” for the order whereas years ago, you called the customer with the price, could reiterate your value proposition and, since you had the contractor on the phone, you could ask for the business.  Contractors (and industrials) are buying better because they can bring increased competition to the quotation process and they have access to more information than ever before.

So, the questions then become …

• Do your salespeople know the right questions to ask? Do you regularly conduct sales training (and different types)?
• Are your salespeople participated in negotiation training? Many purchasing managers get trained in how to negotiate. Should salespeople know what their customers have been taught?
• Do you follow-up on your quotes? And if they are delayed have a “tickler” file for regular follow-up?
• Do you know your close rate per customer? By type of quotation? Are you used as the stalking horse but they have no plans to give you any business?
• Are your salespeople well trained in your value proposition? Do they know everything your company offers and the key questions to elicit need? They don’t have to be experts to sell it, just experts in gaining customer information so that they can bring in the experts who can address the customer’s needs.

And I won’t get into the issue of the prevalence of SPAs and the administrative and financial challenges!

While the fax machine may have begun margin erosion, and email and the Internet accelerate it, if sales is your front-line to capturing business and ensuring profitability, then they need to be trained on your value and how to interact (negotiate) with customers regarding price. Understanding “cost to serve”, the profitability of the business and learning to sell on value are essential to generating a reasonable return on ownership (or investor) investment.

What questions should salespeople be asking? What training are you doing?  What is the best sales training program (resource) that you’ve attended or utilized?