As any sales manager could predict, initially the strategy didn’t work. The next job featured an identical list of materials, so the customer expected identical pricing. What’s more, since I didn’t know the product line I had to visit the site twice to feel comfortable about the order. The second job was very far away, so my time spent in the field and higher delivery costs meant further erosion in profits. The third job was much like the first two, but even farther away!
We fulfilled the third order and decided to pack it in. I had started off with the price bar so low and the service bar so high that it seemed impossible to make money on these orders. I planned to have a meeting with the customer and requote the next job higher, fully expecting to lose the fourth order.
But that meeting never happened. (Sorry sales managers, here comes the punch line.) Instead, one morning we received an unexpected purchase order for the fourth job. The project had the same specs as the first three, but it was five times as large! The size of the order qualified us for truckload pricing. Suddenly our margins were phenomenal. And by then I was familiar enough with the product that I felt comfortable after just one visit—and the job was practically in our backyard! So it seemed that I really did “make it back on the next one.”
But salespeople take heed, the happy ending wasn’t completely rosy: Imagine if I had priced job No. 1 at more comfortable margins. I would have made good profit on the first three projects, and then I could have retired on the money we made on the fourth. (Sales managers, now would be a good time to chime in with a knowing nod and an “I told you so.”)
Tad Troilo is a manager for Cranmer’s Kitchens by Design in Yardley, Pa. 215.493.8600. E-mail: TadNT@ aol.com
