DWM - 2001 - Summer

Volume 2 Issue 2 Summer 2001

Helping the Sellers Sell
Using Software and the Internet to Boost Sales
by Sherif El-Dibani and Diane Huybers

As new technologies are introduced, companies are forced to adjust their traditional marketing strategies. This article will cover methods used to increase dealer networks, as well as closing ratios, and new affordable tools that help both the manufacturer and the dealer accomplish just that.

The article will also briefly introduce the concept of a customer-centric marketing strategy and the role of software and the Internet in achieving long term success though Customer Relations Management (CRM).

During our years in the industry, we have established a basic success formula by which we evaluate the potential future success and longevity of our clients (see box page 39). Integral to this strategy is the pursuit of market share.

Pursuing Market Share
Market share, in simple terms, is defined as the number of units sold by a manufacturer as compared to the total number of units sold in the market area.

Market share can be increased in many ways, the most common of which are:

Attract new dealers and increase sales force;
React quickly to market and competitive pressures;
Increase awareness about your products;
Get your products known to architects, specifiers and contractors;
Offer a wide product range, when feasible.

Attracting new dealers traditionally is achieved by offering the following:

Better discounts than those offered by your competitor;
Special dealer pricing to match a competitor’s pricing (this is usually combined with added discounts or a more comprehensive product line);
Better products and warranties than those offered by your competitor;
Special pricing on options or window types;
Better service and selling tools than those offered by your competitor.

The basic underlying strategy is to make the dealer profit by selling your products. Most of the strategies listed above imply lower margins for the manufacturer, and may also result in larger expenses incurred adding new product lines and/or adding staff to improve customer service.

Is there a better way of achieving the same results by forgoing margins and/or increasing costs? The answer may lie in today’s available technology: a combination of software and the Internet.

Putting Software to Work
Software is already a tool used by many to facilitate the quoting process at dealer sites and with salespeople. But there are many shortfalls to how manufacturers view software. Most manufacturers use software as a tool to allow the dealer to quote easily and accurately, transfer orders to the manufacturer’s system or fax them to customer service, while allowing the dealer to print professional quotations for the client. While these are very strong points for the distribution of software to dealers, will the dealer actually end up relying on your software, or even using it at all? If so, for how long?

To ensure that software is a success with dealers, manufacturers should put themselves in the dealers’ shoes by asking themselves the following questions:

What will the software do for the dealer?;
How will the software make the dealer’s day-to-day business activity more efficient?;
Will the software help the dealer close more deals?;
Will the software allow the dealer to add his own products such as siding, roofing and installation charges?

Dealers are just like everyone else; they would like to use tools that help them throughout their business while also helping them increase business. So, if the software is designed to address the manufacturers needs with little regard to what dealers really need, it is a wasted investment on the part of the manufacturer and will only end up frustrating the dealer.

If a manufacturer chooses to supply dealers with quoting software then it is crucial that this tool address most, if not all, of the dealers’ business requirements. Manufacturers that succeed in this will get dealers hooked on selling their products. It becomes very difficult for your competition to convert dealers from your products to theirs.

How can software help your dealer increase the closing ratio?

Get the customer involved in the design of their windows and doors. This important feature gives the customer a sense of ownership over the design. From standard designs to custom configurations, shapes and grid patterns, coupled with professional quote presentations in printed or HTML form, will increase closing ratios (see figure 1);
Provide the salesperson with the ability to negotiate with his clients. The flexibility of manually changing the price of the base product and each option independently allows the salesperson to feel his way through the negotiation process. The result is fewer discounts being offered to the customer. For example, by offering a discount on only one or two options, the customer may readily accept the price and sign the contract since he already has a sense of ownership over the design. Of course, it is important to have the ability to limit the amount by which a salesperson can discount a product. The dealer sets these limits.

Some software even offers the dealer the ability to set a dummy limit, which, when reached, displays a warning “Discount level not authorized. Please contact the office.” This limit is usually set at a lower discount level than the real limit, which the second and absolute discount level allowed. This is a good example of the power of well-researched software design. The customer will see such a warning and think that he is getting a very good deal, more reason to sign the contract now.3. Compare salespeople.

A salesperson enters a house and uses software to introduce the company, design products, price them and generate a professional quotation. Another competitor pulls a price book, hand draws windows, flips through price books back and forth, hand-writes the quote and hands it to the customer. Who do you think will get the deal?

Why Use Quoting Software?
Well-designed software should provide both dealers and manufacturers with benefits.

Some of these advantages to dealers include allowance of the following:

Management of customers and prospects;
Cost calculations;
Full life cycle from quote to order to purchase order and internal work orders;
Commission calculation;
Report generation and data analysis;
Addition of dealer specific products (non-competing) and services;
Links to accounting (receivable, payable and general ledger).

Some of the benefits to the manufacturer include:

Accurate and error-free quotations;
Product limitations respected at the quoting stage;
Grid alignment and grid pattern printouts and cut sheets;
Import of purchase order from dealers;
Import quotation from dealers, analysis of market trends and forecasting;
Fast reaction to market changes: Update the entire or a portion of the price book and simply publish to the Web. The software checks a predetermined URL and for the latest dataset every time the dealer logs on to the Internet. If there is a newer price book the software downloads it and updates the dealers databases;
Publish dealer specific price books or price records. If the dealer has the correct identification then he will be able to use the special pricing;
Publish date specific discounts and specials allowing the manufacturer to react quickly and inexpensively to market pressures;
Transfer order status to each dealer reducing customer service costs;
Attract new dealers by offering them valuable tools, and not just by increasing discounts.

Internet Expands Its Role
Most window and door manufacturers use the Internet to advertise and communicate information about the company and its products. Very few have adopted the Internet as a tool to improve customer service, increase sales and reduce costs. The Internet, coupled with appropriate quoting software can accomplish all of this and more.

What does CRM mean? Customer relationship management should be exactly that: the process of actively deepening the knowledge you have of your customers over time, and then using that knowledge gained to customize your business and strategies to meet that customer’s individual needs.

It is important to stress this point simply because a large percentage of the market’s perception is that CRM is simply a technological solution that does sales force automation or call center functions. CRM is about an entire change of mindset to become customer oriented; it is not simply a piece of technology that will solve all your needs (definition provided by Ryan CrawCour).

First, you must realize that this is a very old concept. If one has knowledge and information about the market to which they are selling, then potentially they can gear their efforts more directly to satisfy this market’s requirements. The result is increased sales.

There are two customers involved here, the dealer and the homeowner. While technology is the obvious tool for gathering this data, it is what you do with it that counts.

Gathering Information from Dealers Using the Internet
As a manufacturer, can you imagine being able to see what quotes were issued by dealers, which ones were accepted and why?

Here are some clues to the type of knowledge that can be derived:

Know which products and options are being sold more often;
Know which products are preferred in specific areas;
Know which option/products are being discounted;
Know the pricing strategies of the sales force;
Know what potential orders and for what products/options are likely to materialize.

What can you do with this information?1. Change pricing strategies for individual dealers and/or regions;2. Run specials on certain products/options for regions or within certain time frames;3. React quickly to competitive pressures;4. Plan workforce, purchases and inventory levels accordingly.

What you do with the information is really a reflection of your business. But if your competitors start doing this before you, you will end up playing catch up.

Gathering Information from Homeowners Using the Internet
Now this is tricky. Does a manufacturer that sells through dealers really want to hear from the homeowner? Of course.

What if you, as a manufacturer, provided a forum for the homeowner, who has purchased his products directly or through dealers, to log onto your website and register his windows and doors for warranty? What if you went further and allowed homeowners to register complaints and/or praise about your products on your website?

There are two distinct advantages of doing this:

You will give added confidence to the homeowner that you stand by your products;
You can gather information about complaints and act upon it before it becomes a real warranty problem in the future.

There is so much to be said about the role of software and the Internet in CRM and in increasing your bottom line. It is important however to remember that it is not the information that you gather that’s important, but what you do with it.

Additional Valuable Internet Uses
The Internet can also be used as a medium to run quoting and order processing software. There are many debates over the usefulness of such capabilities. Yet with today’s Internet security features, at least the argument of “who wants to have their price book where everyone can see it,” is no longer valid. Do you think that none of your competitors have your printed price book? Think again!

Other uses of the Internet extend to suppliers and manufacturers offering them the ability to see what part numbers you have in stock, so they can plan production and delivery. There is so much more that can be done over the Internet and with good software. There are always new ideas and we are always learning from new customers. Maybe in a few years we will have a Palm (PDA) based contact management and quoting software!

Cost Justification
Manufacturers of all sizes do not consider investment in software or the Internet as well-placed dollars. Most also tend to think that the costs are prohibitive. In reality, manufacturers cannot afford to do without either software or basic web presence, and the costs are now much more affordable. If a manufacturer calculates the per year cost of customer service and order re-keying errors generated on orders placed by the top 10 percent of their dealer network, they will quickly realize that a small investment in software and the Internet is well-worth their while.

There are many strategies and tools to help achieve the formula for success. Most strategies are not new and have been tried and tested. Software and the Internet are the new tools that help you put these old strategies to work. Software and the Internet are key in beating your competition. They are no longer a luxury; they are necessary and affordable tools for today’s competitive marketplace.

Diane Huybers and Sherif El-Dibani serve as president and operations manager respectively for Computers Mean Business Inc. in Toronto.