Setting: Boardroom in the office of a major garment export company.
Scene: Meeting of sales team
A visibly agitated Jaideep Sinha, the Sales Head, faced his team. “We have got yet another complaint about our gross unprofessionalism and negligence from our biggest customer Debrah!” Sinha waved a sheet of paper containing Debrah’s email requesting samples “This came 40 days ago. No one acted on this. We lost an order for 40,000 pcs! On one hand, we request customers for more orders to fill our capacity. On the other, we don’t take existing orders seriously”.
While what Sinha said was true, there was more to the story ..
“Sir, but this was not part of the original request from Debrah. They added it later,” protested Kalyan, the account head for Debrah.
“Yes. But we were informed by mail. How was that missed?” Sinha countered. He was clearly upset. More so because they had completed over 700 designs in two months for Debrah. All that hard work had now been undone with this singular oversight.
Sir!” Kalyan rose to his own defence. “This is just one case in over 50 tech packs we’ve executed for them. Moreover, we had the added responsibility of developing five tech packs for Zeswear
“The Zeswear tech packs were delayed, too. Weren’t they?” Sinha, questioned
“That’s not our fault. Zeswear was late in giving us all the details. In fact, we had to follow-up a lot,” Kalyan protested.
“Is that your excuse for missing this request from Debrah?” Sinha bellowed. “We cannot neglect an existing customer while we try to secure new ones. Remember, your order book is filled by Debrah. Orders from Zeswear might pick up, but it may take another year to do so. Currently, we are dependent on Debrah to run our mills!”
Role of the sales team
Kalyan’s predicament is not unique. Most sales teams in the country’s garment and textile export houses would be quite familiar with similar situations. Textile manufacturing and export is an intensely competitive business in which sales teams vie for orders from large retail houses based in Europe of USA. To do so, sales teams have to help showcase their companies’ capability to reproduce ‘storyboards’ (given by the customers’ designers) at competitive prices.
Storyboards are a series of sketches, diagrams or photographs with measurement, colour palettes, etc. that show how the design for a product has to develop through the main stages of manufacturing. Designers develop storyboards based on their evaluation of market trends. These storyboards are passed on for development to one or multiple manufacturers so that they can evolve them into trendy designs that will draw end customers to the brand’s stores. The ability to turn a design on a storyboard into an appealing product is key to a manufacturer’s success.
In addition to the look and feel of the product, the interpretation of the elements of a design, also decides the cost of a product. In textile, price is a major differentiator as there is nothing else that a competitor cannot copy. So, at times, several options at different price points (and different effects) have to be submitted to the brands for their selection.
The manufacturer’s sales team keeps a hawk eye on the numbers of each of these offers so that it can secure the best possible margins. For this, they remain deeply involved in the entire pre-order process –the very initial discussions, order confirmation and the finalisation of all design elements (look, feel, fabric finish, yarn quality, fit).
Even after the order has arrived, the sales team stays invested in the process of coordinating for customer approvals required to move orders from post-order PPS sampling stage to bulk production. This means that at the same time, there would be multiple customers with whom multiple submissions are being made about both pre order samples (of future season) and PPS samples (of current season). Each goes through multiple iterations involving several back-and-forth emails and comments from the designers. Approvals have to be also sought for sources of raw materials at both the sampling stage and the bulk manufacturing stage.
During bulk manufacturing, any deviation from the mutually agreed product specs might either increase the lead time (because of rework) or escalate cost of production and eat away profitability. As the sales team does all the coordination needed with customers for finalizing the product, they become the obvious choice to continue interacting with the customers, to negotiate and take approvals for exceptions created during bulk production, too. Further, they also have to ensure that the products are shipped in time, billing is completed and payments are realized in the system. The sales team is aware that missing out on any of these tasks would risk current and future orders of the existing customers and can have immediate, significant financial repercussions for the company.
The sales dilemma
Managing existing customers is crucial, especially because new ones are not easy to acquire. Firstly, there is the geographic challenge – the customer is not in the same country as the manufacturer. Secondly, these customers (large retailers) are few in number, and those that are a good match to a particular company’s manufacturing capability are even fewer. But the biggest challenge for the sales team is getting the first appointment with a new customer. It takes time, patience, perseverance to get the foot in the door. The sales team has to understand the prospective customer’s business, the lacuna in their current supply chain, and showcase relevant capabilities to address the identified gaps. They then have to develop the first samples, decipher the preferences of the customer (product quality/variety/price/fresh technologies), get the initial order, execute it, identify gaps in internal production capabilities, and build the business scale up plan (and customer confidence) with capacity enhancements, if any.
So, after a point of time, the work required to be completed to serve existing customers and their orders overwhelms the sales team’s capacity completely and compels them to focus on “the bird in hand rather than two in the bush”. Consequently, the rate of addition of new customers or lines becomes a factor of accidental availability of sales bandwidth rather than a concerted and continuous process!
But at the same time there is always a definite need to focus on new business because of one or more of the following reasons:
1. Increasing pressure on margins from existing customers
2. Decreasing orders from them
3. Potential for better margins if the company can win new clients or new lines from existing customers
4. Risk in the increasing dependency on one or two major existing customers
5. Time-to-time underutilization of mill capacity.
So, if the company does not find a way to successfully service and grow both existing as well as new customers, in an increasingly competitive environment, the profits of the company is likely to enter a downward spiral as they continue to fight in the limited product range of existing customers. But how can the sales team develop new customers when there is really no bandwidth to do this? To answer this question, it might help if one tried to answer why organizations feel that, even though most of the tasks that the sales team is involved in (~80%) either involve no selling skills or are physically executed by other departments in the company, the sales team has to coordinate and be responsible for all of them.
The core issue
Most companies in the industry strongly believe that customers prefer to have all their order-related discussions with a single individual in the company – i.e. a ‘single window’ of communication. It is also asserted a single individual also has to be given the responsibility of protecting the order margin. This is expected to keep the margin from eroding as the order goes through the usual iterations and modifications in various stages.
Are these valid beliefs? Let’s examine each of these Firstly, can customers be comfortable with multiple windows? From the example of the Banking & Financial services sector, Retail, Travel companies, Insurance etc. who all work with multiple windows- i.e. call centre, website, branch offices, etc., it is quite clear that customers are not very particular that all their conversations are with same person who sold them the product. In fact, someone from product development will be able to discuss product variants more authoritatively or someone from the bulk manufacturing team can more readily convey execution or dispatch related information. Multiple windows interaction with customers can be successful as long as
1. There is consistency of promises and
2. As long as there are no repeat conversations.
This can be achieved if conversations are rule based and transactional.
In the garment manufacturing business, companies also streamline all customer communication through the sales team to protects margins. The pertinent question is- does holding one individual accountable, really do that? The answer to this lies in examining why margins sometimes get eroded even when no orders are accepted into the system without ensuring that the company gains in that transaction.
The multi-tasking sales team is always juggling with multiple balls in multiple stages -right from pre-order to PPS to bulk manufacturing. Sometimes, in the mayhem, a ball gets dropped. For instance, a customer email requesting an additional pocket in a garment design in the PPS sample stage might be missed in the midst of the hundreds of conversations that the sales personnel is carrying on about multiple products in various stages of production. So, when the irate customer finally points it out, not only does the company lose credibility, but it also has to rework as per the customer’s instructions. This can delay order completion, and lead to the need for airfreights or accrue penalties. Such margin erosion on orders reinforces the belief that it is important to hold the sales team accountable!
But, it is obvious that holding individuals accountable doesn’t solve but reinforces the problem.
Direction of solution
1. Identifying & focussing on ‘real’ sales
The only truly sales activities which need ‘real’ selling skills in this business is development of new customers or new lines/categories with existing customers. So, what is needed to resolve the bandwidth dilemma is a method by which significant capacity of the sales team is released to focus on these activities.
2. Setting up a back-end team to take up non-sales” tasks
This means that all tasks of coordination and order management has to be relieved from the sales team. But for this divesture to be acceptable, the sales team will have the confidence that all the these activities including costing, sample finalizations, payment collections etc which used to happen with their oversight, will now happen with clockwork efficiency and reliability without using any of their capacity for any kind of coordination. For this, a backend support team has to be created which will work with machine-like efficiency!
3. In order to ensure that this backend team can work independently and effectively, they need:
- Direct access to customers
- High level of standardization of tasks with clear handover criteria
- Tasks distributed to teams based on time and skill requirements (e.g. development, order management etc.). This reduces multi-tasking of the backend team and improves ability to get back to a task after interruptions.
- Clear SOPs and well-defined scope and responsibilities
- Automation (wherever possible), especially to handle high volume, repetitive tasks
- A centralized monitoring mechanism for tracking elapsed time, ensuring process adherence, and signals for right time expediting.
When all work together seamlessly, customers’ requests and queries can be addressed without the involvement of the sales team. This will free the mental and physical bandwidth of the sales team- allowing them to focus on “real sales” and on expanding the company’s market presence.
4. New customer acquisition
But even when the non-sales activities have been eliminated from the scope of the sales team, they will still face a dilemma of prioritizing between engaging with current customers and developing new customers. Compared to securing orders from existing customers, new customer acquisition is a harder, longer lead time activity with multiple steps. And the timely completion of these steps- including customer visits, preparations for these visits, etc. are very important for ensuring success. So, it is important to carve out a dedicated and highly skilled business development team who will meet and pitch opportunities to potential customers
These expert business development resources have to be ably supported by campaign coordinator/s who can develop database of potential customers, filter opportunities, plan telephonic interactions, and schedule visits. This way, the expert resources can spend more time wooing the customers. Once the business development team secures an order from a new customer and completes all activities (with the help of the back-end order management team) leading to a bulk order, the customer can be considered as fully acquired and passed on to the regular sales team.
5. Growing SOB with existing customers
Once a manufacturer is a designated supplier to a customer, unless there is a massive fallout in supplies due to product quality or delivery commitments, orders will keep coming automatically with minimal ‘selling’ efforts. But in and industry with very few potential new customers, there is tremendous advantage in increasing share of business even with the existing customers. So, this team can focus exclusively on the these customers, identify opportunities for line expansion and use their specialized skills to help customers select successful styles from storyboards.
6. Monitoring the sales funnel
Sales tasks (business development and regular sales) can be monitored by checking the progress of orders in a sales funnel. Each order can be tracked as it goes through the various stages of the sales funnel with the help of any standard CRM package. Obstacles can be proactively removed and issues can be speedily resolved. Effort should be to move as quickly as possible through the funnel from lead generation to order confirmation.
This solution is based on specialization and coordinated efforts. Its implementation, inevitably, will
necessitate breaking down of traditional mindsets and silos. It may also involve modifying performance measures and compensation plans to reflect and reward combined effort. But, when multiple teams (centralised monitoring, order management, development team, internal sales teams, business development managers) work collaboratively to engage customers, more than 50% capacity of sales team can be released while ensuring improved quality of service to customers. This released capacity can be harnessed for acquisition of new customers and new categories.
Increased flow of customers and categories will, over time, show results in the form of a healthy order book, high capacity utilization, and continuous increase in revenue. Moreover, disciplined and systematic sales activities bring transparency and agility which can enable companies to respond quickly to emerging market dynamics.