Brochures and company documents
Good knowledge about products and prices is a different way of saying: I know what the market requires and I have a good possibility to sell and make a profit. This is all very well but you have to find customers to have this statement confirmed. We all know that no customer is anxiously waiting to buy your products, he must be convinced by you to do so. Most of the users are afraid of changes unless he understands that he will benefit from them, so the sales force must be provided with all possible tools to introduce the product in a successful way to the customer.
In later sessions, we shall go into detail about the selling techniques and the preparation of the salesmen to be successful but we shall concentrate on the tools you should provide your salesmen to assist him on the job. Somebody has said that eyes are more intelligent than ears. You can tell a long story to convince your customer of the merits of the products and still not succeed. But with the proper documents in hand he can see straight away what the product looks like, how it is assembled, how it can be handled, connected, operated and what it can do for him.
All types of company documents, from brochures to annual reports, are important promotion tools.
The documentation should be made in such a way that it attracts the immediate attention of the customer and he will be interested to hear your explanation. The quality of the brochure reflects the quality of the company. It will stay with the customer and should impress him when he sees it. The brochure must be prepared carefully by professionals who understand it has to convey messages to the customer. Important criteria are:
the material it is made of
the product information
the information about your company.
The basic material must be of good quality and appealing.It should contain photos of the products and some applications where and how it is used. The customer might recognise these applications which will put him at ease, and gives the salesman the possibility to explain how you satisfied the wishes of the user. A photograph of your factory or workshop can lead to an explanation about your company and the way the material is produced, to create confidence. Schematic designs of the product and the range of possibilities it can offer. The text should be concise and inviting to questions, emphasising the strong features of the products and the variety of applications. Technical data of the product, indicating the standard execution and possible options.
A resume about your company explaining the sales records and the confidence you already obtained from other (prestigious) customers.
Next to the technical information, the salesman should be instructed how to present the offer for the material or equipment requested by the customer. Selling professional equipment means very often the supply of a number of products or a complete installation, that requires careful calculation of several elements:
- One product supplied in larger quantities for different applications
- the combination of different products
- installation of auxiliary equipment
- electrical or mechanical connections at the customer
- training of the customer’s personnel on site.
If the project involves some of these elements no price should be given during the visit. He should explain to the customer that the policy of his company insists on providing of the correct pricing for the whole job stating separately the different items. Such an offer can only be provided after consulting the different departments like production, engineering and sales. The quotation always should be presented in a written offer, with the proper description of the different items. Also in this case, the offer should reflect the quality of your company. It must have a structure to make it easy to read and provide all information required by the customer. The quotation always must start with the indication that the offered products are made to meet the application specified by the customer, mentioning this application.
Give a clear description of the complete supply Give the technical details of the different items
Explain the functioning of the proposed material Give the price(s) of the described material List the optionals that can be added with their prices Mention the cost of packaging Mention the cost of transport.
Mention the installation cost (if required), stating the number of days required as you expect at this moment. As this can vary considerably, depending of the conditions at the customer, it should be discussed and agreed upon when the order is placed.
Add your company’s sales conditions including:
- validity time of the offer.
- warranty period on the proper functioning of the equipment (6 months/ 1 year)
- delivery time.
- payment conditions.
These last two items are always argued by the customer, so you have to leave a margin for negotiations. Finish your offer with the phrase that you are willing to visit the customer to discuss the offer in detail. This justifies a follow-up phone call to find out first reactions of the customer. A well-prepared and well-presented offer is an excellent tool for the salesman during his negotiations.
For the selling of individual and simple products the salesman should be in possession of a price list to present the prices on the spot. The prices of these smaller items can often be negotiated during a visit and the immediate reaction can lead to an instant order. The price list should only be used after the technical discussion, when it is perfectly clear what the customer wants and when the salesman feels, that providing the prices can lead to the conclusion of the order. Giving your prices on the wrong moment might enable the customer to use them with your competitors and get a better deal from them.
A price list should be prepared in a logic manner for easy reading by the user. Make clear separation between the different products groups, state the standard execution and the optionals that can be added. Each item must have its own reference number that is used in all departments of your company who are involved in the preparation of the order.
Discount schemes for larger quantities should be given on a separate page to avoid that they are spotted by the customer at the wrong moment. They can be used when the salesman is close to the conclusion of the order, providing this extra incentive to increase the order volume.
Well-prepared documents are always a boost to the image of your company, they represent additional cost, but a good return on investment is assured.
Prices for professional equipment are generally determined on a costs-plus basis in which plus represents the profit. The prices which can be asked depend of course also on the prices of competing products. But a profit of about 15% is necessary to make a project generally financially viable. The cost of a product has various elements: development costs, marketing costs, manufacturing costs, component costs and sales costs.
Development costs and marketing costs have to be made before the product produces revenues. These costs are largely independent on the quantity to be produced and sold. It is good practice to write-off these costs completely per product produced in the first five years. This leaves some extra margin when the product has to compete with newcomers on the market.
Manufacturing costs per product are dependent on the total number of products which will be produced as tooling costs and production start-up costs have to be amortised. Also here it makes sense to consider in the costs per product only the quantity planned for the first five year of production. It makes sense to make a proper estimation of costs of materials and components bought from outside, of labour time and costs and add overhead costs which are not covered at another place, as e.g. administration.
Many products require the purchase of electronic components from foreign companies. Prices of components, which have to be imported, are quite dependent on quantities bought per year. A proper contract with a supplier may reduce prices considerably. When components are imported from other countries, suppliers will often require payment at delivery or even pre-payment. This type of payment without risk for the supplier will normally allow discounts of 5%. The time from delivery of components to the moment of payment for the final product may be quite long, for some products even 12 months. The capital required for these foreign components can be a substantial part of the capital required for the successful execution of the project.
Sales costs are for a part dependent on the quantity sold. This is the result of the commissions paid to the salesmen. The fixed parts of the salaries and the travel and lodging costs are less dependent on the quantities sold. However, it is common experience that quantities depend heavily on the effort put into sales actions. For professional products the sales costs per product are normally estimated at 20% of the price per product quoted to the customer.