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QUALIFYING CUSTOMERS AND/OR PRODUCTS:  *** AN EXTREMELY IMPORTANT PAGE ***

Qualifying customers and/or their products are critical for good tradeNOT ALL CUSTOMERS ARE THE SAME AND NOT ALL PRODUCTS ARE CREATED EQUAL, so when you qualify a company or their product line for new business, your focus should be on the following:
  • What item(s) the customer buys.  Learn and list all you can.
  • Know EXACTLY what the customer buys, and that means everything (only items related to our industry).
  • What is the exact size (length x width x depth), weight, gauge or color of that item.
  • What quantity of that item is ordered per purchase.
  • How often that item is purchased.
  • How the item is packaged.
  • How is that item purchased (is it shipped in or picked up locally)
  • Is what they buy a DELIVERED price, not a price at the sellers destination (i.e., FOB Maine) before shipping costs.  What is the final cost with product in hand?  If your customer is in Florida, and they buy a product out of Arizona for $3.00, than you know unless they are buying $3,500.00 at a time, and possibly getting pre-paid freight, you have to assume that your buyer is paying for shipping or freight.  Shipping fees are based on the total weight of the shipment, the size of the box or pallet, and how far the ship to address is from the shipping address.  This $3.00 item could be $4.50 by the time the buyer takes possession of their purchase.
  • When possible, find out what the buyer is paying for anything you offer them.  You might have to push a little, but you can get the info with some creative approaches.
  • Ask buyers for target prices?  Ask..., where do I need to be on this item to earn your business?  Often, they may give you a number higher than what you planned on offering, so again, never volunteer pricing without completing the qualification process.
  • NEVER GIVE OUT A PRICE UNTIL YOU HAVE FULLY QUALIFIED A CUSTOMER.
  • Ask for old invoices (inside 60-90 days) and just say you want to show your boss to negotiate pricing.  Remind them that you're taking their information to your boss in an effort to FIGHT for them.  Remind them that you're trying to reduce their overhead by 10 to 20% overall.
  • NEVER TELL A CUSTOMER YOU WORK ON COMMISSIONS.  This will alarm them to think you are trying to work them over for as much profit as possible.  Tell them you are on salary, and that your only interest is to earn their business, and to save them where possible in their overall costs for product(s).
ADDING NEW INVENTORY:  I have no problem bringing in items that are not currently part of our inventory as long as the item has "some" relationship to what we do, and as long as you have a commitment from your buyer to buy what we stock for them.  Increasing our inventory is always a good thing and I would even consider offering a BONUS for any new item that YOU sell and have added to our inventory.  Adding additional inventory to our already growing list mean an even greater inventory, it shows growth, and it gives us more options and additional inventory for newer and existing clients.  Depending on what is added and the quantity that we'll need to bring in to satisfy your customer, a signed stocking agreement may be required to protect our investment.  A stocking agreement is nothing more than a signed form between the customer and MWI that says if we bring in items for that customer, that they will will buy whatever inventory we have in stock for them, should they find another resource later, and we are left with some of their inventory.  

APPLES .vs APPLES:  You need to compare what they buy to the items we sell.  Not all boxes are made the same and not all tooling is made the same.  You have to consider the quality of the item(s), how it's packaged, the material used, colors, thicknesses, lengths, weights, and other things like that to effectively compare products.  Once you move a few items, you'll know the ends and outs in no time.
 
Here's an Example:  Let's say you sell a tape dispenser for $8.00 and your customer claims, or (can prove) to be paying $6.00 for the dispenser they buy.  You have to figure out why they are paying $6.00, and why you're charging $8.00.  There has to be a pretty good reason for our price to be $2.00 higher.  Are the two dispensers really the same?  Is the customer lying about their price?  Does the customer have no clue on what they buy and are guessing at the price?  Maybe their dispenser doesn't have a tape tension feature or a retractable blade or a rubber grip, or maybe their item is made of plastic and ours is made of a heavy metal material.  Their dispenser might be as generic as possible, where our dispenser may be of a top quality grade.  But when you compare what they have with what you are selling, and your dispenser has the tape tension feature, the retractable blade and/or the rubber grip, then yes, you will get more money for your item.  This is why it's SOOOOO important to compare EXACT to EXACT.
 
So... when you go out to the customer and they say, "how much is your 2" tape dispenser" and you reply, "$8.00".  The first thing they will think is that you are $2.00 higher because they only pay $6.00.  They have no idea what you are are selling or the quality of your item.  They only assume that our dispenser is just like theirs, but, for more money.  This is why you have to be careful when your customer tells you they pay $6.00 and you charge $8.00 for yours.  This is a critical part of qualifying your customers.  And... BEFORE YOU GO OUT AND SELL AN ITEM, MAKE SURE YOU UNDERSTAND THAT ITEM INSIDE AND OUT.  You can't properly sell something that you don't fully know or understand.

MATCHING PRICES:
Don't even try to match a customers price until you can show a fair comparison of the product.  If you tell your customer that your dispenser is $8.00 and they pay $6.00, and you haven't done the comparison, this could lead to trouble, because in their mind, you are selling the same thing, but at a higher price, so be careful of this.  SHOW THEM WHY YOUR DISPENSER IS $8.00 AND WHY THEY ARE PAYING $6.00 FOR THEIR ITEM.  If both items are truly alike, then yes, we will have a concern, and may have to come down on price or just not offer that item.  This brings us to my next comment.
 
NOT ALL BUSINESS IS GOOD BUSINESS, which is why you need to qualify BUYERS "first" before giving out pricing.  If you have to sell on low margins to get the business, but in reality, the volume isn't there, then don't push too hard for that business or on that particular product.  Unless the buyer is giving you $2,000.00+ per order, you can't possibly manage that company, their products and their needs on 20 to 25% profit margins.  You can make an effort to get this type of account, but weigh everything out before you kill yourself trying so hard to land that account.  If the margins just aren't there, let them continue buying from their current source.  When their supplier is out of business because they tried to manage this account with such low number, that buyer will eventually come to Movers Warehouse.
 
REMEMBER... qualify, qualify, qualify!!!  Do your homework early for maximum profits and KNOW YOUR PRODUCT LINE before you try to sell it.

Updated: 11/19/2011

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