Sales Q&A – How to handle backorders

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Q. I recently gained an order from a new customer for 10 items. We back ordered four of the ten. My customer is quite upset with me and my company’s purchasing agents. Our relationship is strained because of someone in my company’s poor performance. What would you do?

A. Ah. The proverbial “backorder” problem. What would we talk about if we couldn’t complain about backorders?

First, let’s recognize that the problem is as old as the job of the sales person, and we will have to deal with this problem until the day we retire. The problem is a result of conflicting pressures. On one hand, your company only has so much money and space, and just can’t buy and hold or produce everything in the hopes that someone somewhere will eventually buy it. As a sales person, however, you want everything available instantly. So someone is always going to be disappointed.

Throw in the fact the customer probably doesn’t want to pay anything but the lowest possible price for the product, and you can see that there is an inherent tension here. If the customer would be willing to pay twice as much for the product, your company could afford to build huge inventories. But, since that is unlikely to happen, your company needs to control its investment inventory so that the company has a chance of making money. In other words, you are always going to have some backorders!

OK, so what do you do about them? The first thing is to prevent them with clear communication and appropriate expectations. Don’t assume that because you backordered a customer that means that your colleagues are uncaring or incompetent. That rarely is the case.

For example, if your company has been routinely selling about 100 of a certain item each month, and you bring in a new customer with an order for 20, it’s unreasonable for you to expect your new sale not to cause someone some problem. The sudden increase in demand from 100 to 120, without any prior notice, will probably mean that someone is going to get backordered.

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The problem wasn’t the poor job your purchasing colleagues did; it was the sudden increase in demand brought on by your new order. Further, if you promised the customer immediate delivery on an item he is ordering for the first time, you probably created unreasonable expectations in your customer’s mind, and promised something that you could not really deliver.

It would have been more reasonable to have promised the customer a two or three week delivery on the first order, and to have informed your purchasing person of the coming increase in demand.

Many backorder problems can be prevented by using these two practices: 1) good communication with your purchasing people, and 2) reasonable expectations to the customer.

But what do you do if you are consistently plagued with a quantity of backorders that seem unwarranted? Go first to your purchasing people with respectful inquiries and a detailed description of the problem. No vague generalities or “sales person’s talk” here. Be detailed and specific with the problems and the consequences of those problems.

If you don’t get satisfaction, then bring the problem, in the same respectful and detailed fashion, to your manager.

Finally, if you still don’t see positive improvements, and if the backorder problems continue to jeopardize your ability to service your customers, then at some point you need to consider whether your continued employment with this company is the wisest choice for you.

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About the Author:

Dave Kahle is one of the world’s leading sales authorities. He’s written twelve books, presented in 47 states and ten countries, and has helped enrich tens of thousands of sales people and transform hundreds of sales organizations. Sign up for his free weekly Ezine. Check out our Sales Resource Center for 455 sales training programs for every sales person at every level.

You may contact Dave at 800-331-1287, or dave@davekahle.com.

 Image courtesy of arztsamui/freedigitalphotos.net

CRM – Overly Simplistic or Too Complex for Most Businesses

Solution providers in the CRM software space seem to fall into two categories.  Basic low cost programs are easy to use but provide limited functionality; and feature rich solutions that are far too complex for most businesses.  The two extremes have caused a high degree of frustration among companies that have implemented CRM software programs.  Some are now looking to replace the basic solution they selected for something a bit more robust, while others are trying to reduce the high cost and complexity of the one they selected.

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While dozens of companies continue to do battle in the space, Commence Corporation is targeting what it believes is an under-served middle market with a feature-rich CRM solution that is more affordable and easier to use than products from Microsoft and Salesforce.com.

“Small to mid-market companies often have unique business requirements,” says Larry Caretsky, CEO at Commence Corporation “that are not being met by basic CRM offerings.  The industry giants can address these needs, but people have found these solutions to be far too expensive and complex for their business.  Commence is aggressively working to fill this void.”

What differentiates Commence CRM from competitive offerings?  “That is easy,” says Caretsky. “Commence CRM provides features that are simply not available in basic CRM packages, such as: customization of views and forms, multilevel data searches, security permissions, pre-built analytical reporting, customizable lead qualification and sales process management, shared calendaring, seamless e-mail integration and more.  In addition, Commence CRM offers marketing campaign management, a customer service or help desk application and a project management module.  This level of functionality is only available from enterprise level solutions at two to three times the cost.  Commence CRM is a robust affordable solution for the middle market coupled with an experienced support staff that ensures customers realize the maximum value from our solution.”

When asked, “What is the biggest challenge facing Commence Corporation in the CRM sector?” Caretsky indicated, “Simply rising above the noise of the industry giants.  It is hard to out-market Microsoft and Salesforce.com.  Both have good products, but they cannot be all things to all people.  No company can service the small, mid-sized and enterprise market with the same solution.  Perhaps this is why there is such a high degree of dissatisfaction in the industry.  Commence is 100 percent focused on businesses that require more than a basic CRM solution, but not the cost and complexity of the industry giants.  We are delivering value and making a name for ourselves,” says Caretsky.

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Read what customers are saying on the Commence CRM website or on review sites like getapp.com and serchen.com.

Image “Make The Right Choice” by sheelamohan/freedigitalphotos.net

Image “Thumbs Up Represents All Right And Agreement” by Stuart Miles/freedigitalphotos.net

What is best for Your Business – Horizontal or Vertical CRM?

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CEO, Commence Corporation

Most businesses today, large or small, are trying to address the same business challenges: reduce cost, improve employee productivity, and increase profits.  CRM software has been hyped as the answer to this challenge, and it seems companies have bought into the concept based on the continued growth of this industry.  CRM comes in all shapes and sizes from free offerings to expensive solutions specifically designed to fit a specific industry segment.  How can you determine which CRM solution is best suited for your business?  Perhaps it is best to start with what you are trying to achieve.  While most companies focus their energy on a feature and function comparison it is just as important to determine which type of CRM solution may best serve your business. There are two types of CRM software:

  • Horizontal CRM products
  • Vertical based CRM solutions

Horizontal CRM products

Designed to address the core requirements of companies across multiple industries

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The CRM manufacturers that offer these products are looking to sell their solution to as many companies as possible regardless of industry.  What you will find here is a myriad of low cost programs that offer basic functionality, and expensive programs with expanded features that you can customize to your requirements.

It is important to note that because horizontal solutions are designed for the masses, customization can be costly if you need to address internal business processes (often referred to as workflow).  While the lower cost solutions offer minimal customization, some very good middle-market and enterprise level products support this.

I refer to horizontal CRM products as “an inch deep and a mile wide” which means the good ones have a ton of features, but very few have been designed to address industry specific requirements.  These products are good at automating generic requirements for contact management, sales, marketing, and customer service.

Vertical based CRM solutions

Designed to address industry-specific requirements

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You will find vertical solutions in finance, construction, health care, manufacturing, and transportation industries for example.  These products are often quite expensive, but typically include built-in workflow processes, rules, and best practices for your specific industry.  Everything from the screen design to the product’s nomenclature is industry specific.

These products are “a mile deep, but only an inch wide” which means they will have functionality specific to your business, but may not be as comprehensive in other areas. One of the advantages of selecting a vertical based solution is that you may not require extensive customization; however, every business is different so some tailoring may be required.

If your business objective is to manage accounts and contacts more efficiently, improve your sales effectiveness, and provide better customer service then a quality horizontal CRM solution will serve you well.

If however, you are seeking a solution where you need to automate specific internal business processes – a vertical industry-based solution may be a better choice.

Images by Simon Howden/freedigitalphotos.net