You see…size is important!

By Martin Stanton

Society may try to persuade us otherwise, but size is important…especially in selling! That has become apparent to us from the findings of recent customer surveys carried out on behalf of clients wanting to understand why they had failed to win particular orders. Increasingly we are being told: “They simply weren’t big enough for us to place this size of order with them”.

With so many companies struggling to survive the recession, it seems that many purchasers are now using a rule of thumb which compares the order value to be placed with the annual turnover of the proposed supplier.

For example, if the annual value of a company’s order exceeds, say, 25% of the supplier’s annual turnover, it may decide the risks are too high. In hard cash terms this means that a business turning over £4m a year would be unlikely to be given an order worth £1m a year because of the potential for a ‘catastrophic failure’ of supply caused by critical mass having been reached.

The figure of 25% I’ve quoted is merely an average of feedback sourced from many companies. And a wide range of other factors will come into the equation when a company is making its buying decision. But continuity of supply and the ability to deliver on time, to an agreed quality and price, will be right up there in its considerations.

So my message to all sales people is this. Make sure that you use the normal qualification criteria for a potential piece of business, but establish whether the prospect has a rule comparing order value to the size of your business before you commit major resource to the bid. If the prospect has such a rule, you may not qualify for the business anyway, in which case you will have wasted a lot of time working on the proposal when you could have been making several smaller sales to other companies.

How to gain that information? Well, that’s another story which is covered in our Relationship Building workshop! Call Martin on 07980 012382 or email him on martin.stanton@emcltd.co.uk and he’ll be happy to tell you more.