In the 2 previous articles, we had the opportunity to analyse two concepts of great importance for anyone who wants to evaluate a software tool and obtain tangible and lasting benefits…
The first concept we analysed was completeness, that is, the possibility of combining and uniting all the daily functions of a company in a single tool, able to synchronize the different departments and make them sound like a perfect orchestra.
The second concept was linked to scalability, in other words the possibility of a software tool to evolve with the growth of the company, with the changes in existing systems and its ability to adapt to changes in the market.
In this article, we’ll deal with a fundamental problem: the need to provide estimates.
In fact, the difficulty of making estimates is a very pleasant problem compared to the problem of not having anyone asking for estimates, nevertheless, it is a complex and delicate activity which requires an accurate upstream evaluation in order to have cutting-edge tools at our disposal, otherwise making an estimate can be a big annoyance which we will maybe tend to procrastinate.
So let’s try to see how software could help us, as well as the essential features that software for estimating should make available to us.
For sure, the first fundamental point for making a quote in a smart way is having the possibility of developing an estimate quickly.
Why should we deliver an estimate within a short period of time instead of taking 12-15 days? The reason is that we are often not the only people a customer asks to for an estimate.
At that point, if the customer has already received two or three estimates, he may not be willing to wait too long.
Therefore, there is a risk that any delay may allow him to conclude the contract with our competitors. Sometimes, for example, it can happen that not only the customer has already received estimates from competitors, but he also received them very quickly. In this situation, being late with the estimate is even more harmful because we can five the customer the impression that we don’t consider him important enough, or that we don’t have time for him, meanwhile our competitors have already broken their backs to take care of him.
With regard to the time factor, you should not overlook the possibility of making a quote in time, i.e. the very moment the client is sitting in your office.
From an emotional point of view (which is essential for sales in general, even more important than the sale of valuable wooden objects), the possibility to make an estimate while the customer is sitting in front of you is perfect because there is a way to instantly check his reaction and explain certain choices, adjust some details and try to package the right solution for the customer just when he is most vulnerable.
A second point of great value is undoubtedly the ability to enrich the proposal with technical details. Especially in a country like Italy – where laws do not always help window/furniture manufacturers – the lack of precision can give rise to misunderstandings, some of which are born in good faith but some are the result of precise strategies in bad faith that regularly lead to conflicts, disputes or other.
Being able to formulate a commercial proposal as precise as possible is not only a way to highlight our professionalism, but it is also a smart way to avoid as much as possible any form of litigation that always and only leads to problems in the payment phase, such as missing payment, requests for additional discounts and so on.
A third point that in my opinion is essencial is the ability to create quotes that represent the soul of our company. An estimate is not just a piece of paper with written numbers, otherwise we could do it on cheese paper and everything would work anyway. In my opinion, an estimate is the continuation of all the beautiful and qualifying things that you have told the customer during the presentation of your company and the promotion of your products / services.
If we told the customer that we are the best, we gave him some beautiful brochures and told him that he has to buy from us for “N” reasons, that our competitors can’t offer him what we are offering him, and then we give him an estimate which is graphically identical to the one of our competitors … We’ll I think there’s a problem.
The problem is called perception and for those who believe that it is not important, that it is ok in any case … I suggest that they keep in mind a phrase so dear to marketing experts: “Reality doesn’t exist, only perception exists”.
If something happens in a customer’s mind which changes his perception about you, for example the estimate you gave him was similar to the quote of your competitor, then the perceived difference between you and your competitors in the customer’s mind could be eliminated and thus destroy part of the castle you have built with so much effort.
Is the customer right? Are you wrong? It does not matter, but human mind works in this way; psychology of marketing and sales is nothing more than a game of perceptions.
Let’s focus for a moment on marketing topics: one of the main creeds of marketing is precisely the ability to find the way for which customers perceive you are different from your competitors.
The problem of being different from others is an important one, because if the customer perceives you as identical to one of your competitors, the first question that comes to his mind is… “Why should I spend more to get the same product/service?”.
For this reason, although many “internal” prints (production prints, glass list, etc.) used by your company may be similar or even identical to those used (internally) by competitors, the printout of your offer can’t. The offer print must be personal, it must be unique; it must be different from the one used by any other company in order to show that you are different. No ifs, ands, or buts.
The fourth point linked to making a smart estimate today stems from what I see in so many companies. Too often, in fact, I see companies where, if the specific person who knows how to make estimates is not in the company, then estimates won’t be made at all. That person is the only one who knows the price lists, the only one who knows the discounts applied by suppliers or the discounts applied to the various customers, the only one who knows the types of finish that are provided with a certain wood, the types of glass that can be put on a wood-alu 78 rather than 92, the minimum dimensions of a piece that can be worked in the machine and so on.
There are companies where too much information is strictly kept under lock and key, which is difficult for everyone else to access. This is a prehistoric and not very smart way to run a company because a minimum unforeseen event happening to the information keeper (illness, holidays, etc …) is enough to ensure that all activities are slowed down in the best case, blocked in the worst case, condemning the company to a commercial stop which brings back to the situation described in point one.
Having a software tool in the company also means making information available and shared to those who have to access it without having to depend on the data keeper.
A slightly less expert person should have the possibility to make an estimate without the fear of making mistakes; in fact, the software, duly configured, must facilitate the compilation of the estimate by showing only the permitted possibilities and inhibiting the prohibited combinations.
Of course, the main aim of an estimate is to assign and communicate the price of the products/services contained in it. Therefore a software should – on the basis of some criteria – quickly and automatically assign a value and avoid manual approximative calculations.
How should the price be determined by the software? It depends on the mindset of the entrepreneur.
In many cases, especially in Italy, we can find an artisan mindset which means a desire to simplify – maybe too much – the price defining process.
One concrete problem with Italian craftsmen is not just the lack of a precise system for calculating the price, but the way in which the price lists per square metre are created.
Having visited many Italian carpentry shops, I have verified with some surprise that prices are often based on a copy of what the competitor does, and the competitor … does exactly the same.
In all honesty, this approach in defining prices is all Italian, because it is enough to go beyond national borders to understand that there is only one way to calculate prices, first you calculate the costs.
Many (but still few) Italian carpentry shops are approaching (or have already been using for years) this industrial mentality, but abroad it is a certainty everywhere. After all, a company exists for mathematical reasons… there are revenues, there are costs, there are margins so how can you think of running a company without precise knowledge, both of production costs and of the necessary profit to the company?
Without a profit that enables investment in new technologies, marketing activities, commercial tools, a company is actually fixing its expiry date, just like yogurt.
Knowing the cost of every single offer is essential to make the correct decisions, otherwise:
– I risk losing jobs because I think I have applied the maximum discount, but in reality if I had calculated correctly, I would have realized that I could lower the price a little more, without losing profit.
– I risk taking jobs at a loss, because I think I have margin so I make discounts on discounts, but if I then apply the correct price list, I correctly calculate the time it will take to work, etc … I’ll realize that in practice I am doing work without earning anything. This does not mean that you should never accept an under-cost job, because there could be some boundary conditions that make that job still advantageous, but the important point is that this choice must be a conscious choice based on clear data.
Finally, the last point that I think is worth noting is the emotional aspect. Not all customers understand the technical features that we want to explain to them as well as all the technological data of our products; but all customers, all of them, are moved because they are people and being touched is part of human nature. So when we make a quote, having the possibility to show how that window or that cabinet will be in the customer’s house is certainly useful and advantageous.
An image, a navigable three-dimensional model speak more than a thousand words and allow the customer to understand better and at the same time to abandon thoughts such as “It’s beautiful but I can’t imagine what it will be like with my orange spatulated wall”. Unfortunately, these kinds of thoughts are a brake that can slow down the purchasing process, so if the software helps us unravel them one after the other, it is certainly helpful and will increase our chances of closing the contract and reduce the time it takes between initial contact and order signature.
Making an estimate for windows without software can take 3-4 hours of work, which in terms of money (calculated on hourly costs in Italy) means that each estimate made costs the company about one hundred euros and these are calculations that an entrepreneur should be able to do.
See you next time.