Measuring estimating success, as it relates to sales, should really include a program to identify more factors than just the cost or price of parts or products offered by manufacturers. Of course, the cost or price is usually a significant indicator in why the order may be awarded in the first place.
Identifying the combined success, of a cost estimating program and sales departments efforts, is another level usually considered, but do these two areas alone show enough for management to review for true company success or should more factors be considered for an effective program?
Measuring and tracking success requires a program that includes metrics that work for the entire company. Below are some goal oriented items to consider:
- Identify department and organizational goals…
- Measure them with a consistent stick…
- Mark the stick with appropriate calibration…
- Review and analyze all results identifying change considerations…
- Share results for teams to be aware of the realized success, confusion and/or failure…
People [customers] weigh a variety of things when they are making purchasing decisions. For example, just winning the first order, is only a small portion of success when one company goal is to grow their “repeat” customer base. The first ”awarded” job could be from a customer who wants to try out the company’s adherence to their delivery schedule, to review the quality from production, or experience the communication flow between companies. While the award could be from estimating a competitive price, it could also be because of a time crunch (lack of time for the customer to request a competitor’s quote.) The customer may just be going ahead with the order even though there were suspect considerations or something not actually in the company’s favor.
“Don’t hang your hat too high up on the coat rack…too quickly!”
Our estimating trainers occasionally hear interesting stories. One conversation included how an order was won from a customer who never returned. After confirming that previous customer does continue to buy parts and products, they now ask themselves, “Why aren’t they [the buying customer] returning and submitting more quotes to us? What happened?”
Without a program to identify trends, record communications, and track results, just winning the first order should not be the full measure for determining the long-term success. Most often it’s a contribution from the entire team. In some cases, a sale can be lost from a telephone conversation or even a delayed response to a voice message. Implementing a customer service program, as well can help to improve profits and increase repeat [happy] customers, along with providing more [low cost] referrals.
When measuring the success of the cost estimating and quoting program…
Do customers get aggravated when they try to get estimating information from your company about how the part is estimated and how it is to be manufactured or does your estimating program provide a quick, easily updatable and informative reporting method? More customers want more estimating information, and as a result, they could be seeking out other manufacturers who deliver to their needs.
How do you calibrate the results of your estimating program?
Whether you estimate machining, fabrication or assembled parts and products manufacturers need to set in place goals, implement a tracking system and identify trends.
Cost estimating program topics, comments, questions, or suggestions for this communication or future articles about estimating are always welcome? Please let me know… Jay Snow, Marketing Manager, Jay.firstname.lastname@example.org, 800 644-4318, www.MTISystems.com
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