Succeeding in technical sales
Working as a sales engineer almost always means working in B2B sales. You sell your company’s products to other companies.
In contrast, selling consumer goods and insurance, for example, is usually B2C, from a company to a private end user.
The type of products you sell will largely determine your day-to-day sales activities. The following areas can be distinguished:
- Selling products
- Selling services
- Selling know-how
The specific wants and needs of your customers are a high priority. To close a sale, you often need to offer solutions in all three areas.
Especially when the products you sell are made exclusively for your customer, their requirements are the benchmark against which you must measure yourself. This is often the case in the machinery industry, for example.
Selling technically complex products is challenging. You must be able to explain the benefits of your product in a way that your potential customers can see them. Only then will they buy! This often makes the quoting process difficult; the entire sales process can take months.
On the other hand, selling such complex products will always require the expertise of sales engineers and cannot be replaced by a simple order in an online store for a long time. Their career prospects are excellent for many years to come.
Technical services are intangible products that are usually closely related to your specialized products. Examples are product training, maintenance, or service contracts. Individual customer requirements often play an essential role.
Contract manufacturing for third parties can also be considered a technical service. The same applies to software development for existing equipment or IT systems.
The sale of technical know-how is generally limited to the services of engineering firms that make the know-how of their employees available to solve problems for third parties on behalf of the customer. This type of know-how transfer often takes place directly with the customer.
Characteristics of technical products
The main difference between B2B and B2C sales of technical products is that the products are manufactured or adapted to the customer’s requirements in the former. The customer has a high degree of control over the product.
Of course, B2C sales also involve complex products. Very few of us will know and use all the features of your “smart” TV or understand all the terms and conditions of your existing insurance policies. The big difference is that as an end consumer, you usually only have the choice between TV A or B or insurance X or Y. No salesperson in a store or insurance broker will create a customized product for you. You have little control over the product.
So, the salesperson’s job is different. As a sales engineer, you must provide the customer with the best possible solution. To do this, you need to know not only the characteristics of your product, but also the extent to which it can be customized to meet the customer’s needs. The B2C salesperson “only” has to help the customer choose the most appropriate product.
Sales vs. Marketing
Ideally, sales and marketing work together to ensure the entire company’s success. The division of labor varies significantly from company to company.
At one extreme, sales see marketing as a supplier of brochures and promotional gifts; at the other extreme, marketing sees sales as an extension of the marketing strategy at the customer’s site.
A problem in working together often arises because of the different objectives. Salespeople usually have to meet a monthly sales target and are therefore focused on short-term success. Ideally, they need solutions that are tailored to the customer.
In marketing, campaigns are designed for product launches, or strategies are developed for specific customer groups. These take a longer-term approach. Marketing campaigns are often planned in advance for the entire fiscal year. Marketing staff are then evaluated based on their success.
Inevitably, the two approaches can lead to friction. You often hear mutual recriminations such as “The people in marketing have no idea what the customer needs out here” or “Our salespeople are simply incapable of conquering a new market segment in the long term.
Therefore, as much as possible, it should be discussed and coordinated during the planning phase. Markets are becoming more and more transparent thanks to the Internet. Competitors are always just a click away. This makes it difficult for sales to find the proper differentiation. Marketing methods can then provide the orientation that sales needs. Competitive benchmarking, market analysis, and targeted product placement help sales to effectively target the right customers for the right products and to sell based on value, not price.
Sales Channels
In B2B sales, the sales channel is usually direct sales. This means that the goods only change hands once. There are no middlemen. Since the products usually require explanation, are customer-specific, and are often not easy to transport, this is the most sensible sales channel.
Salespeople are either employed by the company or work as independent sales representatives on a commission basis. The first option is usually chosen for higher-value products. This is the only way for the manufacturer to influence the quality of sales directly. It also provides better feedback on customer needs for marketing and product development.
However, direct sales with a direct sales force is the most expensive channel for a manufacturer.
Indirect sales involve at least one intermediary. The end customer buys from this intermediary. This form of distribution is often used for technical products when it is not profitable to set up own distribution in smaller countries. Smaller companies can expand abroad at a low cost by using a network of distributors. The local distributor receives low purchase prices to resell the products with a markup on his margin.
The manufacturer saves personnel and marketing costs. However, it also has no contact with local customers and no influence on the distribution quality.
Distribution Channels
In addition to the sales channels, the sales channels must match the product and the end customer. Only then will sales be successful. Channels include wholesale and retail, direct sales, or the online store. A distinction is made between single-channel and multi-channel sales.
In the past, the single-channel approach predominated in the technical sector. Only one sales channel was used—mostly direct sales. Today, most companies have an additional online sales channel that sells at least accessories or standard products from the portfolio.
The Internet not only serves as a channel but also supports sales by providing case studies, application videos, product brochures, and datasheets. Companies often offer more advanced solutions such as live chat with service or inside sales representatives.
Today, these methods are often referred to as inbound sales or inbound marketing. Companies are trying to adapt to changing buying patterns.
Thanks to digitalization, your prospects are much better informed about your products and services than they used to be. Before they make a purchase decision or even contact a salesperson, they want the most accurate information possible. If a company provides this information online in excellent quality and is easy to find, it has a leg up on the competition.
Long-serving sales representatives in the field are sometimes skeptical about this because they see their customer relationships, often built over many years, as a unique selling point that is at risk.
It is essential to coordinate the different channels. If a new customer segment is addressed online, the salesperson must not only find out about it by approaching potential customers. A modern CRM system that gives everyone involved a complete view of the customer is indispensable in a multi-channel approach.
Today, classic single-channel sales are often found in online-only stores or traditional brick-and-mortar stores.
Product Delivery
As a sales engineer, you are not directly responsible for product delivery and logistics. However, the delivery method is usually part of the quote and often comes up in sales negotiations. You should therefore be aware of the scope of delivery in your company.
It can make a big difference in transportation costs whether you agree “EX Works” or “DDP” with your customers. This is especially true when shipping more oversized products. You must take this into account when calculating your quote.
Incoterms® (International Commercial Terms) have been the national and international shipping standard for many years. They govern the rights and obligations of buyers and sellers regarding the delivery of goods: when the goods are transferred from the seller to the buyer, who bears which transportation costs, who is liable for loss and damage to the goods and/or insurance costs, and when.
Incoterms® clauses do not regulate, for example, payment terms, the transfer of ownership of goods, or the settlement of disputes. The new version will be effective as of January 1, 2020, and will replace the Incoterms® 2010 version (source: www.iccgermany.de).
An overview of the Incoterms clauses:
- EXW: Ex Works
- FCA: Free Carrier
- FAS: Free Alongside Ship
- FOB: Free On Board
- CFR: Cost and Freight
- CIF: Cost, Insurance and Freight
- CPT: Carriage Paid To
- CIP: Carriage, Insurance Paid To
- DAP: Delivered At Place
- DPU: Delivered At Place Unloaded
- DDP: Delivered Duty Paid
In this list, the seller’s obligations increase from top to bottom. The two extremes in detail:
The EXW clause is purely a collection clause. It only defines the minimum obligation of the seller to make the products available for collection at the named place. The seller does not incur any transportation costs. The seller is not required to load the goods onto a collecting vehicle, nor is the seller required to clear the goods for export, if necessary.
DDP, on the other hand, involves the seller’s maximum obligation. He delivers by making the goods available to the buyer on the arriving means of transport, cleared for import and ready for unloading at the named place of destination. The seller bears all costs and risks until the goods arrive at the designated place of destination.
In international trade, the seller must pay all import and export duties and complete all customs formalities.
Your shipping department or local chamber of commerce can provide detailed information.
Warehousing
Logistics includes the design of the distribution warehouse. The location, size, and system of the warehouse affect your delivery times. Short delivery times are a sales advantage and can give you a competitive edge.
Quick availability of spare parts is a prerequisite for fast service during a breakdown. Logistics is, therefore, a key contributor to customer satisfaction.
Consignment Warehouse
If you have regular deliveries to essential customers and your procurement or production times are longer than your customer’s expected delivery times, it may make sense to introduce a consignment warehouse. This provides a buffer for your customer’s orders. Depending on the product range and the importance of the customer, this warehouse can be a dedicated warehouse for the customer on your premises, or you can set up your own warehouse close by or even on your customer’s premises.
If the warehouse is directly accessible to your customer, you must contractually address when the title passes from you to your customer. Options include transfer after a certain period of time, immediately upon removal from the warehouse, or only upon full payment (retention of title).
If you set up the consignment warehouse at your company and deliver on-demand, regular delivery terms usually apply. Typically, there are also replenishment periods during which you agree to replenish the goods that have been removed.
Pros and Cons of a Consignment Warehouse
As a supplier, you benefit from strong customer loyalty when you set up a consignment warehouse. Your customer does not have to set up his own warehouse for the required parts and benefits from fast availability. As the supplier, you bear the inventory risk and tie up your capital. Therefore, setting up a consignment stock should always be included in the customer’s total cost calculation.
Sales Methods
There are many selling methods and strategies. Here are just a few:
- Hard Selling
- Total Quality Selling
- Story Selling
- Sales Excellence Strategy
- Total Customer Satisfaction
A significant number of sales trainers make their living by constantly changing the currently popular method. This is not a negative assessment; customer needs change over time. Only those who meet them will be able to sell successfully.
As mentioned above, today’s customers are educated thanks to the Internet. Selling, according to the old hard-selling motto “hit it, hit it, hit it”, which is only focused on your advantage, will no longer work in technical sales.
This sales strategy aimed to convince the potential customer to make a one-time purchase. Manipulative and suggestive questions were often used. Pressure was built up by claiming limited availability or short-term special prices. The customer’s needs were not considered. Hard selling was particularly prevalent in the USA in the 1950s and 1960s and has contributed to the sometimes negative image of the salesperson to this day.
In those days, demand was often greater than supply. At least, that’s what salespeople could claim because information was hard to come by. In fact, because of the excess demand, companies were often able to raise prices and still sell well. Such a situation is called a seller’s market. Today, we only see sellers’ markets in areas with monopolies.
For the most part, we have a buyer’s market. That is, supply exceeds demand. There are multiple suppliers in almost every product area. Thanks to the Internet, the performance of products and suppliers is practically transparent. Competitors usually adopt innovations in a similar form within a short period. Shorter product intervals also contribute to this. When a new product line is introduced to the market, it usually attracts buyers’ interest, while older products are no longer given much attention. The result is often a falling price.
These market conditions make your job as a sales engineer even more important. You are the one who has to work out the concrete benefits for the potential customer. You need to build a relationship with your counterpart. After all, people still buy from people, and the “good feeling” of the buyer should not be underestimated.