Industry 4.0 Proposal Management Best Practices | Approval to bid

Delayed approvals can damage Sales metrics, reputation, and employee morale. We explain why pricing arguments are becoming increasingly common, as well as how to solve them.

Once the organization knows what the customer wants, once the organization knows what manufacturing the product will cost, once there is a plan for procurement and outsourcing, once the customer’s budget has been considered, once all of these things and more have been checked off, only then can the active quote be sent to the proper authorities for approval.

It is at this point that Sales sends out the result of its hard, sweat inducing labor to the rest of the company, waiting on the approval of department heads, from sales manager, to CFO and COO. These individuals are often busy, and approvals can be delayed by hours or even longer before the Rep is given the go-ahead.

The delay can seem incidental, but a lengthy time-to-quote can signal poor customer responsiveness to the buyer, not even considering the frustration of the Sales Rep or team in charge of the proposal, waiting to do their job.

If B2B manufacturers want to keep up with the startling pace of industry 4.0, even this small hiccough in the proposal process needs to be managed appropriately. More importantly, problems in this step can also signify greater challenges within an organization, or even with how an organization is competing on price.

Industry 4.0 Requires Adaptability | Cross-functional Communication

Arriving at an appropriate price is one of the largest challenges a business can face, possibly because the price could never be high enough, possibly because the likelihood of customer approval could never be 100%, probably because value is always measured somewhere in between.

It can be challenging to diagnose pricing problems, particularly in open markets where costing requirements are unique and numerous. That being said, it is typical for competitive markets to apply pressure differently to different departments of an organization, leading to misalignment between the costing strategy and the sales strategy. This can lead to cross-departmental arguments on price, which impact the speed of pricing approvals.

The problem is unique, but it is also predictable.

As an example, the CFO might want a certain amount of profitability and therefore want sales to compete on value. Meanwhile, sales teams could be responding to real-world pricing pressures, wanting to deliver the lowest quote with the greatest chance of success. But the pricing approval is the only tool the CFO can use to ensure a consistent strategy. So, the individual holds onto the approval just long enough to make his/her opinion felt. Exercising this option harms the organization in the short run, but the message has the core business strategy at heart.

The problem is communication, not pricing.

We advise frequent cross-functional sales operations meetings to ensure that the company’s Go-To-Market strategy continues to be differentiating and competitive. These meetings provide a platform for adjustment, for example, of pricing approvals to reflect price competition. Once this meeting is in place to ensure alignment between costing and sales strategies, each department has a say upfront, before the approval request is sent. Communication aligns the business strategy to its execution, and the execution to the business strategy.

The board can also take a closer look at ways to improve the core value proposition, possibly:

  1. Developing a sales playbook with low-cost, high-value, suggested features or by eliminating costly, unvalued features
  2. Decide what the organization is great at producing, letting sales persuade the customer of the value of your core differentiators
  3. Decide how sales should influence the buyer’s requirements, and the likelihood of success

These strategic goals can then be delivered to sales teams on an ongoing basis, either through training, CRM, CPQ, or other software.

Each of these bullets aligns core business with sales. It is also worth mentioning that the more strategically aligned sales becomes, the more important time-to-quote becomes. This is true because landing in that first quoting position provides the opportunity to define value for a given product. As manufacturers become increasingly adept at the quoting function, they become increasingly competitive, eventually able to influence the market rather than reacting to it.

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