B2B manufacturers prioritize Operations as a competitive differentiator. Piles of free resources and investment are thrown into new capabilities they are calling industry 4.0. 

Factories are upgraded with real-time inline quality control. Cloud-based ERP systems are deployed, which provide visibility into value chain partners. These are just two capabilities to provide differentiation on delivery.

Meanwhile, the Sales Rep is using Excel spreadsheets to track pricing updates. New customers require sheafs of information to be typed in manually, sometimes in multiple locations. Frustrated, delayed by antiquated systems, confused by lack of transparency, Sales is delivering inconsistent experiences to prospects and customers, the unprofessional reputation of the company spreading like ebola through the market without prospects even touching the product. Proposals are cold long before they reach the prospect.

Manufacturers need to recognize: Without a Sales unit to match the customer responsiveness of Operations, the company will never have a chance to serve the customer. The final judgment will be: Customer service at this vendor is bad; we do not want to work with them.

Matching Product to Perception: What Inflated Time-to-Quote Means for the Corporate Strategy

Manufacturers are changing to meet the needs of industry 4.0, and the rubber is meeting the road, as companies save money and develop new digital capabilities for their product lines. Manufacturers who are making real investments in digital technologies in 2017 are projecting revenue growth of 2.9%. Efficiency is an even greater storyline, however, with projected efficiency gains of 4.1% leading to bottom-line savings of 3.6%, for every year from now until 2020 (PwC, “Industry 4.0”).

This is good news for top performers with a history of proactive digitalization — bad news for many companies who have faced substantial challenges in adopting digital processes. The latter manufacturers, those in a reactive position, who are adapting to the market after the fact, express industry 4.0 as a changing sales environment, forcing firms to change their Operations or fall behind.  

This viewpoint might be glass half-empty analysis, but it indicates the impact of digitalization, not just industry 4.0. Yes, product lifecycles are shortening (#2 pressure). Quick-movers are bringing on new technologies and processes, then there is a trickle down effect as the market responds. But customers are also speeding up, devouring information about the market before speaking to any sales rep, requesting more quotes, demanding competitive pricing (#1 pressure). The need to differentiate on quality (#3 pressure) is just another reaction to competitive pricing.

Time-to-quote supports adaptation to these top 3 pressures on manufacturing. How?

Time-to-quote is the average turnaround time for a request for proposal, benchmarking customer responsiveness at a critical stage in the customer journey: the sale.

The sale is often overlooked as part of the customer journey because many customer experience experts do not include lost opportunities in their models. They myopically focus on customer retention, or keeping customers happy once they are customers.

This is a big mistake for the organization as a whole and for individuals located at strategic points within the organization.

1. Sales Reps see lengthy quote times eroding prospect interest to the point of lost sales opportunities.
2. Sales Leaders see time-to-quote as an inefficiency, the reduction of which can lead to more time spent on selling.
3. Time-to-quote directly impacts profitability, as the first quote a customer receives will shape pricing expectations and value perception.
4. Sales Leaders also see time-to-quote as a key influencer of quote-to-close. Faster quote response times are correlated to higher quote-to-close ratios, the theory being that prospects use time-to-quote to inform the purchase decision.
5. Lengthy time-to-quote often indicates deeper issues in the coordination between Operations and Sales. A COO might not care about time-to-quote, but inefficient collaboration during the quoting process will also influence Operational KPIs, such as rework.
6. Marketing leaders need to revisit time-to-quote because it directly impacts reputation. The first piece of work given to the seller, time-to-quote is also the only part of the organization a prospect will see if it chooses another vendor. This strong impression can lead to a bad reputation, regardless of the competitiveness of a company’s products.

Across the C-Suite, time-to-quote can have significant impact without an organization’s realization of the core problem. Manufacturers are so busy looking at product releases, pricing and quality, they are overlooking how these developments are communicated to the market. They are concerned with the nail and forgetting the hammer.

Sales must be able to keep pace with Operational improvements. Just because a new product is launched does not mean it will be sold. Sales must have the free resources to learn new products and develop resources to communicate the value proposition.

Sales must be able to keep pace with the market. When a primary competitor changes the story they tell prospects, Sales must have a way to formulate a consistent response and communicate that response - possibly by changing the proposal template. When the market price reduces, Sales and Operations need a way to accept the price reduction without triggering approvals up the chain of command for every sale. These are just two inefficiencies spawned in the sales organization reacting to organizations with superior quote-to-order processes.

But above all of these concerns is the perception of quality, which is more important to prospects than quality. Product quality does not matter until a prospect makes a purchase. With customer service increasing in importance, it is no wonder that buyers are prioritizing time-to-quote as a basis for perception of quality. It is a sign of customer responsiveness, of digital proficiency, of modernity, and of an efficient business.

Manufacturers with sales challenges should consider the quoting process as a potential bottleneck, and as an opportunity for differentiation, and revenue growth.

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Aberdeen Group. “What Does Digitalization in Manufacturing Mean Now?” Jan, 2017. Retrieved on Jan. 18, 2017. http://v1.aberdeen.com/launch/report/research_report/15203-RR-digitalization-manufacturing.asp

PwC. “Industry 4.0” 2016. Retrieved on Jan. 18, 2017. http://www.pwc.com/gx/en/industries/industry-4.0.html