Separate Orders from Sales to Improve Your Business Sales is all about helping thing


05 Aug

Customers shop for and get what they need or want. It places focus on finding leads, converting leads, and closing the deal. Once those three things are done, all you need to do is deliver the product. So if sales minded people are focused on these 3 things, why separate the sales and orders functions within a business?

The fact is many businesses, big and small, combine the sales and orders functions under one organization (usually called sales). Well this can work in some situations; there is an important case to be made for separating getting sales from taking orders.

Management Tips for Creating a WIN-WIN Scenario

A widely recognized key to long term business success is building long term relationships with your customers. The simple fact is that it takes longer and costs more to get a new customer than it does to repeatedly satisfy the needs of an existing customer who already trusts you.

It is very important to give your customers what they want to encourage them to come back to you again. It is equally important to give your business what it needs to survive, or you won’t be around long enough to help your new customers a second time. You need to satisfy your business needs and your customer needs at the same time. This is known as a Win-Win scenario. The customer wins by getting something they need or want. The business wins by getting something that they need or want. If either side does not get what it needs or wants from the relationship, or feels they were dealt with unfairly, there is no incentive to go back and do it again. The only way you can build healthy long term relationships is with Win-Win transactions.
So what does this have to do with separating Sales and Orders teams? Everything.

Win-Win scenarios don’t just happen. They require negotiation. In a simple business the negotiation can take place between the customer and the salesperson. As a business grows it quickly becomes too complex and time consuming for the customer to negotiate effectively without someone to look out for their interests and be their voice inside the business. Without people specifically working on behalf of the customer the customer’s voice would not be heard inside most businesses. We call the people who argue on behalf of the customer’s best interests, the Voice of the Customer. The Voice of the Customer inside the business is generally the Sales team and the Customer Support team. Their counterparts, the Voice of the Business, are the Orders team and the Delivery, or Fulfillment team.

The Voice of the Customer and the Voice of the Business must work together to ensure a Win-Win scenario. The Sales team brings the customer message to the table. The Orders team brings the business’s message to the table. The customer can be as involved as they like, but they don’t need to be at every meeting and every negotiation because the sales team is working on their behalf to ensure they get what they need.

Management Tips for Ensuring a Balanced Negotiation

So it’s great to say that the sales team is the Voice of the Customer, and the Orders team is the Voice of the Business, but aren’t they really both working for the business? What motivates the sales person to truly act on behalf of the customer instead of just trying to get the most for the business? The answer to this is in how people are measured. Sales people are (or should be) measured on sell price. Orders people are measured on margin (how much money is left after all the costs are paid). This means the sales person is not rewarded based on whether or not the business makes money. It also means the sales person is rewarded based on something the customer can clearly see: sell price. They are free to discuss it with the customer in a completely open and honest way.

As a customer, if your sales representative is being paid based on profit margin then you must simply trust that they are steering you towards a particular purchase because it’s good for you and not just because they know it has a higher profit margin (and hence a better commission). As a sales person in this situation the temptation is always there to push a higher margin product that may not be in the best interests of your customer.

As a customer, if you know your sales person earns commission based on sell price then you can be sure that you are getting the whole story. Many organizations do not even reveal their internal costs to the sales people so that they will be put in the same situation as the customer, and openly and honestly defend the customer’s interests. The sales person is rewarded solely on how much the customer spends, and everyone knows the situation. As a customer, you know exactly what the sales person’s motivation is, and can respect that. It is the best situation for you as a customer. It may seem like a small difference, but the effects are huge. Now the sales person is motivated to get the most for the customer so they will spend again. They are put in the same situation as the customer with regard to price. They don’t have costs floating around in their head to make them wonder about whether the business will make money or not. They only know what the customer knows. They are only motivated to get the most for the customer. It is only in this situation that they can truly become the Voice of the Customer.

The other side of the coin is the Voice of the Business. You can well imagine that if a business gave their customers everything they asked for whatever price they requested they would be out of business very quickly. So across the negotiation table from the Sales team and the customer sits the Orders team. The Orders team is rewarded based on how much money the company makes after costs are paid. They are not in the same shoes as the customer. They are in the shoes of the business. The Orders team is also looking for a Win-Win scenario. The Orders team also wants a long term relationship. But the Orders team is not willing to give anything away unless there is some benefit to the business. A balanced Voice of the Customer and Voice of the Business results in the very best balance between customer interests and business interests. Separating the Orders team from the Sales team is an important step in building the foundation for long term, mutually beneficial relationships between business and customer.

Summary

Separating the Orders team from the Sales team creates a balance that fosters solid, long term relationships between a business and its customers. The Sales team goes after what is best for the customer. The Orders team goes after what is best for the business. Worst case for both sides is a failure to reach an agreement (no sales, no margin). Best case for both sides is an agreement that leaves both sides happy, and ready to do more business in the future. And through it all the customer always has someone they can trust to look out for their best interests, because in large part their interests are shared.
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