It is clear that rent, tuition or services such as water, electricity or gas will not go unnoticed, but have you recently quantified your spending on cigarettes, sweets or Uber trips? Are you clear about how much you have paid for parking or tips? If you answered yes, let me contact you for advice on controlling my expenses!
But if, like the vast majority of us, you have answered that you have no idea, it is likely that ant expenses have made their own in your pocket and therefore, this column that transposes this example to business will interest you, because I also added the “seasoning” from AgroMarketing.
Efficiency of our operation or benefit for our customers?
“My cost to serve? It is the gasoline of the truck to visit the client and the six to talk in his field “was the forceful response of a distributor who explained to us the costs he incurred to serve his client-farmer in a standardized visit in a field in northwestern Mexico and that, honestly, it was not so wrong but it was incomplete.
In accordance with Sintec Consultingthe cost of serving “It is a methodology that allows visualizing the costs that a company incurs in a more granular and detailed way, at the customer, product or channel level. It seeks to understand the profitability that is generated in the attention of particular needs, to carry out a client management that maximizes the value for the company”
Although this seems to be primarily linked to the operational benefits of our organization, the impact must also be favorable for our client. By adding the appropriate segmentation by behaviors to the classification by characteristics, the cost of serving will contribute to define commercial strategies that will be implemented with much greater precision.
I now want to share three risks you can avoid if you sharpen your aim and implement a good process to define your cost to serve.
RISK 1: Giving too much care and getting poor results
If you identify the cost of sales service activities, distinguishing by channel and customer profile, you could see that you are probably over-investing your sales team’s time and money in contact points.
It usually happens that when doing this analysis, you observe that the cost of serving in a traditional channel (seller visit, planning, follow-up, etc.) is similar to that of the digital channel and if this is not by design, it is a first hole that drains your resources.
And I dare to make an analogy with something that is frequently said in the field: adding a lot of water to a plant does not guarantee that it will flourish because it is not a matter of quantity but of watering it at the precise time. Attention to your market is not a matter of intensity but of precision and the analysis of your cost of serving will give you an excellent key to understand if your yarn has been fine enough or there are still things to improve.
RISK 2: Failing to meet standardized needs by focusing on particular needs
The attention of massive groups presupposes that there are concerns, needs and requirements that are shared between groups of clients. It is likely that we will be tempted to make so many “custom suits” (which also require more resources) that we neglect standardized care.
In the agricultural sector it is common for farmers to seek a visit from a technician to understand the disease, pest or deficiency of their crops, however, and in the manner of any doctor, the first approach has to be conservative and from a more general perspective.
Before your commercial adviser runs to visit each client who has a question, it is usually efficient to follow preventive protocols before applying a specialized solution. There is no doctor to suggest surgical intervention before implementing a check and follow up, so unless it is an emergency, you have to care for your client with careful feet, stay close but not create so many personalized strategies because there will come a point in time. the one that your template is not going to be enough (and it will be unaffordable).
Do not be afraid and give him the necessary tools so that he can do without you 24/7 because, paradoxically, that will make him almost irreplaceable. If you do not analyze the cost of custom actions, your budget is going up in flames.
RISK 3: Punish efficiency
Has it happened to you that one of your salespeople stands out for his leadership, he is the one who makes things happen and he is the one you trust so that something got stuck and he/she is the most qualified person to solve that issue? Be careful, you may be punishing efficiency.
when the performance of a work team is unbalanced, not all have the same level of experience or simply do not “pull even” it is very likely that we are suffering from this “disease” and clearly the cost of serving is a highly effective tool.
If you evaluate the payment of prizes and commissions in a unidimensional way (volume or amount of sales, to cite an example) you will be neglecting to consider the number of visits, the resources invested and you will lose visibility to understand the profitability by seller, route or territory .
Do not skimp on this analysis because far from falling into paralysis, you will fall back but see how the pressure is placed on fewer members of the squad than you thought.
Remember, this topic is not black and white, this proposal focuses precisely on the nuances that this methodology will add to the understanding of your commercial work. The customer will be the main beneficiary if you consider that instead of saving just to save, you will offer quality service and not just presence with unsuccessful results.
How about we meet here next week? Have a great day.