The Chutzpah of "Commercial Terms"

The Chutzpah of "Commercial Terms"

Ask any fresh engineer who wants to make it in Sales & Marketing, his or her 'opinion' on Commercial Terms. And the chances are there that he or she will look wary all of a sudden. A look which without saying anything conveys all the ridicule in the world on your chutzpah. When I first started working, my General Manager (a gentleman indeed) tried to explain it to me. He said "Ok-imagine you are in this restaurant and you want to have some fried chicken, the chicken is the technical part and the bill is the commercial part"! Do you understand? Well I didn't -I thought what's engineering has to do with a chicken tangri kebab. But I said "right sir.. I do" .Mr Ghosh looked skeptical but left it at that.

Today if he asks me I would say " Commercial Terms! It's the all in all of what I do" for a living. (But  unfortunately, it appears that he has gone to never never land-so my repartee will have to wait)

Have you ever come across the word "techno-commercial"? You must have. "Commercial terms" is the commercial part of your proposal, quotation, offer, Tender etc. which is equally important as the technical, if not more so. 

Let us suppose that you have talked in detail with the decision maker and both of you have come to a conclusion that you are going on for a sale. How do you proceed now? You submit a proposal. You start by stating in it the inputs from the customer. Then, you state the discussions i.e. a summary of the system which your customer wants to buy so that the input conditions match (you have already written down the inputs) . You state your price. Is that it? No friends, I'm sorry to say that that's not it.

Your proposal will as effective as a "one-eyed french speaking, laughing hyena" for selling, as there is plenty of information missing. The following are just a few areas of information missing.    

1.     Price basis : The prices that you mentioned are with included transportation costs?
2.     Delivery: You propose to deliver the material in what time period? Immediately.. in 1   month? After three months?
3.   Payment Terms: How do you want your customer to pay you. Do you want an advance? If so can you give a bank guarantee for that amount. How about the rest? Do you want the balance on a C.O.D basis or through Letter of Credit. Etc etc...
4.  What happens in case of delay i.e. You delay the material delivery or the customer delays to pay you.
5.    Validity : Say the customer calls you up or the customer’s purchase department. places the order after a year, can you accept it? Of course not but have you mentioned the validity  of your offer anywhere in your original proposal. Validity should be always mentioned. Some people think that a proposal should be like a telegram, but I always like to be clear in all aspects.

All these points regarding the sale and which you propose to your client to be applied against the sale are called Commercial Terms. Remember, you sell only when you get your money. Say you have sold three high priced machines (total price 10 million Euro) but all of them have inherent credit for a year. Then start hunting for a new job, as you'll get the pink slip, without fail.

Your commercial terms should be so thorough and you should know them like the back of your hand. With one reading, you should know what conditions govern the sale. Your success or failure depends upon commercial comprehension as well. COMMERCIAL TERMS should arouse in you the same interest as the technical system you are selling. If they do not, then either develop it or get the hell out selling, dude!

The commercial terms section is the area where you can use your experience and make your offer the most attractive. Here, there are no guidelines and how you do so depends from case to case and your experience. For high value capital equipment, commercial terms generally vary from client to client.

So we have more or less finished commercial terms, 

See you next time then friends

And till then,

Love

Bilbo

GUERRILLA MARKETING STRATEGY

GUERRILLA MARKETING STRATEGY : (GUERRILLA SALES)

From this point onwards , we will be speaking about sales & marketing both, whichever may be relevant in a particular area or domain which we are discussing

[picture shows a Vietcong guerrilla
during the Vietnam war]

It seems incredible to me that our average students still tend to confuse sales & marketing. ( I say this from my personal experience wherein I have seen that every sales-coach at the start of the training session, will be inevitably queried about sales and marketing). Let me make this more simpler.

Sales is that part of Marketing which is concerned about transfer of the goods manufactured/compiled or sevices offered/presented to entities which require them in exchange for value received. The main functions of the marketing department are market information & research, budgeting, strategy finalization, forecasting, sales and after sales. I have intentionally made this definition as simple as possible so that it is easy for comprehension. The sales function lies inside the function of marketing along with a number of other sub activities, which are equally important to the process of marketing as the sales function.

Now that we know the boundary limits between Sales & Marketing, let us go back through decades in search of Herr Karl Von Clausewitz, an Austrian General who is widely regarded as the greatest military tactician ever.Today in the world of marketing, it is a war out there. You cannot afford to loose one single order. Things are becoming desperate now.In these chaotic times, it is essential that Clausewitz's truth isms are known by everyone in the profession, of which the most important one is that of numerical superiority. The side with the higher numbers always win... Examples are all around us.

Germany lost World War II as their army was much less in numbers then the Allied Forces.  Before America enterd the war, The Allies were being subjected to defeat after defeat. But when America joined the war, the germans become numerically less and lost the war. In business, how does a small company with a million dollars turnover fight its competitor with a billion dollars capital base. It doesn't if its wise for that will be suicide.

What it does is to analyse all the businesses where the big company is involved in and to what extent.Generally all bis companies have a few VIP niches where they rule; Some more where they are not so formidable and a few where it has a small presence. 

The smaller company often tries to target one of these third category niches and introduce products which are better then the big company models.They sneak in introduce their product and sneak out. They then bring out better versions of their own product in a continuous upgradation. The big company becomes aware of this and in most cases has no time or interest to take on the small company against a product which contributes  only a paltry amount to its turnover. There are cases where the big company has even sold out its small share in the particular product business to the smaller company.

In marketing, these type of attacks from the flanks are called Guerrilla Marketing marketing and the 'guerrilla market sales' are called Guerrilla Sales

See you next time

Bil

My Lot.com invites you

         

Now Earn money

discussing philosophy, doing tasks, playing games etc. 
My Lot awaits you