Published In November 2000
Having the proper resources and experiences to handle various VDV projects is one thing. Articulating those skills to a customer is quite another. The way a company develops and presents a proposal is equally important as its ability to complete the work. Webster's Dictionary defines “proposal” as: “1. the act of offering or suggesting something for acceptance, adoption, or performance 2. a plan or scheme proposed 3. an offer of marriage.” For years, electrical contractors have been writing proposals (offers, suggestions, plans, or schemes) for (acceptance, adoption, or performance) by existing and potential customers and general contractors (GCs). Although we may not have offered marriage to GCs and customers, we have developed long-term customer loyalty with all its ups and downs. Like any marriage, to maintain a strong relationship, the EC must be understanding and adaptable to the customer’s needs and desires in an ever-changing competitive world. This has forced ECs to adjust their way of doing business to be with a more market-oriented approach. This change is most evident in the way we develop and present our proposals. In the past, contractors have incorporated their own personal identity into their proposal. To some, a proposal is mainly a price quotation for which they will accept a project or a technical document of engineering and design dexterity with a price. The price is based on a meeting with the GC or in response to a request for proposal (RFP) and a request for quotation (RFQ). Some bids are submitted without important face-to-face communication with the customer. When this occurs, contractors can only write their proposals strictly on the specifications that were given. Such proposal presentations have little customer personalization. What has changed in the electrical marketplace and why must we develop a more competitive marketing-oriented proposal? Today, in the emerging VDV markets, proposals must be marketing oriented. We have to first understand that we are in a highly competitive, sophisticated direct market. We have more of an opportunity to meet with customers and understand their needs and wants. Customers will demand more personalization and expect the proposal to be more than just a price quote. Proposals must reflect your understanding of the needs and wants of individual customers and their organizations. Electrical contractors have to adapt their mode of operation from a product/technical-oriented approach to a market/customer-oriented approach. To understand the origin of the VDV proposal, let’s review the recent history of the VDV market. In the early 1970s, Judge Green’s decision allowed competitive markets in the telecommunications industry. The telecommunications business up to this point was the exclusive domain of AT&T and Bell Operated Telephone Companies’ public utility. When the market opened up to competition, several organizations and manufacturers from around the world entered into this ‘interconnect’ market. World telecommunication organizations like Northern Telecomm (Canada), NEC (Japan), Siemens (Germany), ITT and Harris (USA), and many other companies brought new product alternatives, choices, and a marketing-oriented approach. One challenge was recruiting sales personnel who understood the telecommunications market and could also handle a heavily competitive atmosphere. They were forced to hire people from competitive office product markets. Most had to be trained in products and the telecommunications industry. But all were seasoned salespeople with proven sales records. They had the sales skills to develop customer confidence in the interconnect industry, their companies, products, and themselves. They also had to influence their own manufacturing companies to become “marketing oriented,” not “product oriented.” The companies were encouraged to listen and change because customers welcomed this new interconnect concept with open checkbooks. Customers were enjoying the newfound “power of choice.” The market was very competitive, with new technology being rapidly introduced. The salespeople’s only advantage was to develop their sales skills, better understand the customers’ needs and desires, and produce a better proposal than that of the competition. The salespeople had to better understand the customer’s desires, needs, and motivations to buy. What is the motivation for customers to buy? Freud’s “Theory of Motivation” assumes that people are largely unconscious of the real psychological forces shaping their behavior. He believed that, as people grow up, they repress many urges. These urges emerge in dreams, in slips of the tongue, in neurotic and obsessive behavior, or, ultimately, in psychoses. Thus, Freud suggested that a person does not fully understand his or her motivation. Successful salespeople, customers, and psychologists recognize that there are no simple explanations of what motivates people to buy. The factors change with every individual, business economic condition, and every new direction caused by competition and business plans. Any attempt to develop a complete list will omit some needs, wants, or basic behavioral factors. In short, no magic formulas exist. People generally are subject to their own habits and behavioral patterns, especially in business. The individuals dictate the company’s personality and philosophy, which determine their reasons to buy. The companies’ reasoning and motivation would dictate your communication strategy. Then all your communication, like proposals, should be designed to appeal to the customers buying motivation or “hot button.” Three categories motivate a customer to buy: security, recognition, and achievement. Security People who fall into this category want a warm and fuzzy feeling about whomever they are going to do business with. They need to know that they will not be left alone, or be criticized for making a bad vendor decision. High on their list is the future well being of you and your company. Hot buttons * History—Years in business, organization structure. * Experience—A “reference list” of what you have done in the past, including the size and complexity of the projects. * Expertise—Present quality of staff, their training, and experience. * Financial—Are you going to support me in the future? Size and financial strength of your company. Disclose any partnership and affiliations that support your efforts. Recognition People in this category want success and also to be synonymous with that success. Often loud, boisterous, obnoxious, and self-centered, they need to be “stroked” egotistically. Hot buttons * History—Need to know your company’s size and importance in the community and in the industry. * Experience—Size of the companies on your reference list that he or she can relate to. The more prestigious the list, the more you increase your chances. * Expertise—Quality of the staff that can presently respond immediately and efficiently in time of need. They need to know that they can show power and control to prove their ability to get things done internally. * Financial—Strong enough to be considered successful in today’s market with a need to know your future growth plans. Achievement This group is motivated by the successful accomplishments to their company’s benefit of their responsibility. They are not interested in fairness to vendors; they want the best product at the lowest price and have no interest in your profit or cost. They are aggressive and consumed by protecting a strong bottom line. They will take risks to accomplish their objectives. They are to anyone working with them demanding, and hard driving with a no-nonsense approach. He or she has to be first, in control, and on the top of all the issues. Hot buttons * History—Success and accomplishments and how you fought to achieve them. * Experience—Challenges that you overcame to successfully complete your objectives. Your dedication and commitment to your customers. * Expertise—Strength and dedication of your hard-working, success-driven staff. * Financial—Your financial strength today and an aggressive financial plan for the future. If the buying motivation is too difficult to comprehend, always remember one undisputed statement when dealing with customers: “People buy for their reasons, not yours.” It doesn’t matter that you are the biggest, with an impeccable reputation, or with the best products on the market; you can still lose a project if you don’t address the customer’s needs and desires. You should address the customer’s needs and desires by using the FAB concept. The FAB concept For every feature of your product or service; there must be an advantage, which will produce a benefit to the customer. For example: * Feature—Placing a 110 AC power outlet on a countertop * Advantage—Ability to power countertop item like a toaster * Benefit—Having toast in the morning What the customer really wants is the benefit of having toast in the morning. The customer can understand the advantage of having the outlet on the counter top versus having the outlet on the floor or the use of extension cords. They care less about the feature of a 110 AC outlet or how you get to the end result, whether you use electric power, solar power, or two mice on a treadmill. Having toast in the morning is their only motivation for buying a countertop 110 AC outlet. Customers buy for their reasons, not yours A major change in the electrical industry is that contractors need to interface more with their customers. This requires communication and site visits to interview customers. This is the only way a contractor can understand the customer’s reason to buy. To accomplish this task, an understanding of how to approach and conduct an interview is needed. The sales cycle has four stages: first meeting, proposal development, presentation, and negotiating the contract. This sales cycle is explored in detail in Management Education Institute’s (MEI’s) “Customer Development Course,” but for this article, we can only briefly discuss the first meeting or the information gathering and the proposal stages. To gather the information needed to personalize your proposal, learn the art of asking a question. When you were young, parents and teachers encouraged you to ask questions, telling you, “Asking questions is the only way to learn.” Then, when your questions became more probing, the same people told you, “Stop asking so many questions.” Simple one-word answers didn’t include all the information you were seeking. Our lack of experience leads us to question without a planned strategy. As a result, we only get part of the information needed and may miss critical data. The knowledge we gain by asking the proper questions is the basis of a market-oriented personalized proposal. Whoever is skilled at questioning will obtain the information they can use to their advantage. There are two types of questions: closed-ended and open-ended. Closed-ended questions can be answered with a single word: “yes” or “no,” “black” or “white,” or “110” or “220.” Closed-ended questions are less probing but can get directly to the point. These kinds of questions do not obtain the total information needed to develop your proposal. Open-ended questions require longer answers. Because they cannot be answered in a single word, these questions are more probing and can create greater discussions. Knowing the two types of questions allows you to develop a strategy for gathering the necessary information from the customer to develop your proposal. The information you need to obtain from the customer is: * Past experience with competitors and products; * Present needs and requirements; and * Future directions and desires. This is accomplished by using open-ended questions, which facilitate confidence and a rapport with the customer. By using closed-ended questions first, which can be answered simply with one word, you can develop a pattern of positive responses. Once he or she has given several positive answers, your customer will be more comfortable in answering you. This will establish the confidence you need to ask more difficult questions. Next, you ask open-ended questions. These probing questions should be designed to gather information on the past, present, and future requirements. The more the customer will discuss, the more information you have to tailor your proposal with. By asking these questions and listening to the answers, you can understand the customer’s motivation to purchase, hot buttons, and the desired benefits. Your proposal will stand out from your competitions’. After gathering information from the customer, it is time to compose your proposal. Part Two, scheduled to run in December, will outline the objectives to remember while writing a proposal and the contents to include in its sections. MARTIN is a management consultant with the NECA Management Education Institute, based in Morris Plains, N.J. He can be reached by calling (973) 540-1298, or through e-mail at firstname.lastname@example.org.