Inside/Outside Sales for Laboratories

All technical service businesses must create sales. To succeed all such organizations need an effective way to:

• Find Prospects
• Qualify Prospects
• Convert the Prospect to a Customer by Closing the Sale
• Deliver the Service
• Retain the Customer
• Create Follow-on Work

In many ways Laboratories are no different from General Consulting, Engineering, Design and similar firms. Though the details may differ, the processes must be planned, coordinated and well executed.

The job of finding and qualifying Prospects is generally the purview of an “outside sales force.” This might be a single person or a whole organization of people working on finding and qualifying Prospects. This group is armed with general information about the Laboratory and the type of person or organization that will likely make a profitable Customer.

The general information about the Laboratory would be things like:

• The Types of Tests Performed
• The Types of Samples Tested
• The General “Turnaround Time” (how long things take to get work done)
• The Options Available for Report/Data Delivery
• The General Prices that Customers can Expect
• Who to Contact and How to do Business with the Laboratory

The “Outside Sales Person” should also know something about whom they should to try to reach. There are many potential Prospects, but many of them will not make good Customers. Some of the reasons might be:

• The Prospect does not have a Need that the Laboratory can meet such as:
  • Wrong Tests
  • Wrong Sample Types
  • Wrong Turnaround Requirements (generally too short)
• The Prospect cannot Pay for the Testing
• The Prospect (in this case the Person or Group) cannot make the Decision to Use the Laboratory

These are “Suspects” and not real “Prospects.” Time spent trying to “sell” to Suspects is not only wasted, it can be detrimental to the organization. Determining who is a Prospect versus who is a Suspect is called the “Qualifying Process.” This might sound simple enough, but it turns out to be far more complex than it appears. Often the Prospect is unsure about their needs, their ability to pay and even if they are able to make a buying decision. Furthermore, what a technical service organization is able to do is never quite as black and white as one might think. A good Outside Sales Person recognizes that things are not exactly black and white and can effectively close the gaps between needs and service offering. That is why it is a Qualification Process and not just a rote decision point. Those persons who do this successfully over the long haul are extremely valuable to the Laboratory. Those who do it poorly can destroy a Laboratory or any technical service organization.

The Qualification Process is rarely done in a vacuum. With rare exceptions, an “Inside Sales Person” needs to be engaged in closing the deal. Because technical services cannot be inventoried, matching Laboratory service offering and capacity with Customer needs is never simple. The Laboratory is much like a commercial airplane. Once the door closes and the airplane leaves the gate, the empty seat can never be sold. It is forever gone. In a technical service business, today’s idle “seats” on analytical instruments or unused “hours” for an engineer or designer are gone at the end of the day, never to be sold. They have “expired.” Hence, just like the airlines, technical service providers try to “oversell” their resources so that they have a low probability of having idle resources. This tenuous balance is maintained by Inside Sales Persons (often called “Project Managers”) who try to balance near term service requests with actual short term capacity.

The airlines are aided in this balancing act by very sophisticated passenger management software. Often the strange and fluctuating pricing structures that on-line buyers see are designed to balance service requests and actual capacity. This all works reasonably well until weather, mechanical failures or criminal action (real or imagined) throws the whole system into chaos. Then the system collapses for hours or days, with the most complex hub and spoke systems suffering the greatest disruption. The result is that there is much dissatisfaction with commercial airlines, especially the large carriers.

For Laboratories, the Inside Sale Personnel or Project Managers are aided in their balancing act by a computerized Laboratory Information Management System (LIMS). The effectiveness of these systems vary widely. These systems are generally fairly good at monitoring what is happening, but are generally much weaker at predicting even near term future capacity. They are often incapable of monitoring even near term capacity and demand. Furthermore, competitive conditions rarely allow a Laboratory (or other sellers of technical services) to use pricing structures to significantly affect short term demand. Hence, Inside Sales Personnel or Project Managers are often in a reactive rather than predictive mode.

It is often the case that Customer experience and retention is highly dependent on the skills and diligence of the Inside Sales Personnel or Project Managers. Frequently, “key Customers” are assigned to the most experienced and effective of these Projects Managers to improve retention of these Customers. Furthermore, effective coordination between Outside and Inside Sales Personnel set the stage for long-term Customer satisfaction. If deals are closed that are doomed to failure, the whole system can be disrupted and even “Key Customers” can become dissatisfied.

Designing effective Outside and Inside Sales operations, training personnel effectively, providing effective management tools and monitoring the performance of this difficult process is a key success factor for any technical service business. Furthermore, competitive pressures will require that the processes be constantly improved. It is one of the key differentiators in any technical service business – especially those that deliver more or less undifferentiated, standardized services.

 

 Stites & Associates, LLC, is a group of technical professionals who work with clients to improve laboratory performance and evaluate and improve technology by applying good management judgment based on objective evidence and sound scientific thinking.  For more information see: www.tek-dev.net.