The Stories Customers Tell Us About Their Freight Forwarding Business

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Sales are under pressure

Sales are under pressure

Sitting down for the weekly sales update with CEO Steve (CEO), Jeff the Sales Manager mulled over what was important. Great progress had been made with Geneva Transportation but he was still bothered by several aspects.

“Morning Steve. You already know about Geneva Transportation and I presume you have spoken to Carol now. Can I move forward and close the deal?”

“I’d like to say yes, Steve, but Carol is concerned about our ability to fully support Geneva. They are a big client and it will cost us should we mess up.”

“Come on, Steve” said Jeff frowning. “You yourself said this is just what we need!”

“Jeff, don’t push me on this. Carol thinks it’s possible but given the number of missed cut off dates we already have and the increase in volume Geneva would bring, it would be foolish of me to approve this without being sure.”

“But…”

“No, Jeff. It’s really great that you got Geneva this far. I would dearly like us to have their business. But, we can no longer afford to just cut a deal and assume everything will be ok. Our margins are tight and whilst deals like this give us the volume they also don’t give us enough room to hire more staff. We have too many temps as it is and our service levels are faltering. Carol is up to her neck just keeping it together.”

“I know” replied Jeff, remembering his latest run in with Carol over service performance. “I have been pitching more added value services and saying yes to the custom reports clients ask for, but this is putting more strain on Carol’s team.”

“I am struggling here, Steve. It’s a competitive industry, as you know, but customers are moving for a small rate change, making it hard to charge premiums. We tried refusing to give discounts and, as you know, that really hurt us. It’s a real balancing act and I am trading off margins between areas. My team are going in high expecting to give in at least one area and to then try and recoup some margin in fees etc.”

“Yes, Jeff, we’ve had that conversation before. Forwarding is getting tougher and more challenging. We have to find a way to get better results.”

“Steve, did you look into the idea of buying a struggling forwarder for their business?”

“Let’s not go there just yet, Jeff. We have seen that cycle before. Getting bigger through acquisition has its appeal, but it brings its own challenges. Too many companies have grown this way only to struggle and then fail. The board is not comfortable with that approach yet.”

Both Jeff and Steve and silent for a moment reflecting.

“Jeff, it’s good news with Geneva, but it’s clear that we are going to require a breakthrough, both in operations and in sales, if we are to prosper long term. We are doing enough to survive month-to-month but you and Carol both have a tough road ahead and I need you to work together on this. We are all looking a little tired these days.”

“Remember how we enjoyed coming to work. I want that back!”

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The forwarder's dilemma

Analysis of the Sales pressure issue

The issue Jeff and Steve are struggling with is that the business has very low spare capacity and this low capacity is resulting in quality control issues for Carol which in turn is undermining the sales mission Steve has given to Jeff. The standard response to this dilemma is to add more bodies, however for Steve the business has reached the point where adding more bodies is actually jeopardising the survival of the business.

This story is clearly about increasing volume without increasing the risk of service failures.

In an ideal world Jeff would simply guide his sales team to stop targeting volume with discounts and direct them to target high margin added value services. This solution would take the pressure off Carol’s team and create margin to hire additional bodies. However Jeff and Steve are stuck. The competitive nature of forwarding means added value services created are rapidly becoming the normal rate services and as a result the margins sought from the added value services are being lost but the extra workload of the services continues.

That really only leaves Steve with one option which is to increase Carol’s team’s productivity and free up capacity

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