Not all sales are good sales.

It never ceases to amaze me that metalcasters will go to almost any length to keep a customer or to secure business with a new customer. The logic here, as best I can figure it, is that more sales are always better than fewer sales, and that all sales are good. Well, this column is all about the first rule of foundry management--metalcasting facilities are in business to make money, not to make castings. To put another way, this column advances the notion that not all sales are good sales.

Especially in a mature industry, such as ours, keeping out accounts and jobs that do not fit metalcasting--that are not compatible--is every bit as important as nurturing compatible accounts and winning compatible business. It is up to the marketing and sales staff, empowered by the CEO, to take on that responsibility and act as the firm's gatekeeper.

Gatekeeping means, first and foremost, that the sales staff simply should not call on non-compatible accounts and should not quote non-compatible jobs. The exception to this rule is when the non-compatible work represents a small fraction of a large amount of compatible work that must be quoted as a complete package. This directive, in turn, requires, among other things, a fastidious prospecting effort, a careful new account screening process and a highly selective quoting process (the latter holds true for RFQs submitted by both new and existing accounts).

Second, gatekeeping requires that metalcasting sales staffs work hard to continuously improve the compatibility of accounts already in their customer bases. This implies an emphasis on value-based relationship selling and active account maintenance, a solid account rating system, active efforts to improve the compatibility of borderline accounts and separation from customer accounts that are not, and likely will never be, sufficiently compatible. Note that the definition of "sufficiently compatible" will change over time and the standard will increasingly rise.

While the notions of "firing" customers and passing up opportunities to quote may strike some as horrifying, the truth is that fine-tuning the fit between customer base and capabilities--through the lens of compatibility--can have profound, albeit sometimes difficult to see, benefits. In fact, acting in concert with the principle of compatibility will set off a highly positive chain of events, which runs something like this:

1. Gatekeeping decisions are properly made--increasing numbers of RFQs are "no quoted," prospects and leads are by-passed more often, non-compatible accounts are fired, and so on;

2. Revenues will likely fall in the immediate term, but profits will often increase as the metalcasting firm takes control of its destiny, its product mix and its customer base;

3. The number of quotes processed often decreases dramatically; more and better attention is paid to the compatible ones that remain; quote hit rates rise significantly;

4. The range of castings being produced (product mix) is narrowed as the fit between metalcasting firm's capabilities and customer requirements is increasingly tailored;

5. Efficiencies and productivity increase through greater consistency of product and process;

6. Quality costs decline as variations in product and process diminish;

7. The effect is an overall decline in time and cost; past dues disappear and available capacity expands; the metalcasting firm becomes more competitive and able to take on more compatible work without any investment in the plant or equipment;

8. The business avoids falling into the mature industry cash trap (i.e., investments happen but ROI does not); overall company ROI and shareholder value increases;

9. Better metalcasting facility performance, greater cash availability, increased capacity, a leaner cost structure and enhanced pricing flexibility lead to a more powerful and successful sales effort and a healthier bottom line;

10. Success breeds more success; new compatible accounts and business are attracted without having to be "sold," and the cycle repeats itself.

Even with the industry's shift to maturity and the impact of foreign competition, there are still billions of dollars worth of metal castings sourced from and purchased in North America every year. Given this vast market, it is more than financially possible for most metalcasting facilities to be selective in the way they sell and the way they do business. Doing so exposes flaws in the firm's business strategy so they can be corrected and allows top management to accept full responsibility for the firm's success or failure. In other words, doing so enables the metalcasting firm to wrest control of its business--and its success--away from a capricious market and hand it back to its own management organization.

The results, as implied above, can include a much improved market position (albeit in a narrower market segment), greater insulation from competition (i.e., better differentiation), a healthier bottom line and a snowballing success effect for the sales effort and the enterprise as a whole. This cascading effect is set off by the combination of harmony, compatibility, a mature selling effort and a CEO who sees the wisdom of not trying to be too many things to too many customers.

Dan Marcus, TDC Consulting Inc., Amherst, Wisconsin