How much would you pay for a RFQ?
I speak with shop owners every day and the conversation always goes in the same direction. They want more business (what they need is an increase in quote activity) but are not sure how or where to start. Most shops dabble with trade shows, some try email marketing and others will even sub-out marketing activities to firms that just don’t understand manufacturing on a job shop level. I have also personally seen tens of thousands of dollars wasted in PPC (Pay-Per-Click) Advertising. Don’t get me wrong, PPC is by far one of the most important activities a shop can do to increase quoting opportunities. The success or lack thereof starts with the execution, often managed by the shop itself or by a firm that has not been properly vetted, because the shop just doesn’t know how to vet a PPC house. Then there are shops that do nothing. These shops will survive for a bit, typically off of a handful of customers, but will eventually get in trouble when a recession hits or half of their customers move on, which can be for a variety of reasons.
So let’s get to the point here – No matter the marketing activity, before you start, understand what you are willing to pay for an opportunity to quote! By doing this you are better able to measure individual activities to see whether you need to be putting more money into them, reducing some financial risk, or pulling out entirely.
Note: When budgeting marketing dollars keep in mind that there will be a significant amount of customers that will quote multiple times and there will be closed won quotes that can largely shift your average (a $50k deal for example). So to keep this simple, we will look at high level numbers that will help you understand how to get started. There will always be exceptions and edge cases you can learn from.
2018 Sample Numbers:
Shop Revenue – $1,000,000
Total Quotes – 1,300
Total Jobs – 390
Win Rate – 30%
Value per Quote – $770
With the above numbers, a reasonable expectation for quotes from a $5K trade show would be 7-15, in addition to 50+ qualified leads. Keep in mind that this doesn’t take into consideration closing a large deal or the value newly acquired customers generate over time. Also, there is a value for each of the 50+ qualified leads that should be used in outbound marketing initiatives such as, email marketing or handing off leads to sales to nurture.
Things to keep in mind:
First-time quotes will have a lower win percentage but will often be worth much more than the face value of the order, if you land them as a repeat customer. Repeat business creates an annuity on the value you spent to acquire them. (Lifetime Value)
Quotes from recurring outbound marketing activities with your database. You can spend $25-$75 a month on email marketing platforms (MailChimp, Constant Contact) to send email blasts to your existing customer/prospect list. Depending on your list size you can generate 5-10 quotes per send, at 2 sends a month this really reduces your cost to create new opportunities. This is why it is important to build your prospect lists. Keep this in mind when executing on marketing campaigns. For example, putting an eBook on your website and getting leads from it. These leads have a value as well, but more on that another time.
Quotes from external email marketing seeking new customers. Spending $3K-$5K to get a 3rd party email blast out to 40K potential buyers and get 10 quotes or $300 per quote is very reasonable. Remember that those 10 people get added to your list and the chances of getting a $10 quote in the future are much higher, especially if you respond with a professional quote in a timely fashion. You are in control of driving future repeat quote costs lower with your outbound efforts.
One customer / job can pay for an entire activity – You go to a D2P show ($5K-$7K in cost) and land a single deal worth $50K. Boom done! Go back next year. In any case, if you plan to go to a show, you should know before you go how many quotes and leads you expect to get from it. If you are spending $8K to be there you should be locking down 10-20 quotes. If you are a prototype, low volume production focused shop (these do not need to be from unique quoters!), give yourself enough time to track and measure those quotes, generally 2-3 months, to determine the value.
Next time you check in with your PPC firm, ask them how much you are paying for a quote, also, ask them to send you a weekly trendline report so you can see how you are doing over time. If they don’t know the answer or how to get it, contact me.
Ask potential customers submitting RFQs how they heard about you and record this data so you can refer back to it and attach it to certain marketing activities. The Paperless PartsSmart RFQ Form™ is a perfect example of automating how to collect this data for first-time quoters.
There is a lot to think about when considering marketing activities for your shop. One thing is certain though: if you don’t start it will be hard to gain momentum to get your business off the ground. It will be next to impossible to turn a $1M business into a $10M business, and it will be difficult to weather economic storms without customer diversification, which you get from continually filling your pipeline with new customers.
Remember, every shop is different. Play with the numbers for your shop and figure out what makes sense. The key point here is to track the data and make decisions that will continue to help your shop grow.
If you have any questions or want to chat in more detail about the strategies above, feel free to reach out directly to me at firstname.lastname@example.org.
Connect with me on LinkedIn to stay up-to-date with future posts:https://www.linkedin.com/in/quickturnmarketing/