Date: Mon, 31 Jul 2000
To: moving@avatar-moving.com
From: "Bob McMillan" <McMillan@Hevanet.com>
Subject: Re: AMS-Forum Oversold?
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[ Return To The Hall of Fame ]The Giant wrote:
<<I think this whole "oversell" idea is very questionable. Isn't this the very mentality that has got movers a bad reputation. When no one is looking and the opportunity is there we take advantage of it. To train and reward salespeople in this manner is in the long run asking for trouble. I have had salespeople who came from other companies try this and my answer always is why would you do something like that. We stick to our rates and doing something like this feels unethical and borderline illegal. I am sure that the "what were once vices are now habits" syndrome quickly sets in, but it is still a vice. I am surprised by the seeming widespread acceptance of this approach.Patrick Griffin
Gentle Giant >>Bob McMillan replied:
No Patrick, movers have gained a bad rap for topping tanks after loading, for lowballing, for promising dates and missing them, for refusing claims based upon "clear receipt", for overbooking and not showing up, for providing untrained crews, for providing drunk labor, for providing no labor, for holding shipments hostage in extortion-like fashion, et al, ad nauseum.Oversell is a perfectly honest procedure. The house sets the rules, draw on 16, hold on 17. Sales has the option to draw on 17 or greater. If you draw and hit your card you win, otherwise you bust. The company says you have to get $10/c (not my rate I'll have you know, just easy for math!) for origin services because they feel that is "what they can live with". Sales person gets in the house and sells the hell out of the truth, justice and the American Way and gets $14/c. Is this wrong? The competition is at $9 or $10 but your person gets $5-6 more for your office. Is this wrong? How about this, the competition is selling 62% off the 400M and your salesman lands a 20,000# shipment, full pack, Los Angeles to Alfred, NY at 48%. Is this wrong, unethical and borderline illegal? I don't think so.
Here's an example of what oversell represents. I had a competitive corporate move from the mid-west to "an overseas location". I move a bunch of stuff to and from "said overseas location" and decided to spend a few hours researching the logistics of the move as I had always worked with a forwarder to service this location. I obtained the competition's range of prices and obtained through-transit rates from my forwarder. After adding an *extremely* modest booking fee to my forwarder's rate, my rate was the same as that of the competition. I moved the shipment on my own (that means without the forwarder - sorry Bernie) and was able to take $3000.00 [read three-thousand-dollars!!!] as booking commission and came in at a lower rate than any competitor. Is this wrong?
Price is not value and value is not price. My mentor in life always told me that the seller sets the price. This was probably true in the 30s, 40s, 50s, even through 1985 in this business. Since '85 though, the customer in this industry has set the price, but we provide the value. It's not up to us to decide the value either, our job is to sell the customer on the value we offer! Our price is higher because we offer a greater value. Or, in the case of that overseas location, my price is the same......but this is the value I add. Now I suppose the moral, forthright, upstanding thing to do would have been to take a $200.00 booking commission and given the customer the absolute lowest price I could? I don't think so dude.
I need to maximize profits for my company and if that means that I have to make more money too, then damn it I'll just have to. We have gone around and around about discounts being too high and profit being too low and here is a perfectly legitimate way to increase profit - ask for more money. Throw out the *standards* for pricing - regulated intrastate, discounted interstate and company set pricing for non-regulated business. Think about margin and how you can put more to the bottom line. If your rep sells a 10 hour local at $10/hr over your standard he/she makes $8.00 more at an 8% commission. Is $8.00 worth even troubling over? If you compensate that rep 50% for oversell and they sell the same local they make $50.00! Granted, you would have retained $92.00 and now you only retain $50.00, but that's the econ/opportunity cost question - would your rep have bothered to ask for the extra money knowing the gamble is selling and/or losing the job versus earning an extra $8.00?
Now, sales persons must be contained at times and it's important to recognize what is in the best interest of the company. If someone comes to you and tells you that the $100 commission they have mailed to their home from the auto transportation company is the norm, you might have trouble on your hands. But if a rep tells you that they don't leave money sitting on the table you might think they have a head for business!
Bob McMillan
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