The sales process in logistics and freight forwarding is hard. With over 400,000 competitors around the world, and global players meeting customer needs far beyond simply moving freight, the sales cycle is excruciatingly long and competition often boils down to a few dollars per shipment.
Even with value propositions clearly laid out and defined, and every possibility, angle, and objection addressed, you still might not get the business at the end of the day. It happens.
What’s even worse than simply not getting the job is the consolation prize: the “chance” to participate in the next RFP or bid. The simple fact of the matter is that RFPs, RFQs, and bids are often a “race for second place.” It is usually a frustrating ending, resulting in a waste of considerable time, effort, and of course, money.
So why the disconnect? Why is there such a vast gap between your bid and what the client ultimately accepts?
The problem is in the value proposition forwarders convey to potential clients. It usually starts with pitching your expertise and relevance, and eventually, getting new business becomes a matter of price. However, in today’s market, shippers are looking for far more than just a low-cost bid.
Visibility Is Always Key
Closing a sale as a freight forwarder can take time, sometimes upwards of two years for a single sale. That’s two years of effort, bidding, negotiations, and concessions made on both sides, and even then there’s no guarantee of getting the business. The problem lies in the fact that sellers and buyers often confuse price with cost.
Price is actually a component of cost. They are not one and the same. Consider a trip to the supermarket. You go and buy groceries, only to come home and see an advertisement for a different store offering what you just bought, only cheaper. It’s a different option. If you had this information from the beginning, you obviously would have gone to that store for cheaper groceries, right?
Not necessarily. If that store is out of the way, or surrounded by roads that are notorious for traffic jams, you’d waste more time in travel and more gas for the trip than you would by simply buying the more expensive groceries. That extra time, gas, and effort are the other components of cost above and beyond the price of the goods you bought.
While it’s a simplified analogy, accepting a bid for business really isn’t that much different. It’s a matter of convenience. Sure, you might offer a better rate than another company, but if your service isn’t convenient to work with, the client will choose a better service provider, even at a higher price than yours.
This is where visibility comes into play. You can stay visible to the customers and prospects you already know and keep on trying to “catch a break,” or you can look beyond your current space into a larger pool of prospective clients where you are likely to find a better match for your services.
Today’s technology, in the form of B2C and B2B e-commerce, allows companies such as freight forwarders to expand their visibility beyond current markets into new geographic areas, or new verticals where they can make an impact but may not have the sales and marketing infrastructure to identify relevant opportunities. While this may not address your value proposition itself, it does absolutely increase the number of potential customers that align with your current value proposition.
Using the Tools of the Trade
One of the best moves any business can make is to adopt the right tools to enable efficiency. You wouldn’t use a hammer to drive a screw; why should procurement be any different? With the rise of industry platforms, companies can connect with highly relevant sales prospects, making growth easier than it’s ever been before. It’s just a matter of finding the right tool for the job.
Read More: How Technology Can Protect Your Profits
Think of companies like Amazon and Uber. Neither of them eliminated or reduced the number of online sellers or taxi cabs. Instead they created a new way for online merchants and drivers to realize revenues, get paid faster, and access more customers than ever before. The same is happening in the freight forwarding and NVOCC markets. It’s time to figure out your company’s growth strategy and how it can be accelerated by a logistics platform.
A version of this post was originally published in 2016 and has been updated.
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