Metalforming Insights Sales and Quoting Survey

This is article is part of a series of monthly articles produced by Harbour Results for PMA’s MetalForming Business Edge e-newsletter. Click here to view the full collection of articles.

Do your quoting activities have focus? If not, the third quarter Metalforming Insights survey, which focused on sales and marketing, hints that maybe they should.

The survey results are in and the Harbour Results team is busy combing through the data for insights to help manufacturers strengthen their business. With all the challenges and changes facing the metal forming and metal part consuming industries in 2021, we are particularly curious to know if it’s impacting sales. 

A Look at Quoting

The first factor we looked at: quoting activities. With the pandemic, raw material constraints, labor challenges, demand volatility from chip shortages, shipping bottlenecks and short-term government-funded consumer spending, and a major technology shift in automotive, we had to ask ourselves, “Is anyone still thinking about new business opportunities amongst all this chaos?”

The short answer, yes. Based on survey participants providing quoting details, the overall median average hit rate of the number of quotes awarded over the number of quotes sent for the first half of 2020 was approximately 11%, but with an extremely wide range. The good news is the data shows the average hit rate on the number of quotes increased during the first half of 2021 compared to the first and second halves of 2020. But then we had to ask if this perhaps was due to less quoting in 2021 versus 2020.

Looking further into the data, the answer is no. The width of the sales funnel for survey participants in the first half of 2021 was, on average, larger than the first and second half of 2020. Specifically, early analysis of unvalidated data suggests the average sales funnel increased from 2.5 times in the first half of 2020 to approximately 3 times in the same period of 2021.

Knowing that sales cycles vary widely in metalforming, the higher hit rate for the first half of 2021, in addition to a wider sales funnel, could suggest that industry buyers are getting back to work with new programs or sourcing decisions from 2020 quoting activities.

Same Experiences Across the Board?

Digging a bit deeper, we wondered if the more profitable participants in the Metalforming Insights survey are having a different experience.    

So, we took a look, comparing quoting activities and success for metalformers with a higher-than-average profit with the rest of the survey participants. The data suggest that the more profitable metalformers do have a different experience, starting with a slightly higher average hit rate compared to the rest of the survey population. However, the scope of the difference varies by time period and whether the hit rate was measured in quantity of quotes or total quoted dollars of business. But in the end, the results are consistent: the more profitable companies appear to have a higher hit rate.

Why is that? Are the more profitable companies just quoting less? As it turns out, they are! While the width of the quoting funnel relative to same-period revenues had a large range of responses, the median average of the quote funnel for more profitable companies was smaller. So, how can these metalformers get away with quoting less and still survive?

Our assumption is the more profitable companies have a strategic focus. That means they know what they’re good at, and therefore have a better sense of what they will and will not win. Armed with that knowledge, these companies can be more selective in their quoting activities. And that’s where they get a narrower sales funnel with a higher hit rate, directly translating into more effective and efficient use of technical resources to produce value.

But keep in mind, this is only our initial look at what the data tells us from the third quarter Metalforming Insights survey. For the participants in the survey, there will be more insight to come. Meanwhile, we encourage everyone to take a moment to think about what your data tells you about how to improve the effectiveness and efficiency in your quoting activities.

About the author: 

Jason C. Brewer, a Director at Harbour Results, helps clients develop business strategy and assists them with improving their operations and sales processes to achieve their strategic objectives.  In addition to over a decade of experience consulting manufacturers, Jason has held engineering positions in manufacturers, management and executive positions in business development and strategy.  He is a licensed Professional Engineer and certified Strategic Management Professional by the Association of Strategic Planning.