- The August CEO Letter summarizes what Vice Chairman Lee Sang-woon emphasized in the <Conversation with Top Management> made on July 28th. -
Sales Part should find out the qualities which can raise customers' value in use
It is never easy to save the production cost by 1~2%. But, the Sales Part tends to consider price discount by 5% or 10% as something easy. To make a profit, we have to sell at a fair price, but if we give up our price so easily, there is no way to make a profit.
We have to keep in mind that 'customer' is the basis for our business and we can obtain profit when we improve customer value. Sales Part should understand correctly the processes and using properties of each customer to find out the value by which the customer's quality can be raised and cost can be reduced. And, Sales Part should let this be delivered to the R&D Part and Production Part, and guide them to make products which can raise customer value so that we can sell at a fair price.
Sales activity should be made knowing accurately the differences between our products and those from competitors
It is quite important to know exactly the differences between our products and those from our competitors. In most cases, customers try to cut the price down pointing out advantages of our competitors rather than those of our products. We have to understand customer requirements through conversation with them, and let them know superiority of our products which can satisfy those requirements. And, if competitors have better points, we have to understand well and use those to supplement our weakness and secure new customers
Even in the case of full-sale, we should try to improve the sales structure and raise prices by discovering uses, customers and markets continuously
As our production facility is limited, such strategies as can use the facility efficiently are also necessary. We have to make continuous efforts to find out more profitable uses and discover customers and markets that need these to improve our sale-structure. Even if the currently produced products are all sold out, we should always survey markets and understand customers' needs to keep making a better profit structure and products portfolio.
Orders should be obtained considering customers' requirements and our level, so that we can meet required quality, cost and due date. That is how we prevent quality failure or delayed delivery and obtain trust from customers.
Sales activity should also base on knowledge of products and understanding of the production process. Receiving customer orders and merely delivering them to plants without accurate understanding, we cannot correctly produce the products customers require. Also, if Sales Part just obtain orders and say to plants, "Please adjust yourself to these specifications!" in spite that our technical level or production capacity cannot meet customer requirements, the product quality cannot meet customer requirements and due date cannot be obeyed. This will eventually lead us to the vicious cycle of confidence sagging and cost rise. To prevent this in advance, sales personnel should do sales activity with good understanding of the level of difficulty of customer requirements.
Methods to increase sales and sell at a higher price with differentiated service should be studied
To increase sales and sell at a higher price, we should be able to provide better service than our competitors. We have to strengthen partnership with our customers by submitting quotations required by customers at the right times, absolutely complying with due date and providing technical service.
Price adjustment should be made only after the circumstances of market and customers are accurate understood
Recently, variability of market prices is growing substantially in several industries due to an excessive supply and oil price drop. It is also important to understand well the circumstances of market and customers and propose a reasonable price at a right time.
I hope that all parts including the Sales Part particularly understand well these points and try harder to increase profit.
You can see more details at the HBS site in HOPE.