How Sales Software Can Reduce the Cost of Order Errors
February 21, 2023
Reducing errors isn't just part of the best practices of high-performing sales teams – it's also necessary to protect your business from losing money.
It may not surprise you that human error and simple customer ordering mistakes can cost your business money. But it's hard to put a dollar amount on all the ways order errors can cost you. In this article, we will discuss the ways order errors can harm your business and three ways you can reduce or eliminate them.
Even minor errors can cost hundreds.
When taking and processing sales orders from customers in-person, by phone, or even by email, sales reps still have to manually enter the order into their system. Details can be easily misunderstood, like making a small error when manually entering orders. Details can be misunderstood. Add to that the fact that orders placed over the phone or in person leave no proof of what was specified after the interaction is over, and you can see how easy it is to get an order wrong. A simple error like a typo can lead to some pretty high costs, both in money and time.
How to calculate errors.
Calculating the true cost of order errors is more than just adding up the financial cost of each error. There are five ways order errors can hurt your business:
- Lost inventory: When customers receive the wrong items, you lose inventory because you then have to also send them the correct items. Over time, the cost of replacing inventory that was mistakenly shipped can add up.
- Increased shipping costs: Shipping costs money. And shipping a corrected order to fix an error costs you twice as much. Even if the customer returns the items that were sent to them by mistake, often you have to pay for the shipping to get the items back.
- Increased labor hours: New incoming inventory needs to be unloaded, organized, cataloged, and sorted into your current inventory. And when customers return items that were sent to them in error, the items need to be checked for damage, repackaged, and put back into inventory as well. Both of these tasks cost time in labor.
- Discounting items: When incorrect items are returned, you can resell them. But usually you have to do so at a discount if the original packaging was opened. These discounts can eat into your profit margins for the merchandise. The more errors that are made, the more items you have to sell at a discounted price.
- Damaged business reputation: It's a buyer's market for most industries, and customers have a wide choice of suppliers for their orders. If your company has a reputation for making order errors, it can cost you customers in the future.
3 Ways to reduce errors.
You may be tempted to prevent errors by coaching your sales team at the employee level. But simply telling them to "double check the orders" and "make sure you confirm everything" doesn't address the fact that certain ordering methods are fundamentally vulnerable to errors. Reducing those errors comes down to three ways of changing how they are placed.
1. Manage all product information digitally.
Product offerings change, and pricing fluctuates over time. Trying to keep up-to-date with all of these changes with a printed catalog is nearly impossible and certainly not cost-effective. It's not uncommon for printed product catalogs to become outdated before they're replaced. If you're still using printed catalogs to track product information for customer ordering, you can be setting up your customer ordering for failure.
You can reduce the chance of errors by digitally managing all your product data and pricing information. With digital product management, product and pricing data can be updated instantly, ensuring your sales reps and customers always have access to the most current information when placing orders.
2. Encourage digital ordering instead of manual ordering.
When a customer manually places an order by phone or in person, they tell the sales rep what they want to purchase. The sales rep takes the order and manually inputs it into their ordering system. At each of those steps, there's a possibility of an error. An order can be misunderstood or misremembered, and a sales rep can make an error when manually typing it in. To minimize the number of weak points between the customer and inputting the order, it's simplest to let the customer input the order themselves digitally.
With the right ordering software, your customers can enter and submit product orders themselves. This reduces the seller's risk of errors and places the responsibility for order accuracy on the customer. By enabling the customer to digitally order for themselves, there's far less likelihood of a miscommunication resulting in an ordering error.
3. Use an integrated sales enablement tool.
With the right sales management software, your digital product catalog and your ordering interface are integrated together. This allows the customer to browse your product offerings and pricing and then make a purchase order, all in the same platform.
By using sales management software with an integrated digital product catalog and enabling customer-entered ordering, you'll be less likely to make costly order errors.
If you’re looking to reduce your customer ordering errors and don't know where to start, click here to learn more about what Perenso can do for you, or talk with an expert and see if our sales management software is right for your business.