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Common Sense Advisory Blogs
How Tightly Do You Manage the Sales Estimation Function?
Posted by Hélène Pielmeier on February 29, 2016  in the following blogs: Best Practices, Supplier Business Issues, Translation and Localization
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How much does translation cost? That’s not an easy question to answer. LSPs spend a lot of time on the sales estimation activity. This process, often referred to as “quoting,” requires developing estimates of the price and turnaround time to complete jobs. That means determining which resources they need to do the job, matching them to requests as diverse as user manuals and marketing websites, and figuring out how to do it profitably, on-time, and to the client’s expected level of quality.

To identify best practices in how language service providers set up the function, CSA Research conducted in-depth interviews with LSPs. More so than for any other function, LSPs often spread the sales estimation responsibility across many roles inside their companies. In our interviews, we asked who makes the final decision for pricing and quote approvals. We found a range of approaches, with two standing out – and a third the best practice:

  • In the majority of cases, executives hold the pricing power either as sole decision-makers or as the final approvers of solutions proposed to them.

  • In some companies we interviewed, sales and project managers have full pricing discretion. LSPs have to closely monitor these employees lest they misjudge or misquote an opportunity – and cost their companies too much, miss deadlines, or do not meet client quality expectations. Some LSPs add some checks and balances to lessen the risk. For example, the salesperson may require strategy approval from a production team or some rate validation from the vendor management team.
We found that a tiered approval system is the most effective practice (see figure). It prevents delays or bottlenecks from reviewers overloaded with less important quotes. In those companies, we found a systematic escalation process for quotes: 1) Some jobs require no approval because the impact of mistakes is low – this bottom tier comprises minimum-rate or low-value jobs and accounts with pre-established rates; 2) the second level invokes the traditional four-eyes principle to catch potential mistakes and applies to repeat work that does not have particularly challenging elements or circumstances; 3) the third tier adds the additional review of a manager for large, competitive, or challenging opportunities; and 4) the top level requires an executive to examine high-impact decisions and approve contracts.



What does this best practice achieve? A systematic approach to quoting with a well- defined quote approval process ensures completeness and accuracy, while it balances client requirements against your profitability and price competitiveness. And pricing just right is an art. Our upcoming report, “ LSP Pricing Strategies,” will address topics such as pricing models, strategies for deciding which rates to use, how to apply discounts and premiums, and TM discounting models.

 

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Keywords: LSP Production Models, Sales and marketing, Sales estimation, Translation management systems

  
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