The Key to Mold Sales
Establishing a niche and communicating your primary differentiators will increase sales.
Moldmakers are a special breed. They incorporate new technology and develop new, improved designs every day. In many ways, what they do is still an art form. Those who do it well should be proud of what they do and get a premium price for their work. However, that takes the right sales and marketing strategy, and moldmakers are not known for expertise in that area of the business.
During my 30 years in the plastics industry, I have visited more than 200 mold-building facilities across the Americas, Europe and Asia. The vast majority are owned and run by an individual who is an expert in mold design and/or mold manufacturing, but not sales and marketing. In many cases, the attitude is still “build it and they will come.” Here, I will share a few observations regarding this faulty thinking as well as some recommendations to change that mindset.
The most successful mold builders do not build everything for everyone. Instead, they specialize and excel in a few areas. Most moldmakers will tell you that the first time they build a mold for a new product, they lose money on the job. However, if the shop made a commitment to only invest in a few areas of the market, it could develop an expertise that is difficult for others to replicate. Carving out a niche can improve profitability.
The key for these companies to continue to grow their sales and profitability is to sell molds for these few market niches to a larger customer base. Some mold builders do this well, but many do not have the sales and marketing knowledge to take full advantage of these opportunities, the majority of which are far away and many of which are in different countries.
Molds is one of the most difficult sales areas in the plastics business, because it requires more knowledge than selling resin, resin handling, injection machines, extruders, blow molders or hot runners. To sell molds effectively, the salesperson needs to understand the intricacies of the part design and what they mean to the mold design. For example, can an undercut on the part be ejected from the mold, or does it require a collapsible core? If the undercut can be slightly reduced or the angle reduced or the resin changed, can it be ejected properly without the added expense and maintenance of a collapsible core design?
Because each molded part is different, mold selling requires a level of knowledge rarely found in salespeople. Often the sales employee or agent does little more than get the request to quote from the customer and present the finished quotation. Then he hopes he has the lowest price so he can get the order. However, if a mold shop specializes in just a few areas, management can provide the salesperson with much more useful sales tools.
Building Your Sales Story
To begin, identify the ways your shop offers potential new customers an advantage over the competition. For example, lower risk, faster cycle times, less maintenance, better uptime and less scrap. Let’s examine each one of these closer.
Lower risk. Many molders are concerned about trying a new mold builder because they have experienced problems with other suppliers. For example, molds are late, they don’t run reliably or they don’t run at a fast enough cycle time. How do you convince this customer that your shop is better?
First, document the molds your shop has built. If the customer runs a 2-gram, 28-mm beverage closure at a 4-second cycle time in a 48-cavity mold and you can show him a photo or video of a 96-cavity 2.2-gram closure mold that operates at 3.5 seconds, it becomes a much easier sale.
If your salesperson can communicate to the potential customer that the shop’s on-time delivery record is 95.2 percent and average late time is four days, the customer knows your shop takes delivery seriously. Your website should be constantly updated. Every new mold that is not a repeat should have a photo and spec sheet available to the sales person to share with potential customers that run similar applications.
Next, provide testimonial letters from satisfied customers. These do not have to divulge any confidential customer information, but the more detail you can share the better. For example, “We bought molds from ABC Mold for the last eight years. We have been very happy with the quality of their molds and the service they provide. They always stand behind their products. That is why we keep buying from them.” Or “XYZ Mold supplies the fastest-running molds for our type of parts. They typically run 10 percent faster than molds from our other suppliers.” These testimonials on the customer’s letterhead will mean much more than anything your salesperson can claim.
Faster cycle time. Running a faster cycle is often undervalued. I have a moldmaker client who developed an improved cooling design that reduced cycle time by more than 10 percent (typically 17 seconds instead of 20). His original mold design sold for $200,000. The improved cooling cost him an additional $3,000 for drilling more lines and using a thicker core plate to accommodate the larger cooling header. He asked if he could get an extra $6,000 for this design. To answer this appropriately, he needed to establish a few values:
1. The cost rate of the machine on which this mold will run. This customer’s mold runs on a 600-ton press, which has a cost rate of $60 per hour or more.
2. Hours per year the mold will run. In the case of this molder, this totals at least 6,000 hours per year.
3. Customer payback requirements. A two-year payback is a safe number, as for most molders it is two to three years.
Based on this information, the value of a 10-percent faster cycle can be determined as at least 0.1 multiplied by $60 per hour times 6,000 hours per year for a total savings of $36,000 per year. Based on a two-year payback, this justifies a $72,000-price increase.
The customer believed this was too expensive and instead decided to offer this technology add-on as a $40,000 option. The standard mold would sell for $200,000, but the high-speed version would be $240,000. Six of the next seven orders were for the high-speed version at $240,000. The seventh customer purchased the standard version because it only had enough orders to run the mold 2,000 hours per year.
The lesson here is that the price of the mold should be set based on the value you bring to your customer, not what your costs are. (If the value is less than your costs, this is obviously not a product line you should continue.)
It is also important to note that when it comes to cycle time, the press in which the mold runs is a critical factor. You need to have a properly equipped machine available for your acceptance tests. Ideally, these would take place in your own test room, where you can control the conditions, including water flow and pressure, air conditioning and dryers, if required. This allows you to prove the true value of your molds to customers.
A cycle guarantee can be a great incentive for a molder to select your shop. For example, one moldmaker quoted a mold that was $100,000 more than the competition because it ran a four-second-faster cycle time. The molder asked for a guarantee of the four-second improvement, which would be based on making good parts in the moldmaker’s testroom. The moldmaker would match the competitor’s price if the test run equaled the quoted cycle. However, it would cost an extra $25,000 for each second the moldmaker’s mold ran faster, up to a maximum of 4 seconds. This would yield the $100,000 premium. The molder’s response was, “Now you are putting your money where your mouth is. We have a deal.” The moldmaker reached the quoted cycle time and gained the customer’s trust.
Maintenance and uptime. Although these advantages are much harder to prove, they are still valued by the molder. For example, a mold that must be sent back to the mold shop for repair can cause days or weeks of downtime for the molder. This scenario shows the value of a mold design that permits maintenance to be done more quickly in the molder’s plant. Another example is a more rigid mold design that will have less deflection of mold components during injection or clamp-up, allowing the mold to run longer before maintenance is necessary.
Since maintenance is a critical step in the moldmaking process, be sure to always supply the molder with a list of parts they should have in house, along with installation instructions. (Note: If you want to do business in Latin America, invest in Spanish translation for your mold maintenance procedures. This will help to avoid the loss of a customer because the molder’s technician cannot understand the recommended maintenance procedures.)
Scrap. A mold that can hold tighter tolerances will often result in significantly lower scrap. This occurs often with very thin parts where one side is thicker than the other because of core shift, long tubular parts where it is difficult to machine the cavity accurately, flip-top closures and multi-material parts, to name a few.
The value of the scrap reduction depends on the recyclability of the scrapped part. For example, a polyethylene container with core shift can usually be immediately ground up and reused with the virgin material. Scrap value also depends on when and where the bad part is identified. If a bad closure is only identified by a leak that occurs after it is put on a filled bottle with a label, reducing scrap 1 percent is much more valuable to the molder. Ask your customer where it experiences the largest scrap cost. Then, if you can offer a better way, you are in the driver’s seat.
The key is understanding how your molds and services are different from your major competition’s, how your customers and potential customers value these differences, and how your sales presentation and marketing shows your value and justifies your price.
You can contact Michael Urquhart here.
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