How to Handle Sales Backorders – Q&A for Sales People

by Dave Kahle

Q.  I recently received an order from a new customer for 10 items.  We back ordered four of the ten.  My customer is quite upset with me and my company’s purchasing agents.  Our relationship is strained because of someone in my company’s poor performance.  What would you do?

           A.  Ah.  The proverbial “backorder” problem.  What would we talk about if we couldn’t complain about backorders? 

           First, let’s recognize that the problem is as old as the job of the salesperson, and we will have to deal with this problem until the day we retire.  The problem is a result of conflicting pressures.

           On one hand, your company only has so much money and space, and just can’t buy and hold or produce everything in the hopes that someone somewhere will eventually buy it.  As a salesperson, however, you want everything available instantly.  So someone is always going to be disappointed.

           Throw in the fac. he customer probably doesn’t want to pay anything but the lowest possible price for the product, and you can see that there is an inherent tension here.  If the customer would be willing to pay twice as much for the product, your company could afford to build huge inventories.

           But, since that is unlikely to happen, your company needs to control its investment inventory so that the company has a chance of making money.  In other words, you are always going to have some backorders!

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           OK, so what do you do about them?  The first thing is to prevent them with clear communication and appropriate expectations.  Don’t assume that because you backordered a customer that means that your colleagues are uncaring or incompetent.  That rarely is the case.

           For example, if your company has been routinely selling about 100 of a certain item each month, and you bring in a new customer with an order for 20, it’s unreasonable for you to expect your new sale not to cause someone some problem.  The sudden increase in demand from 100 to 120, without any prior notice, will probably mean that someone is going to get backordered. 

           The problem wasn’t the poor job your purchasing colleagues did; it was the sudden increase in demand brought on by your new order.  Further, if you promised the customer immediate delivery on an item, he is ordering for the first time, you probably created unreasonable expectations in your customer’s mind, and promised something that you could not really deliver. 

           It would have been more reasonable to have promised the customer a two- or three-week delivery on the first order, and to have informed your purchasing person of the coming increase i... READ THE FULL ARTICLE HERE