Yes, “What can your customers do for you?” This was the question I posed to several manufacturers and distributors in preparation for a recent seminar titled, Dealing with Vendors. Most had a difficult time answering. Why? Because the focus is generally down the distribution channel, asking what else can be done for customers. Rarely, is it reciprocal that customers ask what they can do for their suppliers. So much profit, or discounts, depending on your side of the negotiating table, is being squandered.
At a certain point, when you, the manufacturer or distributor, have done all that you can for your customers; given the best discounts, the best service and they want more, it’s time to turn the paradigm around. If you take a close look at your total offering, you might find that you’ve bundled your products and services into a single lumbering package. If you look close enough, you might find that some ‘value-added’ things you offer do not provide the value to your customers that you expect. And, they take it any way. They say, “It’s free isn’t it?” No, it’s not free, and it’s your responsibility to educate your customers!
You have to partner with your customers to learn what creates value for them and what does not. If you give your customers something in your offering that costs you time or money, and your customers don’t really need it, you are throwing valuable dollars down a rat hole. And, you don’t really have to. Here’s what I told the school equipment and supply purchasers at my seminar in Charlotte: “Ask your vendors for a better value package.”
Better Value Package
First, I suggested that the purchasers learn what they could do for their vendors. It was a difficult concept for the purchasers as well. Things that didn’t cost the end users money but created value for their vendors could save their vendors money. In turn, the manufacturers could pass the savings down the distribution channel. In turn the end users could ask for a better value package. The ‘better’ could be bigger discounts, longer warranties and quicker service, just to name a few possibilities.
Through interviewing manufacturers and distributors, I learned what would create value for them in the school supply industry. While the below listed suggestions might not create value for you, you must ask yourself what would create value and tell your customers. Below, are the ten money saving ideas I shared with the school supply end users. Manufacturers, distributors or end users can profit handsomely from the following:
- Specifications that are more clear and specific would allow for a sharper pricing pencil.
- Getting orders in earlier, during the winter, would help the workflow load. Many factories are not doing much of anything during the winter and orders coming in earlier could receive better discounts.
- Purchasing as much as possible from one vendor. The more comprehensive a package purchased usually generates the bigger discounts.
- Guaranteed shipping dates can be big savings to manufacturers of large items. When an end user calls to delay the shipping date, the manufacturer has to store it somewhere and has to pay for the storage space. Factory walls are generally not made of rubber, so they can’t always be stretched to accommodate for delays and planning errors on the part of the end user.
- When an end user can provide a single location for shipments rather than to several satellite locations, the manufacturer saves time and money. At the least, the end user saves shipping costs.
- Buying in standard industry bulk packs yields bigger discounts over buying short and forcing the manufacturer to break and repack standard industry packs.
- Accepting first and fourth quarter shipments from many manufacturers earn better discounts.
- Purchasing committees are nightmares for most salespeople.Much time and energy is wasted.Many purchasers believe this gives them additional leverage. Really, it doesn’t. It just costs everybody money. Streamline the purchasing process and receive better deals.
- End users can partner with one another and combine shipments in geographically intelligent areas and reduce freight costs.
- Cooperative purchasing saves everybody money.Additionally, some end users do not realize they are covered under state contracts and can get better deals accordingly.
What Can They Do for You?
Finally, regardless of your industry, if you are an end user, partnering with your vendors can deliver a better value package. If you are a manufacturer or distributor, partnering with your customers is productive. Teach your customers what they can do for you. It will allow you to give them more value for their purchasing dollar. And you’ll get more loyalty in return. What you really want, whichever side of the table you reside is Outrageously Successful Relationships (OSRs). Build your OSRs with care and enjoy the benefits that are sure to follow.