Do you think your customers appreciate the value of the value-added services you offer?
- If you think so, just how valuable are they to your customers?
- What are the real dollar amounts that are assigned, by your customers, to the value-added extra you offer?
- Have you told your customers the real-dollar value amounts that you have assigned to the value-added services you offer?
- Have you even assigned real-dollar amounts yet?
Recently, in dealing with the issue of value through the eyes of your customer, I challenged a group of sales agents for an international manufacturing company to answer these questions at their sales meeting.
You need to know this company has positioned itself as the “Cadillac” of their industry. I saw two problems with their positioning: First, Cadillac is no longer considered at the top of the heap, so the company is unfortunately stuck in an erroneous and old paradigm mindset. Second, since so much of what they offer is sold to state departments of transportations (DOTs), both the agents and manufacturer have resigned themselves to believing that only the low bid wins. Why be the “Cadillac” (thinking Cadillac is at the top of the heap) if you believe only low bit, commodity-selling wins?
I believe that this company yearns for customers that both understand the value of and appreciates top quality products and service. I also believe that they are just like so many others in manufacturing and distribution that cannot clearly articulate the total value of their offering.
So, they find themselves stuck on the “Commodities R Us” paradigm.
In this example, lets explore further. The DOTs do not only want the low cost, they also want the best total deal, or what I call the total value package. Any customer must look beyond the price to the total cost of procurement, or doing business with a particular supplier. And, it is the absolute responsibility of the sales person to educate the customer as to their total value package offering. What was surprising to me was that these sales agents had very, very few answers. What about you?
Would you agree that in retailing, distribution and manufacturing, there are few secrets? Meaning, that most purchasers know where to get most of the offerings of their industry—and most of your customers know it. With that being said, one can play the “Commodities R Us” game or do something else. The something else, I believe could be differentiation through your total value package. The challenge for you is to determine the true and honest dollar-value of the value-added services you offer.
An important element in offering understandable value is to first educate your customers in the fine are of buying better. You know what I mean—how they can change their buying behavior and if they do, what’s in it for them?
- This could mean ordering using a timing method that allows more lead-time.
- This could mean inventory management and automatic replenishment.
- This could mean ordering less frequently, enabled through better usage projections.
- This could mean distributor and contractor collaborative selling.
- This could mean buying pre buying some supplies in a different season.
- This could mean bundling multiple items from one specific manufacturer. This would be seen as the direct opposite of cherry picking.
- This could mean…(you fill in the rest of the bullet points for yourself).
Value is all too frequently, as elusive as a leprechaun and his pot o’ gold—but it does not have to be this way. You simply have to figure out what your customers consider to be valuable, do it for them, and then tell your customers what it is that you did for them. This lesson was, by accident, drilled into my head very early in my own selling career.
I’ll never forget the day I stopped into Park Pharmacy in Paso Robles, California. It was the mid-1970s and I sold sunglasses to retail stores at the time. Yes, I said sunglasses! Well, when I walked into the store on one of my regularly scheduled service visits; I noticed some product from another vendor on my display. Being the territorial salesman that I was at the time, I went directly to the owner, Bob, and asked him about them.
He told me that a competitor had stopped in and told him that this particular style of sunglasses was currently a very hot item. Bob asked me, “Are they popular?” I answered in the affirmative. Bob went on to say, “That’s why I bought them.” I proceeded to tell Bob that this “hot” style had already been on the display for the last couple months or so from me. He said, “Oh!”
Gosh, wasn’t it Bob’s responsibility to know what was in his store? Wasn’t he supposed to trust that I’d take care of him? Wasn’t he supposed to be loyal to me?
You and I both know that the answer to the above questions is a resounding, NO! It was my responsibility to tell Bob what I was doing for him. If I didn’t tell him, how in the world was he supposed to know? This applies to you too. How in the world are your contractors to know what it is that you are doing for them if you don’t tell them?
Value added services are not perceived as being valuable if your customer doesn’t know what it is that you are doing for them.
Tell your customers what it is that you are doing for them. If you do not want to be relegated to living in the world of commodity selling, where low bid wins…
- Acknowledge that you are responsible to educate your customers as to how they can buy better.
- Acknowledge that you must ferret out what services your customers really do believe are of value to them.
- Acknowledge that you must help your customers to determine the real dollar value of your “value-added” offering.
- Acknowledge that you must, as you would do with your young children, continually remind your customers about the real-dollars you save them when they do business with you.
I believe that you can access that pot o’ gold at the end of the rainbow if you know where to look. The best place to look is at where, when, and how you choose to deliver and demonstrate that extra value-added service that you give to your contractors. It is only valuable if they consider it to be of value and they know you delivered if you tell them.
Ed is the Founder and CEO of the 501(c)(3) non-profit public charity, Cigar PEG Philanthropy through Fun, and president at Rigsbee Research which conducts qualitative member ROI research and consulting for associations and societies. He has been called “the dynamite that broke up our log jam” by association executives—rarely politically correct and almost always provocative—and from a dozen years as a United States Soccer Federation referee, Ed calls it the way he sees it. Exceptional resources at www.rigsbee.com.