5 Value Drivers That Don't Involve Cutting Prices

Written by Mike Marks on Monday, 29 October 2018. Posted in Business Strategy, Distribution

Most customers will ask for a price cut if you ask them how you can provide more value. But discounts are the surest way to erode margins and start a race to the bottom. Realizing this, well-intentioned distributors look for other ways to provide value, such as “load up and buy now” programs or back-end rebates. But promotions like these, which can lower customer inventory turns and hold back customer margins, don’t provide real value.

In this article for the World Millwork Alliance, Mike Marks outlines five better ways to provide customer value that don’t have anything to do with price cuts:

  1. Provide documented cost savings. For example, helping customers avoid costly downtime through safety initiatives, heroic recoveries or other programs.
  2. Streamline or automate replenishment. For example, implementing an online, password-protected systems customers can use to view past invoices, and receive email reminders about payment.
  3. Offer marketing or merchandising support. For example, providing small customers with marketing materials and programs.
  4. Help them to invest more resources for their own growth. For example, inventory consignment that frees up customer dollars tied up in inventory so they can hire more salespeople.
  5. Share what you know. For example, guidance on succession planning, professional management or analytics.

Read the full article in the Fall 2018 issue of Millwork and More.

About the Author

Mike Marks

Mike Marks

Mike Marks co-founded IRCG in April 1987. He began his consulting practice after working in distribution management for more than 20 years. Over the years, his narrow focus in B2B channel-driven markets has created an extensive number of deep executive relationships within virtually every business vertical in construction, industrial, OEM, agricultural, and healthcare.

Mike has led project teams that improve market access by aligning resources to growth opportunities serving manufacturers, dealers, and distributors. Clients have ranged from small privately owned firms to many of the industry’s market share leaders. Ownership structures have included owner-operators, private equity, ESOPs, and publically traded firms. Mike is proud of the teams work and the confidence clients have shown with additional project work.

He has written extensively, and is frequently quoted on many industry issues. He has substantial board experience on both public and private distribution firms. His contributions to the field include serving multiple terms as a Research Fellow with the National Association of Wholesaler-Distributors, permanent faculty at Purdue University’s University of Industrial Distribution, eight years as Graduate Adjunct Faculty in the Industrial Distribution Program at Texas A & M University, and rendering several precedent-setting expert opinions in contract disputes between manufacturers and distributors.

Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, an $800 million vertically integrated electronics distributor in Stamford, CT. Mike’s path to management in his early career was through increasing responsibilities in sales and sales management. He also completed a tour of duty as a manufacturer’s representative.

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