5 Value Drivers That Don't Involve Cutting Prices
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:
- Provide documented cost savings. For example, helping customers avoid costly downtime through safety initiatives, heroic recoveries or other programs.
- 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.
- Offer marketing or merchandising support. For example, providing small customers with marketing materials and programs.
- 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.
- Share what you know. For example, guidance on succession planning, professional management or analytics.