After the recession, MDM wrote about how customers who pared staff and resources wanted distributors to do more for them – but did not want to pay more. Some distributors tried to extract more out of customers in return, but many more added on the services at no extra charge just to hold onto the customer in a tenuous environment.
Now more distributors are looking at ways to improve how they document the value they add to solidify those customer relationships. Technology is making that easier. But distributors have also been driven to document value-add more effectively due to competitive threats.
Customers are the main driver, however, said Tim Underhill of Underhill & Associates. They remain under pressure to reduce operating costs. “The easiest way to do that is to go to the supplier and ask them to reduce the price,” Underhill said in How to Get Customers to Fight for You.
But you can only go so far on price. Distributors need to build processes for better value documentation that become a part of the sales process and are focused not only on price or even inventory savings, but the entire picture. That may include the impact of product substitutions, services or other factors such as reduced downtime and labor costs for the customer.
The last thing a distributor wants is for a customer to jump ship at the promise of a lower price or a “Me, too” service offer from a competitor.
Read more about Underhill’s approach and three areas distributors should focus on to successfully move forward on value-add documentation in the MDM Premium article, How to Get Customers to Fight for You.