Merrifield Consulting Group

















SELLING SERVICE THROUGH DISTRIBUTION CHANNELS

 

I recently addressed a New England Manufacturer's National Sales Rep meeting about an under-emphasized opportunity - selling service value. The manufacturer has historically commanded a premium price for better quality hardware, but they were concerned that they had not been getting full appreciation for their great service which includes one-stop sourcing, high inventory fill rates, 24 hour shipping and more. As their products pass through the channel, their concerns were: whether each channel member's value-added service was adding or subtracting from their own; and was this cumulative service value getting sold?

 

In general, if any one of the channel members - the reps, the distributors - find that too many other competitors are selling equally excellent products, do they look for a competitive edge through service value? How many companies can: list 5-10 elements of basic service excellence and, the related economic benefits to the customer?; state measurable statistics to support service claims?; and perhaps guarantee elements of service excellence by providing a credit-fee to a customer for not delivering promised service levels?

 

For example, one distributor I know of guarantees that: he will ship 100% of all orders phoned in by 5 PM; he will pick and price perfectly; and a few other things - or, the customer is given a $30 credit. This distributor sells the benefits of these "features of service excellence" constantly. Such capabilities create value unique to the firm, and lower operational costs because it is cheaper for personnel to "do it right the first time."

 

Today three trends are making service excellence most important:

 

1.       Large customers often see more variance in the quality of the service from suppliers than in the quality of the hardware.

2.       There are often fewer, bigger customers to sell because consolidation of most businesses continues.

3.       And, many customers are reducing the number of their suppliers and lengthening contractual purchasing agreements.

 

Because of these trends, "relationship selling" built on a bedrock of guaranteed service excellence will become critical to locking-up key customers or being locked out.

 

Questions for competitive survival in the future are:

 

1.       Are we measuring, improving, and selling elements of service excellence to become low cost operators and best value suppliers?

2.       Can we educate customers to buy service value which offers a lower "total procurement cost" even at a higher price?

3.       Are manufacturers able to sell their service value through the channel or does it go unappreciated and get diluted by mediocre service from reps and distributors?

4.       Are "channel partners" pushing for purchasing systems with the large, growing, surviving customers using service excellence as the edge?

 

 

 

Merrifield Consulting Group, Inc. Article # 3.4