ValueAddedDistributors have always known that their success would rise or fall on their ability to add value for customers.

But as the definition of added-value extends beyond familiar standbys like local or consignment stocks, next- or same-day delivery, off-hours service, or specialized expertise, TUG Board member Mark Law is urging companies to adopt a three-step approach to making added-value more than a “sound bite”.

“We need to have a process in place to identify the added-value and document it,” says Law, Group IT Manager with the Hayley Group in Doncaster, UK. That makes it essential for distributors to:

  • Understand what customers see as added-value and get their sign-off on the definition
  • Identify opportunities to add value that benefit the distributor’s business, as well as the customer’s
  • Document the savings in time and dollars, so that customers can readily see the value you’ve added.

“It’s not necessarily about picking out specific issues,” Law stresses. “There’s no rule that applies to every business. So we have to have a process in place” to identify the issues that matter most to each customer.

Avoiding the Commoditization Trap

In an era of fast production and mass automation, individualizing a distributor’s service offering sounds like something new. But Law says distributors do it all the time—or if they don’t, they should.

“It’s always been there,” he explains. “Otherwise, we end up just being the cheapest vendor, which is a game none of us should want to get into.”

But as the business environment gets tougher and customers become more discerning, it takes more to make the offer stick.

“In the past, we could just say we had the best service in our area. Now, customers want us to prove it.” That begins with understanding what changes or improvements will matter to them most—even if it means getting a different story from each major account, and responding accordingly.

“You have to have that conversation with the customer before you start doing anything,” Law stresses. “If the customer needs help reducing stocks, you have to ask what it’s worth to them.” With the details clarified and the customer signed on, “you can start keeping a record and reporting back on what you’ve achieved for them.”

Learning to Be the Best

So how does a systematic strategy for adding value help build your business? Law says a customer-centered approach positions the distributor as a trusted advisor, not just a supplier of a particular product line. And those in-depth conversations about what constitutes value will bring you ideas and insights that you can generalize to other customers.

When adding value works, it can cover many different aspects of a customer’s business, from revenue to asset management, from administrative savings to training and technical support. The focus can range so widely, in fact, that Law stresses the need to set priorities.

Register today for an open forum on Value-Add functionality in SXe, August 8, 2016 at 11:00 AM EDT. Whether you modify product internally or send material out for fabrication, coating, assembly, etc, this discussion will prove fruitful!