The Changing Perception of Value
During the past 60-days we have experienced the financial equivalent of three trips around the Tower of Terror roller coaster ride. Top this off with a new U.S. President; new Congress; and we might compare our times with a journey through the spin cycle of a business washing machine. We have heard tales of Wall Street, Main Street and now even our street has changed a bit. Never before has Distribution Management team been challenged with helping their organizations redefine their organization’s approach to customers more quickly.
Commodity salespeople sell, the customer service folks enter orders and warehouse people ship product. But, knowledge-based distributors add that “fairy dust” we call value. This is a special value. It goes above beyond the intrinsic worth of products and technology listed in catalogs. We all know – if the products “sold themselves”, the distribution channel would have gone caput sometime around 1998.
Now consider this: The changing economic landscape has changed the way our customers perceive value. We can either flounder in our efforts to swim against the current of change, or we can harness the power. Let’s drill into this.
During times of economic expansion customers place highest value on the ideas you present which drives growth. For example, if your idea allows them to increase the outflow of products by 4-5% - you have contributed great value. But as the fluctuation trends downward, things change. The highest value shifts from growth to cost reduction and avoidance. Further, customers’ adversity to risk takes a giant leap forward. Walk a mile in their shoes, taking a big risk in tough times can be career and/or company threatening.
If you will please note, I said they place the highest value. It doesn’t mean the other things loose their value, but the value changes. Let me illustrate this with a short story from America’s past. Families in covered wagons trekked across the great wilderness with all their worldly possessions loaded aboard. When the mountains turned to desert they were faced with a choice – grandma’s piano or a couple extra barrels of water. And while that fine musical instrument still had value – for the next 300 miles water shifted to a higher value. Today’s economic situation has put some companies into a similar mode with cash flow. They want to hold on to more of it for longer periods. Align your value statement with this thought and the force of nature work with you.
Now here’s the rub. All too many distributor organizations have taken a circle the wagon approach (pardon the continuation of my Conestoga analogy). They push their sales team to do more of the same. First, they hesitated to teach their team how to measure and record real value. Now, they continue forward pushing the same products with increasingly poor results. And, they chalk it up to the economy.
Let me implore you. No, let me beg you. Take time at your sales meetings to discuss value – customer value. Not just value as some obscure term. Discuss value in the most meaningful of terms - that 5,000 year old metric of value – Money. The companies who use these times to build, measure and report back the value they provide will be the winners when things get back to normal.
Before I sign off
If you assume your customer contacts already understand your value, you are terribly mistaken. Report after report (from the folks who track our customers) indicate, our customer’s management team has the same problem we do: their people don’t understand financial drivers. Your company’s sales team needs to lead the way and help customers connect the dots.