Why fee-based services for Distributors
For years distributors have talked about the value of their service to customers. Only a few have dared to “put their money where their mouth is” by initiating a program to actually charge for the work. Along the way, our industry has been under attack from online sellers with no ability to add value. This escalates our people costs while the customer demographic grows more dependent on the service distributors provide every year.
We face a perfect storm of issues demanding a change in our business model. Think about this…
- Gross Margins are under attack. No product or industry segment is safe from margin erosion.
- People Costs outpace the increases in sales. Qualified people are in big demand and their salaries grow faster than the rate of inflation.
- Demographic Change means our customers have fewer trained and qualified people. Customers need services now more than ever.
- Business Trends like right sizing, lean operations and other techniques translate into fewer trained staff members for our customers. Again, demand for our service grows.
- Microprocessor-based Products are everywhere. Low cost products, which require programming, drive customers to call for an hour here and an hour there, have found their way into every industry. Distributors are the ones providing the help – mostly for free.
- Industry Experts tell distributors only 50 percent of their customer base actually contributes to the bottom line. Why? They require more services than their gross margin contribution provides. This is an unprofitable and unsustainable model.
Not Convinced – If you don’t provide the services, who will? Read this feature article from IMARK Today. Click Here