August 1, 2017
By Bill Wade, Wade & Partners
Every survey says it, ‘Quality, Availability and Price’ is how I buy. Do you buy this?
Turning value-added services into a profitable venture is walking a tightrope, because so many customers do tend to focus narrowly on price. That, in turn, pushes heavy-duty distributors and truck dealers to measure themselves against one another based on price—a trap that can easily push value-added services even further down that “must have” criteria list that fleet maintenance guys are using.
“Customers are frequently unaware of the special perks they receive from distributors,” writes Richard Vurva in If it’s free, where’s the value? “The reason is because many distributors do a poor job of measuring the value of the services they promise.
And while salespeople say they have adopted a value-added approach with customers very few “put a real dollar value on the services their companies provide. Even if they can quantify their company’s value-added services, they’re often careless in giving them away to customers who don’t deserve or need them,” says Vurva.
To break out of this mindset, heavy-duty distributors need to be very intentional about the value that they’re providing. Communicating that intention to your customers via your sales team, for example, which should be trained to offer (in exchange for a fee) these add-ons as part of a complete package. If your sales reps and countermen don’t see the value in the products being sold they’ll start giving stuff away instead of creating an environment for selling an even bigger package that includes both products and services.
Why Win a Race-to-the-Bottom?
Here are more steps that you can take to encourage customers to invest in value-added services and to avoid the “race to the bottom” on price:
As you ponder these questions, also consider how your customer really buys, when he buys, and what products he needs the most. From there, you can come up with ways to engage that customer throughout the entire job process—and not just when he needs something in a pinch.
This approach opens the door for numerous value-added opportunities. Understand the mental triggers that your customer goes through along the way and the process that they’re working through to buy from you. Then, help them do that more often.
Ultimately, turning value-added services into revenue-generating entities takes time, and the process itself may be painful—both for your company and its sales force (including especially counter people and customer service reps), and for the customers who are being asked to pay for these “extras.”
The good news is that with the right level of intent, and some customer education, fleets and other customers will come to see the value that you’re providing with those additional services.
Instead of just throwing a bunch of value-added options against the wall and hoping that something sticks. Come up with a real plan of action that creates a win-win situation for both you and your customer.
Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. Contact him at firstname.lastname@example.org if you’d like to discuss these concepts further.