Are you a supplier or expert?
Tuesday 1 October 2019 Tags: Added value, HRM, Knowledge, Customer loyalty, Business model
Are you a supplier or expert?
Once your customers have bought your products you’d rather not have anything to do with it anymore. Each of their questions is a bother and costs money. You can only benefit if you sell your products to them. Right?
This is how the flower trade regarded their supermarket customers at the end of the 1990s; the biggest profit is made on purchasing. One penny difference with your competitor could cause you to miss out on millions in sales.
Price and service
Things have changed somewhat in the 20 years that followed. In the world of the supermarket, the price is still a very important aspect. But in the meantime many flower and plant suppliers embraced the concept of service as a profitable service. They convinced their customers that a focus on purchasing price alone does not automatically lead to value creation. Not for the supplier and also not for the supermarket.
Knowledge and experience for more trade
When I started in the flower trade in 1997 we, as flower supplier, regarded the flower and plant section of the supermarket as our own section. We collected sales data, analysed price points, optimised presentation techniques, professionalised maintenance, shortened the logistics process and gladly gave guarantees. We actually seized the opportunity to capitalise our knowledge and experience in flowers and plants for the customer with the end goal of increasingly more trade with the supermarket.
A big hit
For my employer, this service really became a profitable service. Currently, supermarkets such as Tesco make suppliers responsible for the turnover, margin and failure rates per price point per product. It is now the flower exporter’s turn to present new proposals for range adjustments if the turnover, margin or failure threatens to reach a critical lower limit.
From supplier to expert
The supplier is no longer a supplier but an expert who takes responsibility for the product he supplies and who oversees the effect his product has on the supermarket’s image. If he does it well, it will be a win-win situation for the supermarket and flower exporter. If he doesn’t, he will lose trade to the competition.
As long as your service activities are included in the selling price of the product, you run a permanent risk that the customer sooner or later cannot resist the temptation to decide on price with his grocery DNA. All efforts, investments, and hard work for the customer can be swept from the table if another supplier wants to dive under your price with a nice "expert story".
Set up as an expert
If you are an expert, make sure that you act as an expert. Do not be afraid of being transparent about all services, the knowledge that has been developed for this, the investments it required, the margins that you need to develop this further and finally the profit it has brought to your customer over the years.
An expert role is authentic and has critical value. If you hide that value in your purchase or sales price you create the perception that you are easily interchangeable for another "supplier".
Be an expert and go transparent all the way with your client.
How would you apply this in your business?
Ensure to gain insight into your customer’s business model. Purchasing is, undoubtedly, not his only expense item. What are the biggest cost factors for your customer? Where can they improve? Which knowledge can you offer to support these improvements? What is the value of that knowledge for the customer and for you?
Conditions here are vision and a change of mind-set. Do you wonder how you can do that? Do not hesitate and request a saving session without obligation.
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