Reducing Cost Without Cutting Prices
ValueAddedPartners.org addresses the fine line between reducing costs and cutting prices. When faced with a customer who is looking to cut costs, it is time to single yourself out from your competition. Often times, distributors offer similar services - knowledgeable salespeople, delivery, credit, and inside support - but what sets you apart are the services that produce measurable dollars for the customer.
The article outlines five specific services that will require little cost on the part of the distributor, but will provide cost savings to the customer.
1. Maximize warranties - Each time a warranty is used, it generates a savings. Compile a warranty list and use it to record the values of product replaced or repaired under warranty.
2. Repair vs. replace - End-users routinely replace items they could just as easily repair. A skilled person could easily make an evaluation and determine the proper action.
3. Proper inventory levels - Does your customer’s plant maintain excess inventory in their tool crib? Does the plant stock 20 30-amp fuses? If so, in the case of an emergency how long would it take for you to make an emergency delivery? In many cases, the plant is only minutes away from a large supply kept on your shelf.
4. Energy related - With the cost of gas pushing $3 a gallon, everyone is thinking energy. Provide recommendations — and more importantly — keep records of how much energy was saved, kilowatt hour costs and the cost of any steam, diesel, or heavy oil saved.
5. Standardization - Is the customer using the right product? Or are they using a “Cadillac line” when a “Chevy” will do? Can you show the customer where there is little (if any) difference between two manufacturers’ products?
To read additional details on how you can track savings, review this full report here.
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