Are Value-added Services Worth Their Costs?

It can be hard for jan/san distributors to compete with online and big box sellers. The “Amazons” and “Staples” leverage their size to drive down prices below where traditional distributors dare go.

To compete, jan/san distributors have focused on service. Amazon Business can offer a lower price, but it can’t, or won’t, offer anything in the way of training or product maintenance — so the logic goes. But local and regional jan/san distributors sure can, and so they do, hoping these services add enough value to keep customers from chasing lower prices elsewhere.

“There has to be a reason to order from me instead of Amazon,” says Beth Lucas, sales manager for S. Freedman & Sons, Landover, Maryland.

But what if offering the service is only part of the equation? It’s just as important to establish the value of that service and, to go a step further, monetize that service. After all, a service may be worthwhile to a customer without the customer even realizing. And offering that service is only worthwhile for the distributor if the customer either understands the value or is willing to pay for that service.

“It is necessary for distributors to quantify the value of the service to the customer,” writes Paul St. Germain in a blog for the National Association of Wholesaler-Distributors (NAW).

If the cost of the service exceeds the value gained by the distributor, the service may need to be revised or discontinued. Furthermore, if the customer doesn’t fully recognize the value of the service, the distributor must not be shy about pointing out all of the ways the customer benefits from the service.

In other words, if distributors expect “value-add” services to carry the day, then they better not be giving them away, especially not unnoticed.

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Unbundling Products From Services