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Conveying Value Proposition

Question: “At one time, distributors had control over product information, access and price. The Internet and other communication mediums have disrupted this structure such that end users now control much of that. In light of that environment, what tools and methods have you found successful in conveying and maintaining the value proposition that your company brings to the market-place and your customers?”
– Randy Farnum, Vice President at S.W. Betz Company, Inc., Baltimore, MD

Buddy Smith,
CEO Carolina Material
Handling Services, Inc.
Columbia, SC
In response to your question, I see that there is more information available to the end user directly. This information primarily takes the form of product features and benefits as well as specifications through online mediums. We view this as a positive because our customers become much more educated, not only about their own applications but also about solutions that are available to them. It is easier for us to partner with well-informed customers.

It is also important to note that the dealers themselves also benefit from the easier accessibility of information. We are able to quickly gather information and communicate it more concisely to our end user thereby providing more value. The tools we use include our own website that communicates information relevant to our customers needs and our manufacturer’s website where we can download product videos and other pertinent promotional material.

Al Boston,
CEO AK Material
Handling Systems,
Maple Grove, MN
We are both suppliers and consumers in the big scheme of things. As consumers we have varying requirements at different times. Sometimes we are only looking for the best price; other times the highest service level.

Given that as a distributor of handling products the best tool that you have in your box is the knowledge and understanding of your mission and vision of who you are. Once you have that down you can design your system to fit your vision and provide either a low price/low service option, combination of moderate price/moderate service, or high price/high service option. Picking the right model and staying true to the vision is the key. Our company decided years ago that we would distance ourselves from our competition by providing customer service second to none. We have found that model highly successful.

Doug Carson,
VP Marketing/Sales
Fallsway Equipment
Company, Akron, OH
Here at Fallsway Equipment Company our primary method is a consultative selling approach based upon fleet management principals. While we represent some truly world class lines of equipment with excellent product differentiation, we continually attempt to make our relationship about much more than explaining features and benefits of the equipment.

We engage the customer about their total cost of ownership, educate them on fleet management principles and make recommendations related to their operations involving our equipment. Beyond this general approach, we continually look for best in class examples from other customers for application of ancillary equipment. There are so many opportunities today to bring value to customers such as making suggestions concerning systems applications, battery and charging technology, application of forklift attachments, etc.

Also, keeping your eye out for methods used to solve problems that are not even related to your business can really endear customers to your company. One of our greatest strengths as material handling equipment suppliers is the simple fact that we engage all industries on a daily basis positioning us to pass along best practices if we just take the opportunity.

Duncan Murphy,
President, Riekes
Equipment Company,
Omaha, NE
It just seemed like we had control, but it was an illusion. The access to information has exploded and customers do have more information than ever. The good news is that they are not prepared with how to use it. A side note is that this phenomenon is a bit generational and as you review your contacts you can predict who might be using it.

Our value proposition must be articulated more so than ever. In reality your reputation for value in the market- place is fairly unimportant. You must make your case specifically and individually to each customer and to each decision-maker at that customer. You cannot wait for a transaction. Start building it today; showing your prospect you are a partner in improving their performance.

There might be different topics depending on the customer contacts responsibility or interest. Do your research so you know more about them than they expect. Here is where the Internet is a resource. Identify who you must cultivate. Use a team of people from technicians to support people and execs, but waiting on the executive touches until a relationship has been established. Ask questions about their operations. Perform a survey to gather data if they will let you.

That might be the most important sales job you perform… access to their facility. People will see your team being led around by the boss. Come back with material suggestions even if there is nothing in it for you. Do not rush the process so they see you have carefully considered options. This plan shows your customer how a professional uses information. All this adds value and might move you into the inner circle. Be aware though that even with this work you must be competitive with your pricing so do not get disappointed when this issue rears its ugly head. Just make sure you have the solid metrics that make your case and prove your value.

Jerry Weidmann,
President, Wisconsin
Lift Truck Corp.
Brookfield, WI
The Internet provides customers access to manufacturers, our competitors information and to some degree pricing information. Information is only as valuable as the individual’s ability to apply the information to their needs.

The distributor’s value-add proposition is knowledge and experienced-based advice. The better the distributor knows their customers and their customers’ requirements the more value the distributor can add to the decision making process. The development of strategies to improve the customer’s efficiency, lower operating costs and improve their overall corporate performance is the competitive advantage of the value-add distributor.

The less the interaction between the customer and the distributor involves advice and expertise from the distributor the more vulnerable the distributor is to internet accessible information and suppliers.

My advice is, know your customer, be his resource for information in addition to products and services. The more your customer relies on your expertise the less significant access to the web will influence his buying decision. Use the internet to help support your advice to your customer. Internet resources can support your advice and inform your customer.

Scott Hennie,
VP/GM, Hy-Tek
Material Handling, Inc.
Berea, OH
As you have recognized, this is a very real and very difficult challenge for distributors. Unfortunately, or fortunately, there is a market segment that will buy product without much or any interaction with an outside influence. The first thing I would suggest is for you to define your “Target Customer Profile.” You need to determine if an online shopper is the customer profile you want to have or where that customer profile fits in your business strategy.

What we have found is that most end users don’t know what they don’t know. When we are faced with a situation where the end user has gathered pricing from the internet, we immediately talk application. It usually doesn’t take long to figure out that there are many gaps between the application and the equipment the customer has selected.

This is the crack that we can then penetrate and look for the opportunity to provide our value proposition. It doesn’t always work, but if the end-user truly has a problem and we are able to solve that problem, the price issue becomes less of an objection. If the customer isn’t interested in solving his problem and remains attached to the price issues, it is most likely not a customer profile that we want to invest a whole lot of time and resource.

Bill Ryan,
VP/GM, LiftOne,
Charlotte, NC
Yours’ is the right question to ask not just for today’s market situation and circumstance we are in, but for all of our businesses and for all time.

To stay in business we must bring value to our customers. But, before I give you my thoughts on what value is, let me ask another question that gets to the heart of the issue. “Does your customer really need you?” If the answer to that question is “no,” guess what? You have no value proposition and you are going to lose that customer eventually. If the answer is a resounding, “yes” and you can articulate it and you know it to be true,well then you have value and you know it!

Great. If the answer is — as it is for most of us — “I’m not sure” or “I don’t know,” we need to get busy finding out. And how do you find out if your customer needs you? You ask them! Ask them why they do business with you, and what it is that your company does that either no one else can do (which is not very likely these days). What it is that your company or your people do better than others? That is your value proposition. Simple right? Here’s the thing: You can’t stop asking. You and your folks need to be following up with your customers every day. Do customer satisfaction surveys. Ask them how you’re doing, and if they need anything else. Ask them if they would refer you to someone else. If they don’t say “yes” immediately, then you need to be working on finding more ways to make them need you. Really, really need you. That is your value and that goes far beyond just a price or a specification.

Steve Fawcett,
President, Bode
Equipment Company
Londonderry, NH
First, we all need to build our own company’s brand away from the manufacturers. Our customer needs to relate directly with us rather to any manufacturer we represent. We do this in website content, business cards, brochures or in any advertising media we send out. We will partner with suppliers for advertising but our company needs center stage.

Second, we need to distinguish ourselves from our competition. We immediately jumped into joining MHEDA’s evolving MVP program hoping to use that as a tool for this use. We were the second storage and handling company in the association to achieve this status. We are telling our customers that we are the best of the best and the MVP award helps prove it!

We truly have to provide valuable internal services that our customers cannot find easily elsewhere. We started a service department about 8 years ago so that we could tell customers we service and install anything we sell to them. We have partnered with other quality companies to provide one source turnkey material handling solutions for whatever our customers might need.