The
new service approach
by
Rich Vurva
A few
weeks after Jack Kacsur bought General Rubber Company 10 years ago,
his largest customer dropped a bombshell on him. The company planned
to re-evaluate its supply base, meaning General Rubber risked losing
an account it had held for 20 years.
Kacsur successfully negotiated a new deal with the company,
in part because he agreed to provide a new bin-stocking service for
the customer, which later evolved into a line-stocking service.
Kacsur learned some valuable lessons from the experience.
First, you can never take customers for granted. Second, it doesn’t
matter how long you’ve done business with a customer or what you did
for them in the past. What matters is your ability to remain flexible
to your customer’s changing service needs today and in the future.
Historically, most distributors have been paid for providing
such services by building enough margin dollars into the cost of the
products they sold to cover their expenses and earn a little profit.
In the future, however, progressive distributors will offer
customers new services and charge for them rather than building them
into product margins, suggests Adam Fein of Pembroke Consulting. In
his article “Succeeding with fee-based services” (page 16), Fein
says the new “Facing the Forces of Change: The Road to
Opportunity” report indicates that wholesale distribution executives
at companies of all sizes expect to charge fees for at least some
services within the next four years.
Fein offers a few guidelines for distributors thinking about
charging fees for services. First, a fee-for-service approach will
succeed only if distributors offer services that have a direct impact
on the customer’s profitability and operations. Second, customers
will demand accountability, which means distributors must be capable
of proving specific, measurable results. Third, trying to charge fees
for old services will not work. Distributors must come up with new
services that customers value.
Kacsur
deserves applause for devising a service to keep a customer happy when
the account was on the line. Now, his job — and yours — is to
uncover new services that help customers improve their profits and
operations enough that they’re willing to pay for those services.
This editorial appeared in the
March 2004 issue of Progressive Distributor magazine.
Copyright 2004.
The
new service approach