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If not price?

The necessities for selling

We previously stated that the job of any salesperson, inside or outside for any wholesaler, is in peril if the salesperson is unable to add anything to the value formula we determined your customers are using.

That formula for determining value, used not only by your customers but by every individual when making a purchase is: Quality + service + information + price equals value. If the customer is considering the identical item from two vendors then that salesperson is left to providing service and information if they want to get the price they are asking of the customer.

During a presentation this past month, a second formula was introduce. Expectation minus reality equals disappointment. Disappointment leads to asking the price.

With the formula, it was explained that each customer has an expectation when they decide where they are going to spend their money. Again, even with the item being identical, there is an expectation of service and information for the price they are going to pay.

Much like your deciding to go to McDonald’s. In our example, you know you are going to buy a hamburger that is similar in quality and price to that which you will receive at Burger King, Wendy’s or other similar fast food hamburger food place. When you visit the McDonald’s and your experience is less than what you were expecting, the reality sets in that the service and information is less than desired.

When you compare this lesser reality to the expectation, the resulting answer is reality. And with reality the customer is going to take another look at the price they have paid because what they have received is less than what was expected. Then the customer is open to looking at another fast food place.

Your customer, which can be any jobber that is a customer of yours, is going through the same scenario. Definitely not taking the time to write all of this out, but mentally thinking about the disappointing experience they have just had with your company starting with your sales representative.

The disappointment can also occur with any other part of your business, starting with the person answering the phones to the person driving your delivery truck or the person in your accounts receivable department. Hence, anyone and everyone within your company is a salesperson; always with the opportunity to add to the value formula as well as working to make the reality of the transaction match or exceed the expectation of the transaction.

With this, the result is not a disappointment but a confirmation of the value the customer receives by doing business with your company. The two formulas are necessities to be taught to every employee within every wholesaler. Without all the employees understanding this and being actively engaged in the process, value decreases as well as disappointment sets in. Both of these unfortunates mean the relationship between the jobber and wholesaler reduces to a commodity. The business that becomes a commodity last is the business that is the winner in keeping the customer (a profitable customer at that!)

This is not a Pollyanna viewpoint. There are more steps that a wholesaler can take. The first steps are with regard to the position a wholesaler would take within the industry.

Two of these is to promote MAP pricing as well as a unilateral pricing policy. A wholesaler should be an advocate for the removal of MSRP because having a MSRP only sets a price point from which discounting is to begin.
Within a wholesaler’s own business, the merchandising department needs to identify and ‘price right’ the leading items. Much like a gallon of milk and a loaf of bread, there are certain items that jobbers know the price of. No one is going to be persuaded to pay an excessive price for items such as these.

A wholesaler should take time to evaluate all of their customers. There are surely those customers that are price oriented. From the perspective of this writer, there does not seem to be any reason why a wholesaler would spend any time or effort in retaining this customer. Their sole criteria in choosing a wholesaler is price and they do so on an item by item basis.

The wholesaler can ‘blur the lines’ of product comparison by creating ‘packages’ instead of allowing direct product comparison. Packages can include additional items related to the initial product, extending warranty, deals on freight and/or delivery, and creating rewards programs.

The bottom line is getting your customer past the, ‘how much does it cost?’ question and get them thinking about what your business, your sales team, and your support staff bring to the relationship. The question instead is, ‘how much is it costing them to not be doing business with your company?’

Answer this question for your customer and price cannot be the question.

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
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PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179