In the late eighties and early nineties, the term value-add was not found in Distributor dictionaries; In those days it was a case of efficient storage and supply and indeed many terms and conditions carried clauses that declined liability for any “inferred” or “suggested” comment made by Sales to clients. Many such terms still sadly prevail.
Perceived value add was brilliance at holding stock, next day delivery and very little else. It changed gradually in the late nineties when the term ‘value add’ was first vented by Resellers who had to adapt to new technologies and deliver far more intensive programmes to their clients.
Things progressed to ‘one point of call’ account management, product knowledge and a “powdering” of prior promises to deliver on time and at the right price. Never mind this should be a standard expectation, it was sold as value-add.
Things went further with non-branded packaging or white labelling, preloading of software, build facilities, the early dawn of solutions and technical support, finance and marketing tools and web based delivery.
Once web and email took prominence, electronic developments such as direct order placement, account view, online payment, e-billing and general account management online came to the fore.
For me, and I suspect more many others out there, value add is what makes the experience of trade an enjoyable one and not necessarily a convenient one. Much of what first appears as value-add becomes a service offered by many. A ‘service’ in itself, is not value-add.
Value-add, in purest forms, are found only in relationships or buying experience and these come from people and not businesses or ways to transact. It requires a consistent message of interest and above all trust in the client. If for example there is a dispute, the the message from Sales, Customer Service, Product management and indeed Credit, should be common and aligned. One can only achieve this by breaking the often divisive lines between the various operating areas of a company. Getting each interested in the other, allowing cross-fertilisation of ideas and goals and above all communication, is key to real value-add provision. It will certainly not work if each area is pigeon-holed and driven by its own performance and incentive targets.
Some 90-95% of B2B transactions are on open credit terms and receivables or trade debtors make up more than 45% of a company’s total assets. In distribution, it’s frequently much higher and yet the measure of efficiency used by many remains how quickly money is collected and how low bad debt is. Using just these measures is a sure-fire way of cutting growth and profitable sales.
The quality of salesmanship has suffered in recent years and much blame may be placed at the door of e-commerce, the Web, email communication and companies forgetting the rudimentary requirement of client relationships.
A common phrase used for pushing clients away from account management and into online buying was “reducing the cost of sale”. What was meant of course was “reducing the cost of a sale”, something quite different. Unsurprisingly, clients prefer to go to where they can talk to people and the net result is one in which many companies see more incoming to outgoing Sales calls with many incoming, simply inquiries that do not lead to a sale. Order takers therefore instead of order creators, a theme applied uniformly across industry sectors. Increase a sales target these days and Sales is guaranteed to push those they already sell to instead of to those they don’t, with resultant margin erosion.
A unified Sales and Credit approach guarantees success as it is usually these two areas that have more physical contact with clients and they remain the best communicators. Taking a real and honest interest in your client while delivering support and consistently unambiguous messages, is the way to a customer’s heart and their order book; the services after all are available anywhere, with the price often lower.
Technology is great and without it there is no progress, but it’s worth remembering the message you give clients is as important as “how” it is delivered.
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