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Adding value to a commodity purchase – Part 4

Ron Furlong
Ron Furlong - Contributed

Chamber Chat with Ron Furlong

How do you add value when you are selling the same or similar to what others do? To date we’ve talked about:

Product or service – Confirmation of the purpose of the product or service, and its intended duty cycle.

Sales process – How the potential customer knows what you have for sale, and ways they can purchase it.

Price – The cost to the customer of having their purchase in their hands and working correctly.

This month the topic is availability.

Availability – The lead-time, the lag-time and the customer’s organizational-burden to go from the identified need to the working solution

For the purpose of this step of the sales process, the “lead-time” is the period of time between the potential customer making the decision to contact you, and having the sales discussion. If your business is open and staffed with people who have the knowledge and authority to complete the sales discussion there is no lead-time. If the customer needs to wait for samples, information, specifications or pricing quotes before they can make a buying decision that’s lead-time.

The “lag-time” is the time from the moment the customer says: “Yes, I’ll buy it.” until they can put it to the use for which they purchased it. If they walk out of your business on that visit with it in hand and it requires no assembly, calibration or unpacking you can say there is no lag-time. Anything other than that, and there is lag-time. We’ll talk more about packaging and setup in the next sales step but those impact “Availability” as well.

is the amount of effort or work required for the purchaser to be able to use the product the way they need to. A simple example is the purchase of hammer that isn’t bagged at the local hardware store checkout. You would expect that it wouldn’t require any instructions and if it’s in the customer’s hand it’s ready to use as soon as the purchaser has the paid receipt. A much more complicated purchase would be a hydraulic stamping machine, as it would normally require delivery, service set up, dye making or matching, and likely some operator training. Each of those, or many other potential steps represent an organizational-burden and each would be an opportunity to add or subtract value from the sale.

Another type of organizational-burden is what the business requires of the customer in order to complete a sale. In most of the hundreds of sales process analysis I’ve completed with clients over the years we’ve discovered that companies routinely shift effort and responsibility from their staff onto the customer. The thinking is to reduce the burden on staff and make the customer responsible for any delays or mistakes. While that may be good for the staff in the short term, it’s not a good way to compete with other businesses whose philosophy is to make it easier for the customer to complete a sale.

In your business, where can you see an opportunity to reduce the lead-time, shorten the lag-time and shift or eliminate process steps to make it easier, quicker and less stressful for your customers to purchase from you? One of the best sources of information can be listening to what your customers say about your competition. What do they complain about? What do they praise? Have they ever shared an “I wish!” statement about doing business with someone else? Those conversational nuggets may just be the best free advice you can ever get.

Next month the “Package.”

Ron Furlong is the executive director of the Amherst and Area Chamber of Commerce.

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