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Value Added Services Dilema

Value Added Services Dilema. Scott Stratman President The Distribution Team. The Highest Value Add’s. Product knowledge Product sourcing Installation expertise Cost effective pricing Delivery of quality Problem solving. The Mathematics of Value Add’s.

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Value Added Services Dilema

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  1. Value Added ServicesDilema Scott Stratman President The Distribution Team The Distribution Team

  2. The Highest Value Add’s • Product knowledge • Product sourcing • Installation expertise • Cost effective pricing • Delivery of quality • Problem solving The Distribution Team

  3. The Mathematics of Value Add’s Usually not good for us! Our Cost Customer Cost Product knowledge Expensive Free Product sourcing Expensive Free Installation expertise Expensive They pay Cost effective pricing Expensive They win Delivery of quality Expensive Free Problem solving Expensive Free Pain in rear The Distribution Team

  4. The Challenge is to keep the cost reasonable and maximize the revenue generating possibilities Cost The wrong model Revenue Return The Distribution Team

  5. Not all value added services cost the same nor do they yield the same results Cost Specialized Statements Special packaging/delivery Complimentary item mix Timely billing Revenue Return The Distribution Team

  6. Old School Minus Equals The Distribution Team

  7. Should be Something like this Minus Plus Equals ADA DD D The Distribution Team

  8. Customer report card Customer Sales COGS Gross Margin # of orders C.O.P.O Product Net Profit ABC 50,000 20,000 30,000 100 20.00 2,000 28,000 TM 70,000 50,000 20,000 70 20.00 1,400 18,600 Pulte 65,000 45,000 20,000 150 20.00 3,000 17,000 XYZ 25,000 15,000 10,000 80 20.00 1,600 8,400 BCA 90,000 80,000 10,000 300 20.00 6,000 4,000 HDI 25,000 20,000 5,000 300 20.00 6,000 -1,000 The Distribution Team

  9. High Cost of Providing The Value Added Service Per Customer Installation w low return High Cost of Providing The Value Added Service Per Customer/Installation with HIGH RETURN C O S T Low cost of Providing the Value Added Service Per Customer/installation with HIGH RETURN Low Cost of Providing The Value Added Service Per Customer Installation w low return Return on the investment The Distribution Team

  10. High Cost of Providing The Value Added Service Per Customer/Installation w low return MAINTAINING CUSTOMER High Cost of Providing The Value Added Service Per Customer/Installation with HIGH RETURN SPECIAL CUSTOMERS C O S T Low Cost of Providing The Value Added Service Per Customer/Installation w low return REGULAR CUSTOMER Low cost of Providing the Value Added Service Per Customer/installation with HIGH RETURN NEW CUSTOMERS Return on the investment The Distribution Team

  11. Design your pricing to match you customer needs for value add’s The Distribution Team

  12. Should it be free to customers? The Distribution Team

  13. Should it be free to customers? The Distribution Team

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