About a week ago, my colleague Chris Powers, the editor of The MHEDA Journal posted an entry on his blog entitled “What the Internet Means for Distribution.” To say it set off a little bit of conversation would be like saying Drew Brees had a pretty solid evening last Sunday. With the firestorm of divisive opinions that it ignited, you would’ve expected it to be posted on MSNBC or Fox News, not a material handling blog. In all, there were upwards of 50 comments on the posting.
Ultimately, the entry accomplished two things. First of all, it illuminated an issue that’s obviously very sensitive and very important to the industry. Second, it absolutely crushed my record for blog post comments. I’ve got a lot of work to do now to catch up to Chris.
If it weren’t enough that his comment total made me look like Urkel to his Mike Tyson, last Friday I ended up talking to someone about HIS blog. I can’t complain too much, though, the conversation ended up being pretty enlightening. The individual I spoke with was Steve Epner. Steve has been around the industry for years, even speaking at several MHEDA Conventions and his comments reflected the general consensus regarding The post—distributors who provide real value, and prove it to customers, aren’t going anywhere.
Epner suggests that the Internet isn’t the true problem. He admits that the growth of e-commerce has made it easier for customers to go around regional distributors, but that’s not the issue. “The problem is that the perceived level of value that some distributors are offering is so low that end-users are willing to put forth the effort to buy direct or find another distributor outside of their local territory,” says Epner. “If that’s the case, it says more about the distributor than the Internet.” He suggests that the simplest way to maintain customer loyalty is through providing—and proving—value.
Most MHEDA members are already providing great value, their membership in the association reflects that commitment. However, Epner says that they’re not always effectively proving that value. To illustrate his point, he offered an example of an A-plus customer that calls for assistance in the middle of the night “In that situation, most distributors will open the warehouse and get whatever parts are necessary to keep the system running,” says Epner. “Then, they don’t charge the customer for opening the warehouse because it’s ‘good customer service.’ I say, wait a minute. If people value something based on what the charge is, and you have no charge, what value does that customer place on what you’re doing.” Epner understands that asking your customers to pay for something that they’ve received for free in the past might not go over well. To avoid this problem, but still illustrate the value of the service that is being provided, he suggests the following. “Next time this situation occurs, add a $350 dollar line item to your customer’s invoice as an ‘emergency charge.’ Then, right below that, include an ‘A-customer credit’ for $350.” The net result financially is exactly the same, but you will have given the customer an idea of the value that they received.
It’s an interesting idea, but he does have a point. Putting a dollar value on a service, even if you don’t collect, will show the customer exactly how much value you’re providing. “There are many cases be it emergency repairs or OSHA safety programs that distributors are providing at no charge,” explains Epner. “They are providing very real value, but because distributors don’t make it known just how much value they are providing, the customers don’t always recognize that value.” If the service is free, why should customers be loyal to you for providing it?
It’s certainly an interesting philosophy and I would love to read what all of you have to say about it. Leave a comment or drop me an e-mail at Dan@MHEDAedge.org.
