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Value Creation Blog

Don’t Let Your Customers Commoditize You – Enterprise Value

Posted by Josh Patrick

MultiTool Companies large and small try to commoditize their suppliers.  Those businesses that allow this to happen will often have a future of profit challenges.

Instead of allowing your company to be commoditized, what if you were to integrate yourself in your customers companies so you can become a valuable resource instead?  This is how some companies keep margins and perceived value by their customers high.

It starts with team service.  Companies who are successful at integrating themselves in their customers operations service those customers with a team.  They might have a salesperson who calls on the customer but they also will have an inside service person and at least one designer who understands the customers needs.

You will often see companies like this have all team members visit their important customers.  There is nothing like having a personal relationship where your company and the team members in your company have an understanding of what’s important to your customers.  This allows your organization to teach your customers how to use your products better.

If you’re involved in the design, you’re likely to not be judged on price.  If you help your customers solve their problems you’re likely to be judged on the value you bring and not what you charge for your product.  Price is important, but when you’ve integrated yourself in your customers company the service and creativity your company brings is what the customer values.

When you have a team working on a customer they will often find more than one thing to sell to that customer.  Research shows the more products or services you sell to a customer, the more valuable you become as a supplier.  When you sell multiple products to your customers you differentiate yourself.  Most companies sell one or two items.  If you can learn to sell several products it becomes more difficult to replace you with a competitor.

You often will find that component sales are more profitable than individual products.  Even better than selling multiple products is finding a way to package your products into a component.  When you provide a total solution you make it even more difficult to be replaced.

Every time you build a unique solution for your customer you add value that is more important than an individual product.  Customers will pay more money for a solution than for a product.  It’s the solutions that we all want, not just a product.

Josh Patrick

Part of not allowing yourself to be commoditized is to be strategic in your sales and marketing approach.  Click on the button below to get our special report on strategic marketing in your company.

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Topics: for business owners, enterprise value, strategic marketing

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