Creating Value in the Supply Chain, Selling in Freight Forwarding, Logistics and Transportation

Part III: Getting the Value Proposition Right

In Part II of the series, ‘Creating Value in the Supply Chain, Selling in Freight Forwarding, Logistics and Transportation’ we looked at how we can translate our solution offering into customer value relevant to his or her business by helping the customer to achieve any one or combination of the following results:

• Increase revenue
• Reduce costs
• Solve critical business issues
• Improve service levels
• Contribute to the bottom line

The value proposition is defined as ‘a clear and specific statement that summarizes the tangible and intangible benefits of a solution offering on the customer’s business. The following are some characteristics of a compelling value proposition:

Incorporates the customer’s perspective
A compelling value proposition is about the customer not the service provider. There is a big difference between what WE (the service provider) will deliver and what YOU (the customer) will achieve.

Is specific to the customer
A compelling value proposition is specific to the customer and avoids ‘brochure’ speak or company jargon. A value proposition is about translating the solution offering into customer specific benefits and summarizing the business impact.

Quantifies business impact of benefits
How can you quantify the impact of a solution offering on the customer’s business? Quantifying the value proposition begins with understanding the current performance levels, the target performance levels and understanding the impact of achieving the target performance levels. Industry benchmarks or best practices may be helpful in many cases when trying to quantify business impact.

Qualifies business impact of benefits
When we qualify the business impact, we focus on the intangible benefits or the created value that cannot be directly measured. The objective is to position the intangible benefits relative to customer needs.

Consider the following examples, which do you think is more compelling in the eyes of the customer?

“Access to our 24-hr customer service channels will allow us to serve your business needs. Our global network and online track and trace ensure that we are able to provide you with up to date and accurate information.”

~ Or ~

“By having one point of contact to help manage our business, this will enable us to reduce time spent on day-to-day issues, feel comfortable with the daily operational flows, understand the accountability for our business and have access to fast and accurate information when needed. Ultimately, resulting in improving the customer service levels to our customers.”

Ultimately, the value proposition will tell the customer WHY they should select your solution offering over that of your competitors. The freight forwarders or logistics service provider’s product is WHAT they sell. Today, we are well aware from an industry perspective, that the features of competitive product offerings are similar and these features will not differentiate you among a sea of tough competitors. What will differentiate you are two factors: 1) service levels, and 2) simply HOW you deliver.

In a difficult economy, companies are faced with increased competitive pressure, decreased margins and typically increasing demands of the end customer or consumer. It is natural to assume that now more than ever, price will drive the buyer’s decision when selecting a freight forwarder or other logistics service provider. While there is some truth in this, in fact, a service provider’s ability to demonstrate and deliver bottom-line value to the customer’s business is more important than ever.

Stay tuned for more of this series, ‘Creating Value in the Supply Chain, Selling in the Freight Forwarding, Logistics and Transportation Industry’.

To read Part I: Understanding the Concept of Customer Value, click here
To read Part II: 5 Ways to Create Value for Your Customers, click here

Article Source: RSI, Value Based Selling for Logistics and Transport Professionals

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