Creating Value in the Supply Chain, Selling in Freight Forwarding, Logistics and Transportation
Part I: Understanding the Concept of Customer Value
Every company has a supply chain, big or small. We all know the supply chain is complex but just how complex? We often make the mistake when selling in the logistics industry of underestimating this complexity and the impact on the customer’s business. During the sales process we often stay happily and contently on the surface of the customer’s business because of this complexity and because we often do not truly understand how what we offer to the customer creates value across the supply chain – big or small, complex or simple.
Because of its complexity, the customer’s supply chains can be a source of great efficiency and cost-savings gains. Companies are realizing that more than ever, supply chain excellence drives competitive advantage, customer relationships and ultimately profitability.
The challenge becomes identifying HOW what you sell can create value for your customer.
Value is defined in the eye of the beholder or in other words, it is an individual or group’s perception of value that counts.
For example, think about your old family photos passed down from generation to generation.
Unless the person next to you is your cousin or another relative, these photos are unlikely to have value for them they way they do for you.
The same principle of value applies in business. Customers will place value on different things based on their perception of value and their needs at that time.
Business is simply trading one value for another. You are selling a product or service (value) and your customer is paying for this product or service (value).
However, it is typically not that straightforward because the perception of value and how it is created differs among different customers. Value is defined in the eye of the beholder or in other words, it is an individual or group’s perception of value that counts.
In general, customers value two things when working with service providers: relationships and service capabilities.
Relationships
- Trust
- Business understanding
- A shared goal
- A common set of measures
- Shared information
- Agreement
Service Capabilities
- Operational processes
- Service delivery
- Reliability
- Geographical coverage
- Competitiveness
- Achieving results
What does this mean to us?
We need to understand how then these factors ultimately create value for the customer 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 then provides a summary of HOW what the tailored solution offering can create value to the customer, again relevant to his or her business. Another way to look at it is to ask yourself “how does my solution help my customer achieve their business goals?” If you can successfully answer that question you have created value for your customer.
In the next part we will look at what each of these five areas of value really mean in the customer’s business. Stay Tuned!
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 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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