Customers Aren’t Equally Effective Buyers

Customer profitability analytics reveals a wide range of buyer effectiveness. And, SKU profitability analytics measurably pinpoints the root causes for their variances in hidden, unnecessary buying activity and servicing costs.

Customers also vary in their openness to changing how they buy to achieve:

1. Lower total procurement costs
2. Decreased downtime for lack of goods needed at hand…
3. Increased uptime which increases on-time satisfaction for the customer’s customers

…All of which increase profitable sales-growth.

Why not survey customers to see who is interested in an analysis of their buying inefficiencies (assuming you have the analytics stats!). Then, help them re-tune their buying process for win-win benefits. Stubborn Level-One, Pure-Price Buyers won’t change into Level-Five Buyers. But, you will nudge some customers up a level (or two) for win-win, sales growth.

Five Levels of Purchasing-Effectiveness?

1. Daily, Price-Shopper. Faxes needs to all distributors for “best-price quotes”. Cherry picks best-priced items from each responder. Gets Price Savings (!) with what greater, hidden costs? A) the Opportunity Cost of their shopping time. B) Paperwork costs from multiple orders. C) Poor service-execution costs from worst service suppliers who only offer lowest prices.
2. Transactional, Service-Value Buyer. Picks the 2-3, best-service-for-them distributors. Shares spend to keep them hustling. Then, checks prices amongst them periodically to counter suppliers’ price sneak-ups.
3. Partnering Buyer. Finds the best service-excellence/value distributor. Gives them 100% of the spend in exchange for: best prices, perfect-service guarantees, and other cost-reducing, extra service needs. But, the price sneak-up concern remains.
4. Re-engineering, Systems Buyer. Co-create a re-engineered, (integrated, automated) buy-sell process for 100% of one or more product categories. But, the costs of creation and the benefits from the new system are generally not measured and shared equally. Distributors incur more of the costs while customers reap more of the gains. And, price sneak-up concerns require periodic shopping of the entire replenishment system.
5. Ever-Increasing, Win-Win Buyer (like McDonald’s). They (or you?) insist on:
   • An open-book relationship with a fair, guaranteed profit standard for the distributor
   • Investment costs and benefits to be measured and shared on a win-win basis.
   • Special prices from producers be transparently passed through.
   • Continuous innovation to move down the total system cost-curve together.

Selling a Customer-Level Bump?

Commissioned Reps calling on buyers in silos can’t sell buying-level upgrades. Distributor honchos must pitch customer honchos using a team-to-team process. The Rep’s revised roll and compensation will be customer specific. Best reps’ account income can always be protected for any transition.

For a free, virtual tutorial on Buying Level – Analytics and Selling – contact me: [email protected].