“How can you take a commodity item and turn it into something critical to your clients’ business?” is one of the most common questions I am asked. To date I have never come across a product or service which can not be linked to something of value – even common things. It just takes a little effort and planning.
How Can You Take a Commodity and Turn it Into a Vital Requirement for Your Client?
Here is an example of how disposable nappies and rubber gloves, in a mature market, turned two businesses into industry powerhouses.
Disposable Nappies / diapers
The first question territory reps of this company were always asked was “What is your best price“. They were in a tight competitive aged care market where every dollar counted. The business was going nowhere fast. With a bit of effort and market research they discovered one of the more significant costs an aged care facility has was laundry. With a bit of smart thinking they were able to demonstrate by using their incontinence pads laundry costs were reduced significantly due to leakage reduction.
Instead of calling the purchasing manager they were now able to call the CFO and ask this question “If I could show you a way to reduce your laundry costs by 22% would that be something of interest?” The answer was always “How?” and of course the appointment was made.
(Reported in ‘The Age’ – Monday April 15th 2002)
Ansell moved its stake in Ford’s occupational glove business form 25% to 100%, a deal that it sees as a template for future company arrangements. The Ford contract is worth close to $20 million a year, and is an example of Ansell’s approach to large customers, in which it will enter a contract to assume responsibility for protecting the hands of it’s customer’s workers. While Ansell has really interesting technology (knitted Kevlar gloves coated with a nitrile polymer) technology alone would never maintain a long term competitive business advantage and they would have easily been caught up by competitors. Ford used to spend $20 million a year on gloves, however they also had medical costs of $40 million a year for hand injuries. With the use of the new gloves and a partnership with Ansell for ongoing development in the first full six months there was a 50% reduction in injuries. Ansell were able to link a commodity produuct to a critical business issue and demonstrate the value of working with them alone.
Today’s Questions and Actions
Here are some questions and actions to help you uncover how important your product or service might be to your client.
- Ask yourself ,and others involved with your clients business, what the challenges they face? List the top few and keep going until you have twenty or more. Be creative and think about the issues their competitors face as well as they are likely to have the same challenges.
- What is the press saying about their industry?
- What are the opportunities opening up?
For each item list two or three ways your product or service makes it easier to deal with the challenge. From this list you should have at least one, if not more, compelling reasons why a client should talk to you and not just ask for a price.