Why Is Managing Value Perception Essential in the Manufacturing Industry
Warren Buffett once said, “Price is what you pay; value is what you get”.
Value can be seen as everything in sales.
You’re no longer just buying an item, or thousands of items as the case may be. You’re paying for the value that purchase provides you with. The opportunity for increased business, the improvement in efficiency in your processes, the reduction in cost or rework, the added features your product or service will have that will enable your organization to expand to new markets, or maybe even all of the above.
What this means for sales is that customers aren’t always just going to go for the cheapest option anymore. They are looking for something of genuine value – and customers will pay more if that means receiving something they feel fits that criterion.
Creating offerings that have real customer value is, therefore, imperative. But most importantly, you also must know how to sell value.
Brand Engagement in the Manufacturing Industry
Customers expect a certain type of brand engagement and experience when it comes to buying from you. When you aren’t aware of what your customer wants, you can’t provide the type of engagement that they’re seeking. Instead, you’re just producing and selling something, somewhat blindly. What this results in is, in many cases, products and services that are not properly marketed to the segment that is most likely to benefit from it.
What’s more, in many circumstances, your end-user is not your customer. When it comes to a product like metal sheets, your customers are contractors. They purchase the metal sheets from you, go to the house and fit them in. Then, they’re done. But, they’re not the ones building the house and certainly not the ones living in it. In this situation, very few times does feedback actually make it back to the manufacturer and as such, nothing changes. Knowing what the value of your products is and being able to appropriately address that is an essential part of pricing. One which you can’t do without the right knowledge.
Again, you’re just making and selling things at this point.
This puts you at a competitive disadvantage because your distributors could change to someone with better quality products at a moment’s notice and you’ll lose business and a large amount of time.
Providing Value with Rebate Incentives
And even when you are targeting the right market it is often that you will find competition and dealing with it more often than not results in a race to the bottom on price via discounts and promotions, this will ultimately kill the value of your product or service in a way that will be almost impossible to recover from.
One way around this situation is to offer rebates. But rebates are a tricky topic. So easily you can swing between profitability and winning sales on a regular basis and making a loss.
Recently, some businesses are opting to set up a digital platform where retailers can buy from them and sell directly to their customers using the same platform. In doing so, the manufacturer never loses sight of the process and can consistently feedback through every element of the process from start to finish.
By offering rebates, you can encourage this behavior with your distributors and ensure they are incentivized to sell your product time and time again.
And yet, rebates can be offered quickly and unnecessarily. These incentives should be used to promote and secure sales that would have otherwise been lost and to engage customers to grow their business with you. But even the best salespeople can fall for the bluff of a street-smart customer. In some cases, rebates are even offered on top of existing rebates with the same customer. Visibility of these situations is extremely important.
Powerful pricing solutions such as Pricefx allow your salespeople to assess a customer’s account in real-time, right there with them at the negotiation table where there’s no room for bluffing or bragging. What’s more, your salespeople are now able to see what would actually happen if you offered a rebate in highly accurate figures. Better still, this can be shown to the customer in black and white. When your salespeople are sure that a rebate will be valuable to a customer, they can wholeheartedly offer the rebate with confidence. At the same time, if they can see a rebate is offering far too much or worse, would be unprofitable, they can avoid offering it in the first place.
Customers Are Smarter Than Ever Before
Shopping around is common practice for any customer these days. When your customers are other businesses or organizations, you can be sure they’re looking for the best price and the best value for their money at all times. So, whoever shows that value best is most likely going to be updating their monthly sales targets with a smile on their face.
Once upon a time, customer loyalty was a much more common thing. Even if a salesperson wasn’t offering the best price or value, their loyal customers would stick with them anyway. Various studies now suggest that customer loyalty is disappearing rapidly with customers more than happy to switch suppliers in a heartbeat. The well-known 80/20 rule ( this being that 20% of the customers account for 80% of the turnover) has been adjusted into a 60/40 rule. Digitization has made everything much more transparent, and costs can be compared instantly. Plus, with the rise of millennials in management, the way we purchase automatically shifts.
We can’t expect customers just to take our word that purchasing from us will be valuable to them. Nor can we assume that we know whether the purchase would be right for them when there’s nothing to back it up. What customers want and what they need is to be informed on the money they will save by purchasing from you. The time their purchase will save and how this will impact their numbers not just now but further down the road.
What pricing solutions and clever pricing strategies do is enable you to provide them with all of this and more. Better yet, it provides your salespeople with more than enough confidence to relay this information from your pricing solution to the customer. A known deal closer through and through.
Pricing Should Be Competitive in the Manufacturing Industry
Gone are the days where businesses faced little-to-no competition in emerging markets or could dominate the sector with relative ease.
It’s no longer possible to coast by being the only option or the only accessible option. As a result, prices are consistently driven down and businesses are forced to be competitive.
But, being competitively priced isn’t as easy as snapping your fingers and naming a new price. The manufacturing market changes all the time with thousands of products changing price constantly.
High-end pricing solutions allow you to keep up with rapidly changing markets with lightning-fast pricing. You can gain valuable sales insights to determine better or worse performing products, customers or regions and make well-informed decisions on the necessary next steps your business must take in its pricing. What’s more, you can leverage powerful customer data to map price setting for optimal gains while identifying opportunities for profitability.
What Pricing Solutions Are Available?
Of course, you could take this pricing into your own hands. Excel is an alternative to expensive solutions that many businesses choose, but you get what you pay for. A negligible cost. Worse yet, Excel is prone to no small number of human error and software malfunctions that could throw your pricing completely off with a few brief keystrokes. On the other hand, entry-level Excel is basic and easy to use. Meaning that your business can be set up and running on Excel with little to no effort.
However, if we’re talking about bringing value to customers within the manufacturing industry, Excel simply won’t cut it.
Your salespeople need something that will provide in-depth data on your customers, the market and potential opportunities. Your customers want to be wowed and shown every benefit they can derive by purchasing a product from you. Your pricing team needs something responsive that isn’t going to fall apart the moment someone enters the wrong number into the wrong cell.
When it comes to return on your investment, high-end SaaS pricing solutions are the clear winner in providing value.
What matters at the end of the day is that your business has a pricing solution that works for you.