Sunday, February 6, 2011

Distributor, Rep or Wholesaler? You're an Endangered Species

If you're in the business of selling or delivering a commodity product made by someone else, you're an endangered species. You have a target painted on your front and on your back. Your customers are trying to disintermediate you, and buy direct from your suppliers. Your suppliers are trying to disintermediate you and sell direct to your customers.  

Interestingly, there are lots of thriving businesses selling and delivering commodity products. How are they doing it? They're providing some value added along with the product, and either charging extra for the value added or getting a premium price for the product because of it.

I had an interesting "value added" experience recently. My wife and I are going on a service/mission trip with Rotary to Honduras this month. Of 38 different countries and US Territories I've visited, this is the first one where I've actually gotten vaccinations. Despite the fact that Honduras doesn't require any vaccinations, our trip leader (a physician) suggested that we get vaccinated for several 3rd-world diseases.  Our doctor's office suggested two places to get that done -- either the Health Department or a niche business, Passport Health. I'm absolutely sure we could have gotten the vaccines cheaper at the Health Department.

At Passport Health, on the other hand, a "Travel Nurse Specialist" named Julie spent 1/2 hour with us teaching us a lot of things we didn't know about communicable diseases in 3rd-world countries, vaccination options for same, and also some things we'd forgotten about health-conscious travel in general.

We opted for the vaccines that made sense to us, each got a shot in each arm and then paid them substantially more than we'd have probably paid at the Health Department. As we drove away, we both agreed, "That was worth the stop".

We'd recommend them to anyone, despite the fact that what they sell is available elsewhere for less money. On the other hand, the knowledge that came with it was, in the words of MasterCard, "Priceless".

If you're selling or delivering a commodity product, look for things your customer needs along with the product -- knowledge-based services that you can bundle with the product and make yourself a "priceless" and indespensable element of the buy decision.  

A great way to do this came from a Chief Executive Boards International meeting -- "Look Before and After" -- What does your customer use, do or need just before he uses your product and just after?    That's what Passport Health figured out -- that people need knowledge of 3rd-world diseases before they choose a vaccination regimen.  It would have taken us 2-3 days on the Internet to learn what Julie taught us in 1/2 hour.   Priceless.   

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Terry Weaver

Chief Executive Boards International

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it 

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