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Wednesday, August 25, 2010

New Customers

Many businesses are looking for new customers. They observe buyers are squeezing margins, new competitors are taking accounts.

Yesterday, I was asked if a federal government reverse auction was “fair?” Fair? Google went public with a reverse auction. It’s not about fair, the question is does it work?

Much of the new competition comes from disintermediation, “taking out the middleman.”

When Intel began their “Intel Inside” campaign, I didn’t understand why they would bother. They wanted to make sure they had as much traction as possible with their whole supply chain, not just the companies who directly bought from them. As the way we buy computers has changed, that campaign has helped Intel.

New buyers and sellers have to learn how to work together to make a successful transaction. Dana Blankenhorn wrote a great post about his concerns for the Veterans Administration purchasing open source software. VA has expertise buying enterprise software, and the process of being an open source customer is quite different. On balance, it is an improvement, but that is not by luck.

Each step of a supply chain should create value. If an alternative can provide more value to the buyers, the supply chain changes.

Right now I am about to buy a new car. I do that every decade or so. I am meeting a lot of people who think their job is to get as much money as they can for impeding the transaction. Let’s see, they get 10% of whatever traife  they can sell me. That’s a lot of inefficiency. Did I mention I change cars as infrequently as possible?

This time I am also meeting sources who can save me between 20% and 35% of the cost of a new car. That is the value I am looking for in a car salesman. They tend to appear on my browser. I have even met one in-person salesman who significantly cut the cost of acquisition for an in-law's new car. That salesman is doing very well.

When you are looking for new customers, consider what they need to have a successful purchase. Could you already have the resources to become their high value supplier?

What has been your experience of applying better value to your supply chain? 

Noon, Wednesday, September 15th, we are offering a free presentation of How To Get More Value From Your Existing Resources, Mount Vernon – Lee Chamber, Alexandria, Virginia. Details and reservations at http://www.saleslabdc.com/leadership
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