I was speaking to a group of Chief Executive Officers (CEOs) and Managing Directors (MDs) of various companies in the United Kingdom recently. We were talking about value and how to effectively grow your business. One of the MDs shared that in his case, they sold through partners. He complained “All my partners care about is margin!”
My Response Might Surprise You
The Managing Director saw this as a negative. I asked if he was one of his partners, what would be his focus. After a few moments, he lowered his head and said “margin.” Reaching this conclusion, I asked 1) Did he need and value this partner and others like them, or 2) could he grow without them? He confirmed that he needed the partners to educate the marketplace. Based on that, I asked “So now that you know that you’d be motivated the same way, what are you doing to help them protect their margin so that you stay top of mind?”
You can easily get frustrated with requests from your customers or partners. But, in many cases, just listening to them and putting yourself in their shoes might tell you that the lack of alignment might be rooted in your outdated view of your market. Basically, what used to matter in your industry, might not matter anymore. If you address the needs of your customer or partner ahead of the competition, you might gain a fair amount of market share.
What Could He Do?
The executive who raised the question above was selling through brick-and-mortar partners. As a group, we suggested several ideas that could help his partners maintain more margin.
1) Create Bundles: The retailers could create bundles that are offered only in physical stores. It might even mean that you tell them they can include a complementary product with each of the main product that sells. This allows you to not create additional SKUs, but you can allow them to offer a superior bundle than those who do not display the product or obtain certifications or training.
2) Offer Marketing Rebates: The retailers might get marketing rebates for in-store promotions that provide for demonstrations and showcases for your products and the stores. Make the rebate be a percentage of sales for a specific category of what you want them to sell. Essentially, if they sell your products, you help promote their business and drive customers to their store.
3) Establish Certifications: In order to become a platinum reseller, you might need to have your products displayed at a physical location, have certified staff who can educate consumers, and in exchange for that investment, you might get additional margin or products that are only offered by Platinum resellers.
You may have to ask questions to confirm that your customer or business partner really wants what they say they want. For example, everyone will say that they want a lower price. Most in the business-to-business space will acknowledge that they really want to know they are getting a better return per investment with you than with another option. If someone said “We want a lower price.” You might respond with “Some people say they want a cheap price. Others tell us they want to know they will get more value per investment with us than with others. Which one matters most to you?”
You need to be in touch with what motivates your customers or your partners. The good news for this executive is that he knew exactly what motivated his partner. But what if you don’t know? In the case of a customer, you might simply ask “What are we missing from our offering that would make it more valuable for your organization?” By asking this way, you are shifting the conversation from a potential focus on price, to one of value.
It’s Your Turn
What do your customers or partners request that you could deliver and use as a basis to grow your business?