Christine leaned back in her chair and gazed out the office window, collecting her thoughts.
“Let me see if I understand your strategy,” she said. “You have identified a customer need, which is to cut consumable costs. The customer is now trying to do that by viewing products as commodities and shopping for the lowest price on each individual item. This forces you to discount those items, which undercuts your margins and leads to a vicious circle of more discounting. You think that this kind of price shopping is self-defeating for the customer, too, because it’s an inefficient way to manage costs. So you want to go back to Dr. Wright’s office and propose some meetings with Susan and the other buyers to discuss a long-term solution for managing overall acquisition costs. Am I right so far?”
“Right,” Scott said.
“OK. Now, you think the answer to both of these problems — the customer’s product-cost issue and your margin issue — lies in our frequent-buyer program, Partner Plus. If you can uncover needs that Partner Plus would address, you figure you could differentiate yourself from your competitors. Dr. Wright and his staff would stop seeing you as a commodity peddler and begin to view you as a consultant with a purpose, the purpose being to contribute to their business strategy. Still right?”
“Well then, I see one little flaw in that reasoning,” Christine said. Time to rock your world again, Scott. “At the risk of violating my own rule about the word ‘commodity,’ it seems to me that our Partner Plus program is just as much a commodity as a bottle of surface disinfectant.”
Scott was stunned. What did she just say? I can’t have heard that right. Finally he settled for: “I don’t understand.”
“Don’t most of our major competitors have frequent-buyer programs?” Christine asked. “And don’t they all operate pretty much the same way as Partner Plus? Aren’t their sales reps going to be talking to Dr. Wright about those programs — if they haven’t already? Won’t those reps try to explain how their programs can cut total acquisition costs because of features very similar to the ones Partner Plus offers: consolidated product shipments, better inventory control, and so on….?”