In the late '80s and early '90s, the term value-add was not found in distributors' dictionaries. In those days, it was a case of efficient storage and supply. Indeed, many terms and conditions carried clauses that refused liability for anything inferred or suggested by sales when they were speaking to customers. Many such terms and conditions can still be seen.
In earlier days, therefore, perceived value-add was about being brilliant at holding stock, or next-day delivery, and very little else. Things changed gradually in the late '90s when the term was first aired by resellers who were being forced to adapt to new technologies and deliver far more intensive programmes to their clients.
Things progressed to one point of call account management, product knowledge and a 'powdering' of prior promises about delivering on time and at the right price. Never mind that this should be a standard expectation, it was sold as value-add.
Things got better with non-branded packaging or white labelling, preloading of software, build facilities, the dawn of solutions and technical support, finance and marketing tools and web based delivery.
Once web and email came to the fore, electronic developments such as direct order placement, account view, online payment, e-billing and general account management online also helped add some value.
For me, and I suspect more many others out there, value-add is what makes the experience of trade an enjoyable one -- although not necessarily a convenient one. Much of what first appears as value-add evolves into a service offered by many. So a service is not a value-add.
Value-add, in its purest form, is only found in relationships. These are about people, not businesses or ways to transact per se. Value-add requires a business to deliver a consistent message of interest and, above all, inspire trust. If there is a dispute, the messages from Sales, Customer Service, Product management and indeed Credit should be common and aligned.
This means breaking the often-divisive lines between the various operating areas of a company. Getting each department interested in the other, allowing cross-fertilisation of ideas and goals, and fostering communication, is key to really adding value. Siloing functions focused inwardly on their own performance and incentive targets is not helpful.
Ninety per cent of B2B transactions are on open-credit terms and receivables. Trade debtors may make up half a company's total assets - more, often, in distribution. Yet the measure of efficiency remains how quickly money is collected and how small the bad debt is. Using only these measures is a sure-fire way of cutting growth and profitable sales.
Salesmanship has suffered in recent years and much blame may be placed at the door of ecommerce, the web, email, and companies simply forgetting the rudimentary requirements of client relationships.
Customers were pushed away from account management and into online buying to 'reduce the cost of sale'. Instead, they were reducing the cost of a sale - which is something quite different.
Unsurprisingly, clients go to where they can talk to people and the net result is more incoming to outgoing sales calls with many of the incoming simply inquiries. Order takers, therefore, instead of order creators. And the theme applies in many industry sectors. Increase a sales target these days and sales is guaranteed to target primarily those they already sell to - with resultant margin erosion.
A unified sales and credit approach, on the other hand, guarantees success in my opinion, as it is usually these two areas that have most physical contact with clients. And they remain the best communicators. Taking a real and honest interest in your client while delivering support and consistently unambiguous messages is the way to a customer's heart and order book; the services after all are available anywhere, often more cheaply.
Technology is great and without it there is no progress, but it is worth remembering the message you give clients is as important as how it is delivered. Whatever happened to talking to people, and frequently?
Eddie Pacey is managing director of EP Credit Management and Consultancy
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