How to Add Value and Raise Profits

Just about anyone that has brushed up against a PC in the past few years has experienced the outsourcing of services. Many PC and software vendors are no longer supporting their products themselves—they’ve outsourced that function to Help Desks that in many cases are overseas. Customers have not reacted favorably to this strategy.

There are many services that are performed around a product—support is just one of them. Manufacturers that see their role as just churning out products may be able to add a service component to their business and actually charge for that service.

In fact, you may already be offering such services. Do you provide special packaging? Bar coding? Do you use green packaging material or boxes using recycled content? Do you do simple assembly or guarantee certain leadtimes and delivery? Do you charge for these services?

Customers have become accustomed to receiving such services as part of a general product offering and it’s likely they’ll be expecting more such services in the future. If you can anticipate your customers’ future needs, think about offering those services at an additional cost.  You could offer a menu of services and allow customer to cherry-pick among the offerings. Or you can package those services as part of the overall purchase and build in an additional profit margin. The key is identifying the services that your customer is willing to pay for.

Here’s how to start:

·        Survey your customers on a regular basis.

·        Maintain an actively engaged sales force that not only knows what products the customers want, but which accompanying services.

·        Learn how much it costs you to sell and fulfill products and provide service to your customers.

·        Understand your profitability in each activity so that you can create a service package that will add value to your customer or customer segment.