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The Value-Added Distributor Series: From Concept to Completion

By Bridget McCrea

Fifty years ago a customer walked up to the counter at Avon, Mass.-based Controller Service & Sales and said:  “Hey, I buy a lot of products from you, but do you think you can also assemble them all for me?” The answer was yes, and from that day forward the electrical control component distributor found itself in the value-added services business. By offering design, assembly, product integration, and various other technical services, this NAED member has been able to set itself apart in a competitive industry and become extremely valuable to its customer base.

“We will do everything from draw out a concept for an application on a napkin to full production – and everything in between,” says Scott O’Day, vice president of sales and marketing. “We’ll program the systems, test them, start them up, and get them rolled out at the customer’s location. It’s a complete job.” Controller Service & Sales also has an online store where customers can shop in a 24/7 environment, access information about past purchases, and either hit “reorder” or generate new requests.

As a final component of its value-added offerings, the distributor offers in-house training for higher engineered products. This offering is a work in progress when it comes to compensation for the service. “Sometimes we struggle to get money for that service, but we’re getting better about being able to charge for it,” O’Day says. “We figure that if a customer gives us a PO for training, they will show up. If they don’t, then they may think, ‘Oh, I will just go play golf instead.”

Recouping the Costs
O’Day says Controller Service & Sales’ value-added philosophy is simple:  customers want the services and value them. “It’s basically woven into our corporate culture around here,” he says, noting that the company’s specialization area of automation and controls lends itself to value-added services. “We’re a niche wholesaler, so our customers tend to need a little more support and services than those of a more general-line distributor.”

Many times, the costs associated with offering those services can’t be justified as a line item on an invoice. In such cases, O’Day says the distributor “recoups the cost in the margin and then makes up for it on the longevity of the customer relationship.” Put simply, the repeat business and customer loyalty that’s stoked by the value-added services far outweigh any potential, direct monetary rewards.

When developing its value-added offerings, Controller Service & Sales closely examines its customers’ problems and then comes up with solutions to those issues. “It’s about identifying a viable opportunity,” says O’Day. “When it comes to our customers, that’s usually a pain point.”

Whenever possible, the company starts the examination process during the presale process, rather than trying to provide useful value-added services once the project is underway. “We try to get the message out about our services prior to the purchase order being cut,” O’Day says.

It’s in our Roots
Even though Controller Service & Sales’ value-added services can’t always be correlated with a specific invoice charge, the benefits that have come from 50 years of offering such services to its customers have been significant. “I definitely feel like we get a higher profit on the products that we sell as a result of our value-added,” says O’Day. “It doesn’t happen on every single sale, but in general it works out to higher overall profits.”

Going the extra mile to assemble equipment and train customers on its use also helps distributors like Controller Service & Sales attract new customers and retain existing clients that might be able to “shop around” on price or for another reason. Finally, O’Day says the distributorship enjoys playing an instrumental role in its customers’ success. “One thing we stress around here is ‘share-a-wallet,’ which allows us to put more of the goods and services that we sell into our existing customer base,” he says.

“That is good for us because it gives us greater credibility and creates a loyalty bond between our customers and our company,” says O’Day. “It’s not always a 100 percent perfect solution, but it’s what we try to aim for. It’s our culture.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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