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Price and Availability

Source: ID Channel Report

Remember the days when customer service meant responding to a customer's request for product price and availability information by:

1. Hanging up the phone.
2. Walking over to the cardex, or even out to the warehouse, to find out the stock status.
3. Checking the price book to get that customer's price.
4. Calling the customer back.

It is hard to believe that just 15 to 20 years ago that is how we did business. The above process usually took a half-hour to an hour just to service one customer. Given today's margins, it's doubtful you could run your business that way and still maintain the same net profitability you did all those years ago.

In my last column, we defined of technology as: "a manner of accomplishing a task especially using technical processes, methods, or knowledge." With that definition in mind, how has technology changed the way we accomplish the task of giving a customer price and availability information?

Today, customers not only call for price and availability, they often e-mail or a fax their requests. Customer service personnel need only look at in your enterprise system (technology) and immediately respond to the customer. Not only can they provide customers with the information they requested, but also can let them know such things such as what they paid in the past, and when orders will arrive. Technical documentation can be e-mailed or faxed right from the system. They can even suggest other items the customer may need, a.k.a. "go together items or accessory items." For example: When you order a burger and are asked if you want fries.

Thanks to technology, a process that used to take a half-hour to an hour now takes one to five minutes. Best of all, the information is accurate and you can further service you customer with additional information.

One key business indicator to measure the success of your business is the amount of revenue generated per employee. If, over the years, you have kept pace with technology, your company should have also increased revenue per employee. And, if you can generate more revenue with fewer people, you should be able to grow your net profitability.

Going forward, many distributors are moving their customers' requests for price and availability to the Internet, either through a Web site or with a direct connection from the customer's system to the distributor's system through an Internet trading network. This eliminates the time employees spend giving out price and availability information, freeing them to focus on sales and thereby increasing the revenue generated per employee.

People often ask me: Has technology caused the erosion of margins plaguing so many distributors? Has becoming more efficient enabled distributors to lower margins to be more competitive and capture market share? Or has technology allowed distributors to survive as margins have eroded due to outside forces, such as customer or supplier demands?

The answer to all three questions is "Yes." If you are a leader and see technology as an offensive weapon, you can use it to become more competitive and look to grow your revenue and market share. If you rather use technology as a defensive measure, you can use it to protect what you already have, and keep competitors from moving in with more effective process. Then there is always the case when a supplier or customer will put added pressure on you to either lower your cost or price or provided additional service. In these case technology can be a lifesaver.

In our next article we explore deeper into customer service and sales.

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