IDEA: Where are the products you ship used? This is MORE important than the invoice or delivery addresses. Find out. It may give you an advantage.

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All companies think they know where their customers are and this may and may not be true. Your sales person visits the buyer’s office.  Your delivery man knows the location for the shipment to be made.  He most likely knows the receiving people from making previous deliveries.  What your employees may not know is where your products are being used.  Find out. It may lead you to create a valuable competitive advantage in the marketplace.

Ask these questions about your customers’ locations:

  • You know the buyer’s address but for how many locations in the company does he buy? He may only buy for one location or he may buy for all (if the corporate purchasing department is centralized).  If he buys for only one location, your sales person needs to find out the other buyers’ names and locations.  To do this, your sales person can offer a further cost reduction if more of the company purchases can be awarded to your company.  You want the buyer motivated to help you within his company so offer him potential further cost savings for other location participation.
  • Your trucks or delivery men know where you deliver. Train your drivers to ask customer receiving personnel if their facility is where your products are used or are your products shipped elsewhere first.  The question is, “Do you guys use our products here or are they shipped to your other facilities?”
  • Find out if your product is altered before being used (i.e. heat-treated, painted, separated in pieces, other components added). Why? You can provide that service cheaper for him because you have those services internally or you have a low cost outside alternative vendor that is lower than his cost (i.e. you have more volume than he does and you have clout with the vendor that he may not have). Offer to do the service for him and give him a price that will be hard to turn down.  Offer to help negotiate a better rate with the vendor because of your leverage to help your customers out.  You want to lock him into your company as a supplier and you want it to be financially uncomfortable and detrimental for him to leave your firm.
  • If your product is shipped to other places after your delivery, are those locations within the customer’s company or outside vendors. Where specifically are those locations?  If  the buyer asks why you want to know, happily tell him you might be able to save him money because, 1.) you may have trucks going there every week that are not always full, 2.) you already warehouse in the area inferring cheaper freight rates,  ) you have special freight rates with an onsite freight company near his firm that may beat his current cost.
  • If your customer ships your product to multiple locations, you may have warehouses nearby that could make those deliveries and cut down on the customer’s inventory value.
  • If your customer’s orders are large enough and he is willing to issue annual contracts, your firm may want to rent a warehouse near the customer’s facility and deliver within 24-48 hours. The annual requirements contract must support your extra rental expense but you consider this when you see the customer’s annual gross profit coming to your firm.
  • You may have trucks already going past the customer’s remote facilities which would cut down on his internal distribution costs. This would allow him not to have to distribute your product through a central location saving him money. Receiving long term requirements contracts might support a price that stipulates “destination point”.
  • If the contract is large enough and the customer has multiple facilities, give him a very low price for all products delivered to one location and an adjusted price for delivery of his products to all of his locations direct. He can compare the annual difference to see which yields the better savings. You give him an option which most of your competitors may not be able to do. Consider making offers that the competition will not match.
  • Offer to haul other freight to his facilities since your trucks pass those points every week. Provide a very low price for these offered delivery charges because he has a lucrative annual contract with you for your products. Those cheap freight prices go away if he pulls his annual contract with your company.

For every customer, you as the seller need to know where your product is going because that destination point may offer more opportunity. You simply need to ask.   GPI 458

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