SPASigma Featured in The Distributor Channel article “Why do customers buy? Questions and Comments” | Strategic Pricing Associates

SPASigma was featured in a recent The Distributor Channel article “Why do customers buy? Questions and Comments”. The article is a review of the Industrial Distribution Magazine’s annual survey which focused on a distributor’s value to its clients. The article addresses the root causes of the fact that over 50% cited “Price” as the answer on the survey when asked “Which are the primary reasons your customers do business with you?”

“Price, really are you kidding me?“

According to over half of the survey respondents, customers are buying from them because of price. In other words, they see their value as the low cost discount leader. I wonder, if this is a response flavored by the responses of those involved in sales, does their management see things this way? Over the course of several hundred (probably over a thousand) detailed conversations with distributor owners and top-level managers, I have never heard any of them say, “We are striving to be the low cost leader in our market.” Instead they talk about solutions, technology and great customer service.

Reviewing the list above, one would wonder if some of the same distributors touting price as a customer attractant aren’t also investing in technical services, engineering skills, support and improved logistics.

I believe the price focus and the services focus are inherently incompatible.

“Why price is even mentioned at all?“

Purchasers constantly push for price. Distributor salespeople are told, “Your price is too high in dozens of ways.” Friendly customers give the seller a “last look” where they are allowed to beat the price of some real or imagined competitor; the message is price got you the order. Not-so-friendly folks mask preference for other suppliers with “your price was out of the ball park, this time.” The message often plays over the top of technical services and sounds like this, “Your service is great, but all of our suppliers provide the same kinds of things.”

We have already stated buyers constantly test our price. This creates a repeated message: price is important. Scientists tell us when messages are repeated the message becomes believable; the thought develops an aura of truth. When the message is repeated by many people, the directive appears as an absolute truism. Psychologists call this the “validity effect” and distributor salespeople respond like laboratory guinea pigs.

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