Years ago, an Ohio-based specialty metal business made the decisionnotto charge for freight costs, even though their products were extremely heavy. The rationale? None of their competitors were charging, so they couldn’t either.
In reality, this company was No. 1 in the industry, so all those competitors were actually just followingtheir lead. When the company realized what was going on, it had the opportunity to change the policy for its entire industry.
And so it did—collecting more than $1 million in additional revenues.
Smart companies know pricing strategy isn’t just about the price on the invoice.To have an immediate impact on your bottom line without formally raising prices, here are three areas to tackle first.
1. Freight Costs
If you’ve been operating for decades, your freight policies have probably been in place just as long. Maybe you don’t charge for freight at all, or fees are the same across all territories—or you charge the same as you did 50 years ago even though shipping rates have risen dramatically.
To start, ask yourself:
When was the last time our freight terms were updated?
What is our justification for our freight policy?
What are our competitors doing in this space?
This line of questioning can help internal stakeholders determine if there’s opportunity for improvement without much effort, as the aforementioned specialty metal business discovered.
2. Rush Orders
When you place an order on Amazon.com and you want 2-day shipping, you understand you’ll have to pay premium pricing—in this case,$99 for a year of Amazon Prime.
Your customers realize this, too. Yet many manufacturers and distributors don’t charge extra for rush orders.
If your lead time is two weeks, but your buyer needs his order in three days, are you charging extra? In order to get that order to the buyer within his limited time constraint, you’ll have to disrupt your operation, move around other orders and pay higher shipping costs. You might even put other orders at risk. You should be paid for those efforts, but many manufacturers don’t actively seek compensation.
Remember, if a buyer needs an order faster than usual, they’ll gladly pay to get it sooner.
3. Volume Discounts
It’s natural to want to offer discounts to your biggest customers, but if you don’t have a discounting strategy in place, the practice can steadily erode your bottom line.
Discounts shape your customers’ perception of your pricing: With every discount your give, the lowered price becomes the new standard. The next time that customer calls with an order, she will expect that same price, even if the order is only half the size.
The key here is to communicate early and often regarding volume discounts. When buyers understand why they are receiving discounts for aspecificorder, they will begin to understand the rationale behind your invoicing and, therefore, not expect discounts with every order.
Additionally, the threat over-discounting poses on profit often goes undetected since most companies don’t truly know how much profit is lost when sales reps offer discounts. Your company does not need to ban discounts all together, but a discount ceiling should be put in place to keep your profits from decreasing too drastically.
Start Small (and Risk-Free) with Freight, Expedites and Discounts
Raising prices throughout each of your product lines can be a highly complex process that demands a lot of analysis. Freight, expedites and discounts are areas you can impact quickly without upsetting current customers.
Start by identifying improvements that can deliver the most profit with the least amount of risk and effort. The extra revenue you uncover can be used to support larger-scale strategic pricing efforts in the future, such as increasing product prices, which will require more time, effort and commitment.
Bad pricing practices are more common than you’d think. Find out why bad pricing happens to good companies in our free guide.
By John Sonnhalter, Rainmaker Journeyman, Sonnhalter
Now that it’s time for budgeting for next year, the question is, where are you going to allocate your dollars? There’s always more opportunities than there is money to fund them.
Social media – have you tried some efforts in it this past year? What were the results? What were management’s expectations?
Mobile marketing – Has this been on your radar screen? Do you have plans to be mobile friendly in 2016?
I recently read a post from Jeffrey Cohen at Social Media B2B that highlights the latest CMO results on B-to-B Statistics on what and where money is being spent. You can get complete details here. What’s amazing is that only 23% of marketing projects run by B-to-B product companies use marketing analytics.
Here are some highlights on budgets:
Marketing makes up 10% of overall company budget
Product companies currently spend 8% of their marketing budgets on social media
In the next 5 years, they will spend 18% of their marketing budget on social media
Here are some highlights on social media impact:
54% of B-to-B product companies have proven impact of social media on their business
40% of B-to-B product companies have a good sense of the impact of social media on their business
6% of B-to-B product companies have not been able to show impact on their business
Here are some highlights on mobile and internet:
B-to-B product companies currently spend 5% of their marketing budget on mobile
In the next 3 years, B-to-B product companies will spend 14% on mobile
B-to-B product companies complete 7.5% of their sales over the internet
Hopefully these numbers will help you in your upcoming budgeting processes.
The press release is possibly the most basic element of public relations and is still the most effective method of getting your organization’s news out. However, the concept of consistency is often overlooked when considering press releases.
Having a consistent press release program can provide a variety of benefits to your company.
What exactly is a consistent press release program? Often we aim to distribute an average of one press release per month for our clients; if it’s a slow news year, that could be 8-10 press releases instead. The key is consistency.
Here are 10 reasons to establish a consistent press release program:
Strengthens your brand’s relationship with the media
Positions your brand as a reliable source when publications need input for round-up articles
Press releases can spur interview requests for more in-depth media coverage
Press releases strengthen your brand
Improve your search rankings
Complement other marketing efforts
Provide content for social media posts
Reinforce your brand’s position in the industry
Provide support material for other media relations efforts
By John Sonnhalter, Rainmaker Journeyman, Sonnhalter
Short videos are ideal for social media and for you to gain reach and shares.
As a manufacturer, are you capitalizing on this powerful tool to disperse your message? You don’t need a “Hollywood” production. As a matter of a fact, the ones done on a mobile phone would do just fine. We’ve done “man on the street” interviews with contractors at will-call counters and on job sites asking their opinions on tools and other products.
Did you know – Videos convey more info per minute than any other media and 65% of the public like to learn via videos.
In my opinion, you’re better off making a series of very short videos (keep each to one thought or idea). Ideally under 2 minutes is what I tell folks to shoot at. Below is an example of one of a series of videos we have done.
Here are some thoughts on content.
Focus on a problem your customer might have from their perspective (what happened if the problem isn’t resolved?)
Provide tips to solve it.
Utilize the video medium to show examples or illustrate a solution. Here’s your chance to be creative.
Make sure they know your company has the solution to solve their problem.
Donna Moritz did a recent post in Social Media Examiner that talks about 6 ways to use short videos in social marketing. Here are some highlights:
How to video – solve a problem.
Highlight your skills – what better way to get your value proposition out there.
Showcase an event – trade show, association event or new product intro.
Go behind the scenes –give the viewer some insights of your company that they normally wouldn’t see.
She also outlines 10 tools you can use to create and edit short videos.
The bottom line is, use video in your marketing efforts.
We’ve been hearing for years that print is “dead” and digital media reigns. However for B2T, print is still and important medium.
Join Matt Sonnhalter in the next installment of our Marketing Minute series to find out more about why you shouldn’t call time of death of print advertising.
To view other videos from Sonnhalter, visit our YouTube channel here and let us know if there’s a B2T marketing topic you’d like us to cover.
By John Sonnhalter, Rainmaker Journeyman, Sonnhalter
Everybody wants answers, especially to problems, and they expect your customer service department to be on 24/7. This is especially true in the B to C market.
I recently had trouble with a wine cooler that was one month out of warranty and quit. Needless to say, I wasn’t a happy camper and I let the manufacturer know on their website over a weekend. To my surprise, I got an answer within a few hours and they are working with upper management to solve my issue. Now they may just be blowing smoke and we’ll see, but their responsiveness made me cool down a bit.
I ran across a study recently in emarketer.com “How to win at customer service,” that claimed most people just want their questions answered.
Here are some highlights:
81% of those surveyed just wanted their questions answered
89% feel more positive about brands that give good customer service
46% tell their friends and family about a quick response time
So what does all this mean to the manufacturing sector? Well the bar isn’t raised too high and we certainly don’t have to reinvent the wheel.
Here are some tips on how to serve the professional tradesman:
Keep your customer service department open on business days from 7 AM to 5 PM EST. If the contractors are having issues, you need to be available when they are working.
Staff your customer service department with experienced people who can answer questions, troubleshoot a problem or forward them onto someone who can.
