Some managers believe warehousing is a task that can be handled adequately by anyone with a strong back. Therefore, the business of warehousing service is in constant danger of becoming a commodity. Commodities normally are sold by price, with few vendors recognizing special features about the product they are selling.
Because of the danger of commoditization, we typically ask warehouse managers to describe their "special magic," those unique features that make their warehousing operation superior.
Identify your magic
If you were asked to list the reasons your company is special, could you provide a quick answer? If you asked your key employees to describe the company's competitive advantage, would they have a ready response?
Are your customers aware of the competitive advantages of your company? If you don't know, wouldn't it be worthwhile to ask them and find out?
Have you identified the competitive advantages of your primary competitors and compared them to your own magic? Sometimes the best way to handle a competitor is to avoid competition.
A professor studying the service industries focused his work on the airlines with particular emphasis on one carrier: Southwest. During an interview with the CEO of a competitor, he asked how they meet the challenge of Southwest. The executive said he could not compete; therefore, the company would stay strong in locations not served by Southwest.
Think like the customer
As you consider your magic and compare it to competitors, ask this question: Why should I buy from you?
Be honest and specific with your answer. Avoid generalizations such as "We give better service." Instead you might say: "Last year, our company received quality awards from two of our customers."
Stay away from the standard answers claimed by many warehousing specialists, including the following:
- We have a modern building
- Our people make the difference
- We have the best price
Then, consider the reaction of the typical customer: So what? What's in it for me?
What are the consequences for the executive you work with if a warehouse performs according to expectations. Part of your magic should be the things you do to help your customer sleep well.
In the early days of computer marketing, sales representatives for the leading manufacturer were taught that "nobody ever was fired for buying IBM." If the prospective customer noted that other brands were available at a cheaper price, the salesperson indicated buying from the leader results in job security for the buyer.
With the IBM example in mind, put yourself in the place of your customer. How would you convince that executive that your company's performance always will hit the target, that nobody ever was fired because of a failure at your warehouse. Be specific, including metrics and comparisons.
Dollars versus value
How can you save your customer money? In today's deflationary environment, warehouse operators are challenged to work with clients who request price reductions.
As a buyer, you see an increase in commercial messages from a variety of businesses that are offering special discounts in order to attract new customers. Purchasing agents for all companies are under pressure to demonstrate their ability to lower costs through aggressive negotiation with their suppliers.
At the same time, there is little evidence that warehouse operators can reduce either hourly wage costs or space occupancy costs. If you cannot lower your costs, how do you negotiate with a customer who demands a lower price?
Look beyond price and consider value. What have you done, or can you do, to increase the value of your warehouse services for your client? What have you done for other customers that might be applied to this one? What collaborative changes in palletizing, or stacking procedures, will enable you to store more units in the same amount of space?
What changes in your client's shipping procedures would increase your ability to receive, store or ship an increased number of units per hour? What steps can be taken by you and your customer, working together, to increase storage and/or handling productivity?
Where's the beef?
As you describe your company's magic, remember the importance of dazzling with detail. If you indicate your service is superior, highlight that with examples of the reduction of order-cycle time, improvement of inventory accuracy, reduction of shipping errors and prevention of damage.
You cannot provide this detail without metrics, so continuous quality measurement must be part of your process. You should measure these elements whether or not the customer has asked for them.
If you claim your warehouse services are highly regarded, provide testimonial evidence from existing customers. Not all clients are willing to provide testimonials, but no one should be offended by the request. Furthermore, unsolicited testimonials should be utilized whenever possible.
If you say, "Our people make the difference," how do you support the claim? A quality staff usually has stability. What is the average length of service for your workforce and that of your senior management team?
If you advertise that your warehouse is more flexible or more responsive than the competition, what examples can you provide? Demonstrate how you reduced customer X's order cycle time from three days to 1.5 days. Describe how you increased shipping capacity for customer Z from 10 truckloads per day to 18 truckloads.
If you say you have the most innovative warehouse team in the industry, provide examples of new practices that resulted in increased value for a customer. In other words, illustrate every aspect of your company's magic with specific case examples.
Marketing myopia
Myopia, or nearsightedness, is a disease that can afflict corporate purchasing agents. As Harvard marketing professor Ted Levitt described it, not every vendor understands what the customer is buying. Levitt pointed out that the consumer who purchases an electric drill really is not buying the tool; rather, some perfect holes. Because some vendors sell warehousing as a commodity, buyers tend to emphasize price and ignore quality.
The intelligent buyer of logistics services should be looking for the best value, not the cheapest price. That value is measured by experience, flexibility and dependability. Like the buyer of the electric drill, your customer is not buying modern warehouse buildings or even impressive management. Instead, he is purchasing logistics value. By failing to market the value proposition, the vendor is likely to fall victim to the low-priced competitor.
Put yourself into the shoes of the buyer. He may understand logistics services have value, but sometimes that value is hard to define. As buyer expertise declines, and new methods of sourcing are adopted, managers are asked to respond to electronic transmissions of RFIs (request for information) and, later, to RFQs (request for quotation). Communicating value in this situation becomes a real challenge.
If you are the vendor, can you communicate your value proposition clearly in every presentation? Are you able to present case studies that illustrate the special magic only your warehouse can provide? Can you be sure that the customer understands the value your company delivers every month? Remember, the buyer is looking for perfect holes, not a good drill.
It’s all about people
Because people always are an essential element of your special magic, a constant audit of your workforce is necessary for maintaining quality. There are two approaches to developing a superior team: developmental and Darwinian.
If you follow the developmental method, you should offer continuing training and mentoring opportunities to enable the average worker or manager to grow. This could include funding the education for an executive to acquire an advanced degree or budgeting for staff members in professional societies, and participation in trade shows, workshops and conferences.
In contrast, employers following a Darwinian approach will emphasize recruitment and hiring of highly talented people, coupled with frequent elimination of those who fall to the bottom of talent ladder. In Darwin's words, they focus on "survival of the fittest."
Which option is best for your company? If you value stability, emphasize development. If your priority is fast growth, you may want to be Darwinian.
Today's challenge
Marketing your magic never has been more critical than it is today.
It is easier to keep and grow good customers, than it is to find new clients. Therefore, in marketing your magic, start with your current customers, not those you hope to acquire. If you demonstrate that your warehousing services are superior to those offered by competitive sources, your ability to grow can be assured.
