The Distributors Fee-Based Services Manifesto: Why You Need To Consider Charging For Services

Fri, 09/20/2013 – 2:42pm

Frank Hurtte

Book Release from Frank Hurtte, Founding Partner, River Heights Consulting

Baby boomers march into retirement 10,000 abreast. Technology drives down the cost of everything we sell. New manufacturing processes extend the useful life of our products to previously unimaginable lengths. Global competitors utilize internet-tricks to challenge our customers’ thought processes. Meanwhile, distributors give away ever more expensive services using a half-century old model called “Value-Added” sales.

Distributor expert Frank Hurtte believes the time to start charging for service has arrived. Distributors can stake a position to some imaginary high ground and insist their customers, markets and competitors are different, but the big bad wolf of megatrends is huffing, puffing, and about to blow their house down.

Hurtte thoughtfully outlines why the “Value-Added” sales model most distributors follow is irreparably broken. Outlining what he refers to as the Margin Recovery Model, he builds a case for charging for many of the services currently provided for free.

North American corporations aggressively outsource IT departments, engineering groups, maintenance teams and other areas. This outsourcing directly impacts the number of trained experts at the distributor customers. Distributors are filling a major portion of the worker gap. The line of demarcation between the work done by customer and that done by distributor has gone from cloudy to a complete blur. And, presently, the only difference appears to be distributors are working for free.

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