More than 40 proprietary research projects on behalf of packaging (materials, containers, equipment, supplies) suppliers over the past two decades (and encompassing more than 4,000 interviews with purchasers) have let PMG identify a consistent pattern. The objective has been not only to identify how packaging buyers rank performance but also to determine which of the categories are of higher importance.
“Some companies spend hundreds of thousands of dollars perfecting their product offering. But unless that innovation is dramatic and disruptive, what determines whether or not the sale will be made or the business retained, are service attributes,” says PMG president John Barrett. “A better mouse trap – if it does not bring added revenue or enhanced profit – will collect dust.
Packaging buyers identify the most important of traits as responsiveness, communication, customer service and accessibility (see bar chart). Product attributes—including product quality, product performance, product line, equipment and systems, even innovation—are of lesser importance, the research shows.
“It may come as a surprise to many in the packaging community that business is won, and enduring competitive advantage achieved, by building and maintaining strong personal relationships between the buyer and vendor,” Barrett adds. “Product quality and performance are more easily duplicated—by using the same equipment to produce the packaging components or buying from the same raw-material suppliers. Service performance is much more difficult to replicate and consequently can lead to sustainable advantage.”
Product improvement and innovation should be centered on delivering lower cost to customers. Price is something most materials converters do not want to use as a lever. However, helping customers cut their total cost also can be a powerful way to establish and grow a long-term, profitable relationship.
“A company may receive a high score in innovation, but if the customer doesn’t identify innovation as important then the score becomes less relevant,” Barrett concludes. It’s important to determine which attributes are most relevant to your customer and then put processes into place to make sure they either remain or improve to levels that will sustain the business.”
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My Thoughts: Actually, I don’t think it’d be much of a surprise at all to converters to learn that plenty of business is won (and kept) by building strong, personal relationships with their customers. In perusing the string of other attributes in the bar chart, it looks like it’s just that level of personal relationship that can grow and thus also deal with problems that might arise for things such as technical service, product performance, on-time delivery and quality.