Situation
Not receiving full value for services
RailCo, a North American railroad, felt it was not receiving full value for all transportation services it delivered to its customers. There was an opportunity to change the way RailCo sells to customers and receive full value for all its transportation services.
Synaptic Decisions was asked to pilot value based selling with a RailCo’s customer to achieve greater customer margin as well as apply the value based selling concept to all its large customers.
Approach
Develop and structure offerings for high value opportunities
Our approach was to:
- Facilitate RailCo’s understanding of their customer's wants and needs
- Identify opportunities to maximize revenue, reduce cost to serve or reduce the cost of risk for either RailCo or its customer
- Develop and structure offerings to target identified high value opportunities with a focus on customer preferences
- Design a commercial menu with multiple offerings to discover what the customer values and to create a multi-dimensional space to trade around that value
- Create a negotiation and trading 'playbook' for the commercial team on trades that maintains or improves margin during each round of negotiations
Insights & Recommendations
RailCo not only delivers rail cars but other transportation services as well. RailCo offers car storage, a valuable service, to one large customer as part of its base lane rate. Because storage was not appropriately structured and priced, the customer utilized storage in a manner that significantly raised RailCo’s cost to serve and reduced expected margins. The storage service needed to be restructured and made more visible in order to create discovery around ways to best align interests and increase value for both parties.
Results
Improved margins for value delivered
RailCo is rolling out the value based selling process company-wide resulting in a whole new way to approach its customer. For this particular customer, RailCo restructured and presented distinctive variations of its storage service within its menu of offerings. The results were improved margins from higher overall revenue combined with a lower cost to serve.
