Iron and steel enterprises as service providers should pay attention to "customer value proposition"

The traditional iron and steel enterprises in the middle of the industrial chain have always played the role of steel producers, mainly for the production and processing of raw materials. However, under the new competitive situation, the iron and steel industry has entered the era of meager profits. To survive and develop in the new situation, iron and steel companies must accelerate the transition from producers to integrated service providers. This has become one of the major issues related to the healthy development of the industry. The “Twelfth Five-Year Development Plan for the steel industry” just announced has made clear requirements for this. During the “Twelfth Five-Year Plan” period, it is necessary to “transform the service concept, enhance service awareness, and establish a strategic cooperation mechanism between iron and steel enterprises and downstream users. Develop deep processing of steel products, improve logistics distribution system, enhance product value and service functions of enterprises, and promote transformation from steel producers to service providers."

Being a service provider means that the company provides its customers with products and services instead of simple products. It is not a “one-click” deal, but a long-term cooperation that depends on each other; it is not a price but a customer. Gain competitive advantage; not just meet existing customer needs, but to help customers tap potential needs. At the same time, service providers need to be able to maximize their profits in the process of satisfying customer perceptions.

The author believes that the key to good service providers is to proceed from the interests of customers and pay attention to the "customer value proposition."

The “customer value” theory was proposed by management professor Lei Dunkeke, Kotler et al. in the 1990s, and believes that customer value is a product that customers use to promote (or hinder) to achieve their goals and intentions, and feel the preference and evaluation. The characteristics, performance and results. Customer value theory believes that value is determined by the customer. In terms of the customer, the purchase is not exactly the product, the service itself, but more importantly, it is a feeling, and the feeling is extremely personal, and the recognition has value. Buy more, the value is high. The customer value not only originates from the core products and additional services, but also includes efforts to maintain the relationship, and creates corporate value through the development of a good and continuous customer relationship.

“Customer value proposition” is the selling point that the company provides to customers. It is the reason why customers are willing to pay extra price for your products and services. It is the reason that customers are willing to “pay the bill” at higher prices. For example, Hualing Group, which proposed to be an integrated service provider earlier in the steel industry, put forward four customer value propositions: establishing a rapid response system, a customized R&D model, total cost of ownership, and delivery date management. The quick response is that the sales personnel who understand the technology go deep into the customer's site, quickly respond to changes in customer needs, and solve problems that arise in the use of customer products at any time. At the same time, a rapid decision-making system was established, and the leaders of the enterprises responsible for technology development quickly organized technical research and production improvement after receiving feedback, and fully met customer needs. Custom R&D is to develop products based on customer demand, provide customers with the most unique and most suitable products, help customers enhance their competitiveness, develop high-tech products, and guide and explore potential customer needs. The total cost of ownership is to help customers reduce costs, including payment costs for customers to purchase product services, costs for using products, costs for warehousing, transportation, quality defects, etc., to reduce processing and distribution costs for customers, and provide supply chain services. Provide customers with high quality products and services. Delivery management is to provide customers with fast and accurate product delivery services, help customers improve the cash flow rate, and ensure that customers get better economic efficiency and operational efficiency.

The author believes that each company's characteristics are different, and different "customer value propositions" can be determined according to the actual situation and the different needs of customers. In short, facing the end-users, companies must change their previous development strategies and seek new winning points. The purchase and use of steel by customers is a complicated process. In addition to product design, there are the following sections: cutting, delivery and distribution, storage, machining, heat treatment, welding, and assembly. Any link will allow customers to experience and impression the product. Each impression will affect the customer's next choice. With such a complex purchase and use process, the value of customer attention will be more complicated. Satisfying this complex customer value is the goal of service providers.

To truly implement and implement the "customer value proposition" formulated by enterprises, enterprises need to establish various business processes to support them, and they must design reasonable action paths and strong management support. For example, Valin has established internal business processes including marketing and service, research and development, production and manufacturing, industrial organization, continuous improvement and capital operation. The company has adopted the leadership concept of "Idea First, Strategic Guidance" and organizational changes. Talent incentives and training, information construction and information sharing are management support. This provides other companies with experience to choose from. Needless to say, as long as the customer value proposition is truly realized, it is of great benefit to improve the overall competitive position of the enterprise and enhance the competitiveness of the entire industry chain.