It's Not Luck - Eliyahu M. Goldratt [99]
“Interesting idea,” I calmly say. “That would solve his problem of an investment budget.”
“But . . .” Joe is out of words.
“It will also enable the client to improve his return-on-investment. His corporate would love it. And if your prospect belongs to a company like ours, you’ll have a really attractive offer, since it doesn’t put any immediate demand on his cash.”
“Are you joking!”
“No, I’m not joking,” I answer dryly. “I’m just examining what is attractive to our prospects.”
This pushes Joe over the edge. “Attractive! I can tell you many things that are attractive to our customers. The problem is that none of them make any sense for us.”
“Give me an example.”
“If you want something really attractive,” Joe doesn’t hesitate for a second, “give the customer everything. The best would be if we own and run the customer’s needs for pressure steam for him. This is ridiculous.”
I stare at him. For a long time. Here is the answer. So simple. Can it be?
He starts to fold under my gaze.
Suddenly Stacey speaks up. “Joe, repeat what you just said. Exactly, word for word.”
“If you want to be attractive to the customer, let’s run his pressure steam needs for him,” he says in angry desperation.
“Why not?” Stacey stands up. “What if we own the equipment, the spare parts, the maintenance people—all of it? We take care of whatever the client needs for pressure steam. We could sell him pressure steam. Not equipment, not spare parts, but pressure steam.
“Oh, don’t worry, we are not going to give it for free. We’ll charge for it.”
“How are we going to charge for it?” Joe spits.
“I don’t know,” she says. “Maybe according to kilocalorie, or BTUs.”
“That will not do,” he says. “We must take the distance from the furnace into account. Pipes, valves, everything that goes with it are a major part of the system.”
Well, well. He’s walking into the trap.
“Maybe we should charge according to BTU per yard?” someone thinks aloud.
“I’m sure we can sort it out,” Stacey says. “That won’t be the problem.” Turning to all of them she asks, “What do you think? Let’s not sell the physical iron but sell the real thing that the client wants. Pressure steam. Where he wants it, when he wants it, in the amounts that he needs. What do you think about the concept?”
Nobody hurries to answer. Some nod their heads skeptically. Some stare at the ceiling or at each other. But there is no negative reaction. They simply are thinking about it. I sit down.
Phil is the first to talk. He says only one word. “Xerox.”
“Yes, Xerox,” Stacey repeats. “Our large copying machines. We didn’t buy them. We don’t own them. We don’t maintain them. The largest ones we don’t even operate. It’s all done by Xerox. And we pay them. We pay them a flat fee per month plus a small sum for each copy. They didn’t sell us copying machines, they are selling us copies of whatever we want copies of. Joe, what do you think about it?”
“It won’t work. Most of our income and all of our profit comes from spare parts. If we are going to give them on consignment, we’ll starve.”
“Who said anything about consignment?” Stacey is surprised. “What I’m talking about is giving this new offer to new clients. Companies that are building new plants or expanding existing ones.”
“Ah, that’s another story.” Joe is more relaxed.
“Well, what do you think?”
“I don’t know.” Joe is much less aggressive now. “It might work. There isn’t much to lose. In any event, in order to penetrate we already sell the original installation for only the raw material cost.”
Stacey continues to consult with him. “Do you think that if we offer it for a flat monthly fee plus charging according to usage we can get the deals?”
“Depends on the prices. But for the right price we’ll get it. The real question is what price gives us a break-even point?”
“Our break-even depends on how much it costs us,” Stacey says. “A major burden is the spare parts. If we implement the new distribution system we can bring every part that is needed within