Customers (Not Competitors Nor Technology) Are the Real Forces of Change
By Bill Wade
The National Association of Wholesalers recently published the seventh installment in their Facing the Forces of Change series of research studies. The series dates back to the early Eighties, and is significant primarily because of the uncanny accuracy of some of their predictions about the coming trends in distribution.
The findings are the result of exhaustive study of responses from more than 1,000 distribution executives and 400 supplier executives in over forty different channels. This is the best broad view work done in this industry.
After looking thru the186 page report, I was most taken by the findings in the distributor/end-user arena… namely that it is the preference of buyer individuals, not external technology forces or competitive (onshore or offshore) tactics that will determine your future success.
DUH! We knew that … kinda. What we may not have considered are the components of consumer behavior that can be actionable within our marketing strategies now.
The study highlights three customer behaviors that will drive our competitive responses soon. They include these key trends:
- Distributors are competing with other real time sources of purchasing information;
- Customers are freely roaming to take over pre-sales transactions;
- Outside sales value is continually eroding, while aggressive customer purchasing tactics are growing.
These situations, along with changing tactics of competitors and suppliers, will lead to major continuing opportunities for independent distribution, primarily centering on these simple principles:
- Customer service has become the ultimate marketing differentiator.
- Independent distributors have become suppliers of relationships.
- Fee-for-service models are still flexible and subject to intelligent design.
Basically, the study has resurfaced a favorite belief of mine: People sell the way they buy. Industrial buyers are human first, not easily reduced to simple accounting robots by the demands of their jobs.
Therefore, it should not come as a surprise that fleet operators will approach operating decisions much the same way they make personal purchases.
They are Internet savvy, so they can be expected to use that tool for much of the pre-purchase information gathering.
They are more and more comfortable with online transactions, and the study predicts a 3x increase in Internet fleet ordering by 2008.
They demand email access to their supplier sales reps. A cell phone alone will not get it done.
They will insist on being able to verify order and account status directly (without the intervention of a customer service rep). Easy questions need to be automated away from the valuable knowledge resources remaining.
The study surmises that the upshot of these changes will be a major redirection of personal sales efforts. The authors see prospecting new accounts and customer training displacing resources wasted on administrative tasks and hand holding of pet accounts.
Armed with these results, it would seem reasonable for distributors to start making changes in their marketing plans now:
- Realize that the traditional sales force function will be a victim of this “buyer as personal consumer” trend… start to reorient and retrain your sales effort away from its role as intermediary and toward its future as an overall operations consultant.
- The consultative sales model will survive… and expand. The more you know about many facets of a fleet’s operation, the more price premium you will command. Think about your website as a real sales tool and invest to make it a transactional advantage.
- Your CRM package (seamless internal linkages of your departments) will define your service reputation and value proposition. The first short term target should be to automate easy calls away from sales force.
Don’t wait… self service adoption can be a real tool. By recognizing these trends at the branch level, powerful industrial distributor Grainger was able to grow sales 15%, increase order frequency 5x, and multiply the average ticket six fold.
Lastly, an interesting side effect of all this is that technology will continue to negate scale… size of the distributor will become even less important than it is today.