It’s All About the Relationships

Relationships are still the key to success in B2B distribution, but they are changing rapidly
JGunderson1

It wasn’t that long ago that the personal relationship your outside salesperson had with customers and suppliers was the dominant driver of the business. I’ve heard or said, “This business is all about relationships” hundreds of times in my distribution career. That relationship made it easier to discuss and implement win-win solutions for both businesses. Then everyone got connected, got a smart phone and it got complicated. What can you do today to earn more of your customers' most valuable resource: time?

It starts with understanding that each customer has their own definition of a great relationship. The strategy for reaching each customer type is changing rapidly. It has helped me to categorize B2B distribution customers into three basic relationship categories, outlined here.

Old School – This is the type of customer that wants a personal relationship with your sales team. You build the relationship with social and training activities outside the workplace and regular in-person sales calls. You invest in training and entertainment budgets that drive these relationship-building activities. These customers value the training and expertise you provide, and often they have a long, loyal relationship with your company.  

This is the customer type that senior B2B distributor leadership interacts with most frequently. The Old School Strategy can be defined like this: Outside Sales & Entertainment Budget = Stronger Personal Relationships & Stronger Personal Relationships = Higher Profits

The danger with Old School customers is that it is often easy to over-invest in the relationships. A sales leader recently told me, “When I looked at our entertainment budget, I found out we were spending more every year, but we were doing it with fewer customers. My tenured sales team is used to selling that way. It looks like they are doubling down with the customers they are comfortable with.”

Middle School – This is a customer type that values the relationship, and may want more time to do outside-of-work training and entertainment. They are often short of resources at work, or don’t have the time to devote to the relationship. You have to make the most of the time they can give you today. This is a great place to focus on your value-added services, technical expertise and training to maximize the time they can give you. Here's the equation for a Middle School Strategy: Delivering Value = More Customer Time & More Customer Time = Profitable Relationships

If your sales team is struggling to get a good appointment with key customers it might be a sign of trouble. You may also hear the sales team complaining it’s all about price, and they won’t pay for our service. That may be an indication your value-added services and technical expertise message isn’t reaching your customers.

New School – These customer types are the most frustrating type for distributors with experienced and tenured leadership. Often I hear Old School sales leaders complain about these “Millennials” who don’t seem to value the relationship. They complain these customers are all about price and won’t pay for value. They struggle to relate to New School customers.

That can be shortsighted and dangerous to your businesses health. The New School customers are the fastest growing relationship type. If you can save them time and make their job easier, they will value your services. That’s the key to a strong New School customer relationship.

New School customers may never want to be your best friend, hang out after work or need that weekly in-person sales call. If you deliver value and make their job easier, they can be the most loyal and profitable customers you have. Here's the New School Strategy equation: Key Value Added Services + Easy E-Ordering = Profitable Relationships

The other benefit to breaking through with this group is that lower sales expense and entertainment budgets equals a lower cost-to-serve. That's a winning equation! In B2B distribution, it’s still all about the relationships. It’s the customer and what they consider to be a strong relationship that is changing. If you have a one-size-fits-all sales relationship sales strategy, it might be time to consider some new approaches.

As always we value your feedback. Feel free to comment below or contact me at john@mdm.com.

 

 

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