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5 Risks Distributors Take When They Don’t Know Their Customers

5 Risks Distributors Take When They Don’t Know Their Customers

March 13, 2019

The way customers buy, and want to buy in the future, is changing. But distributors who assume that all of their customers want to shop on an electronic platform all of the time do so at their peril.

Over the past two years, we’ve surveyed tens of thousands of end-users. And while the overall shift to digital shopping and buying is clear, the fact remains that not all customers are alike. Some customers want to shop on an inviting, easy-to-navigate website — even if they want to buyin person. Others don’t want any human contact at all — they expect to conduct all research and transactions online.

As a distributor, you can’t afford to guess which customers fall into which categories. The risk of investing in the wrong resources and neglecting to bulk up where it will benefit you is simply too great. Investing too much wastes capital, and investing too little results in not meeting your customers’ needs, resulting in under-delighting them. This is never a good situation. 

To get it right, distributors must first invest in determining their customers’ individual preferences and motivations.

Here are the five big risks you take when you don’t know what your customers want:

1) Investing in the Wrong E-commerce Platform

We often see distributors spending five to 10 times too much on e-commerce or even five to 10 times too little because they’re uncertain about what they are building. And just putting together an ecommerce platform isn’t enough. Because even the most digitally driven customer will walk away — or click away — from a website they can’t navigate, or that doesn’t meet their needs. Generating demand for your ecommerce platform requires knowing how and why customers shop online, and creating a focused strategy based on that knowledge. 

2) Getting the Mix of Sales Staff Wrong

At the same time the role of field sales is declining, the importance of inside sales is increasing. Too many distributors are failing to grasp the shift and invest accordingly. Too many distributors have spent too much on their most expensive resources: field sales. Most could stand to invest more in inside sales, customer service and electronic channels to service customers more efficiently.

Still, while many customers are moving away from a desire to connect in person with a field sales rep, that is not true of all. So, don’t rush to adapt the field sales role until you have all the data. For example, we worked with a distributor who surveyed customers and found that 96% of those customers wanted a sales rep to visit weekly or monthly. This is significantly different from the aggregate results presented in our “What Customers Want” report. Yet, if that distributor had not taken the time to learn how different their customers are from the majority, they could very well have cut outside sales staff — and lost revenue.

3) Branching Out Too Much — or Not Enough

Aggregate research data indicate distributors can expect a shift away from in-person ordering at remote branches or outlets. But, again, that is aggregate data. Your customers may be different. Factors such as size, geography and their resources may affect whether or not they want to purchase from a branch. That is information you need before you close, consolidate or open branches; if you close branches that you actually need, your sales will take a hit. If you open branches that aren’t needed, you waste capital dollars. The risks are too high to go data-free.

4) Investing in the Wrong Order Infrastructure

More and more customers contact distributors through email rather than by phone. Our data indicate that 70% of distributor customers prefer email ordering. This indicates that many distributors would benefit from investing in email automation, which speeds up order processing and eliminates the need to manually key in orders — a both time-consuming and error-prone process.

But, again, know your customer. If your customer spends most of their time in the field or moving around on a plant floor, email may not work for them. In that case, you’d be better off investing in other platforms, such as mobile-phone apps. Knowing this means you can shift your dollars to channels that will meet those needs, rather than spending on resources that won’t have a big impact.

5) Passing Up Opportunities to Grow with Mid-Sized Customers

Customers want to shop as efficiently as possible. As the emphasis moves away from in-person visits from your outside sales team, consider shifting some of the functions they used to provide to your inside sales reps. Capitalizing on customers’ contact with inside sales is not only more cost-effective, it is efficient: Sales calls can be completed in 15 minutes rather than an hour. It also provides opportunity to increase contact and therefore spend with mid-sized customers where outside reps don’t make financial sense.

Remember, taking the time to gather information from customers may sound inconvenient, and may even require an investment of dollars, as well as time. But that is far less costly than investing resources in a platform your customers don’t use, or in a sales or service strategy that isn’t what your customers want.

Get the second edition of What Customers Want: A Distributor’s Guide to Customer Buying & Shopping Preferences in the MDM Store.

Jonathan Bein, PhD, is the managing partner of Real Results Marketing, which helps distributors make marketing a profit center. He has developed and applied analytic approaches for customer segmentation, customer lifecycle management, positioning and messaging, pricing and channel strategy for distributors. Reach him at jonathan@realresultsmarketing.com or visit realresultsmarketing.com.

© 2019 Gale Media, Inc.

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