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An Effective Value Proposition is Life and Death for Distributors

An Effective Value Proposition is Life and Death for Distributors

July 30, 2019

With digital poised to reign as the dominant sales channel, and global competition on the rise, distributors can no longer view a value proposition as a luxury. In this market, a clear and actionable value proposition is critical to survival.

A good value proposition tells customers who you are, what you’re about and why they should do business with you. And it can’t exist only as meaningless words recited by the marketing department. To be effective, your value proposition should be lived throughout the company, from the front-line team members who interact with customers to the folks who stock shelves. Because a value proposition should set you apart from competitors in a way that communicates the value your company provides customers. That’s why it’s called a value proposition.

Unfortunately, when creating value propositions, more than 88% of distributors that responded to a recent Real Results Marketing survey said they focused on a handful of features, including product selection, availability, speed of delivery, pre-sales technical support and professional sales representatives.

What that means is a lot of distributors are sending the same message, highlighting the same features. That’s not helpful for two reasons: First, when you’re saying you excel at the same things your competition is great at, you’re not differentiating. And second, giant competitors, notably Amazon, have all but cornered the market on things like product selection and delivery speed. 

A Big Opportunity

On the other hand, independent distributors that take a different route have a big opportunity to stand out among their peers.

But before you can create an effective value proposition, you would be wise to understand which customers you are serving, and what they value, as well as how they view your offering. And you need to understand what you do well, and where you’re truly differentiated.

That insight allows you to target a specific set of customers, giving them what you know they value. That means less time wasted chasing leads that will never produce profitable customers and freeing your team to grow with existing customers — and to invest effort in keeping them happy.

For example, a distributor we have worked with sells many of the same products that others do, including abrasives, safety products and hand tools. But their value proposition is their exceptional service with customized solutions, and they charge for it. And because the value proposition is ingrained in the company’s team members, they understand won’t gain anything by pursuing customers looking for bargains.

Organizational Effectiveness

The benefits of a strong value proposition go beyond selling the right products and services. Distributors who create the right value proposition and communicate it effectively will find they are working more efficiently and effectively throughout the organization:

Executive team. With a clear value proposition, executive management can focus on strategy and value creation. 

Finance. When the company has specific value-proposition based strategies, the budget can be focused and streamlined. Departments have accountability, and are spending on the right initiatives and inventory. 

Operations. The company has partnered with the right suppliers for the right product in the right places, resulting in more turns and less excess inventory.

Customer service. When customer service reps understand the value the company provides, they can prioritize their time with the right customers, delivering better service and satisfaction.

Inside and Outside Sales. When sales teams have a clear understanding of their target market, they won’t compete on price,  but instead focus on prospects that will value the distributor’s products and services.

Creating an effective value proposition and weaving it into the company culture isn’t something that can be done overnight. But the effort absolutely pays off. Trying to be all things to all people is a sure path to bleeding profitability. But creating and communicating an effective value proposition will put a distributor on the road to increased profitability.

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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