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Blocking & Tackling
As printed in March, 2005
Truck Parts&Service
Customers (Not
Competitors Nor Technology)
Are the Real Forces
of Change
By Bill Wade
Wade&Partners
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:
1.
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.
2.
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.
3.
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.
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