The National Association of Wholesalers recently published the most recent installment in their Facing the Forces of Change series of research studies
This series remains the only major research study to analyze the future of wholesale distribution within multiple lines of trade, and provides insights about the overall future of the wholesale distribution industry and the role of wholesaler-distributors. It is significant primarily because of the uncanny accuracy of some of their predictions about the coming trends in distribution.
In Facing the Forces of Change: Decisive Actions for an Uncertain Economy, IBM’s Guy Blissett, provides wholesaler-distributors with strategic insights into the key business and economic trends affecting the wholesale distribution supply chain through 2015.
The four major trend areas identified this time include analytics, services, technology and human capital.
After recently reviewing the last couple of reports, I was most taken by the commonality in 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 our future success.
Duh! We kinda knew that. What we may not have considered are the components of consumer behavior that can be actionable within our marketing strategies now.
The studies highlight customer behaviors that I think 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 differentiation.
- Independent distributors have become suppliers of relationships.
- Fee-for-service models are still flexible and subject to intelligent design.
Basically, the series of studies 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 we predict a massive increase in Internet assisted supply chain by 2016.
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 reports clearly indicate 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 heavy-duty specialists to start making changes in their marketing plans now:
- Realize 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, including suppliers) 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 percent, 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, and size of the distributor will become even less important than it is today.
Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at [email protected].
