Dan Horan, Author at Indian River Consulting Group https://www.ircg.com/blog/author/danhoran/ Indian River Consulting Group specializes in helping distributors and manufacturers accurately diagnose problems and identify risk-bound alternatives so they can take their next steps confidently. Call us to learn more at 321-956-8617 or contact us now. Mon, 09 May 2022 19:41:12 +0000 en-US hourly 1 https://wordpress.org/?v=6.1.1 https://www.ircg.com/wp-content/uploads/2021/04/favicon.ico Dan Horan, Author at Indian River Consulting Group https://www.ircg.com/blog/author/danhoran/ 32 32 Case Study: Manufacturer Shifts Approach to 2 Distinct Segments to Reduce Conflict, Solidify Market Position https://www.ircg.com/blog/case-study/case-study-manufacturer-shifts-approach-to-2-distinct-segments-to-reduce-conflict-solidify-market-position/ https://www.ircg.com/blog/case-study/case-study-manufacturer-shifts-approach-to-2-distinct-segments-to-reduce-conflict-solidify-market-position/#respond Mon, 03 May 2021 19:35:00 +0000 https://www.ircg.com/?p=11563 *Disclaimer: The following case study is based on a real client. The company name has been changed to protect the company’s identity Allison-Fuchs is a leader in the power transmission industry with a large installed base in mechanical equipment and other specialty hardware necessary for factory operation. Allison-Fuchs built its installed base by offering innovative …

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*Disclaimer: The following case study is based on a real client. The company name has been changed to protect the company’s identity

Allison-Fuchs is a leader in the power transmission industry with a large installed base in mechanical equipment and other specialty hardware necessary for factory operation. Allison-Fuchs built its installed base by offering innovative and reliable products.

In the beginning, a channel dedicated to technical knowledge evolved to sell Allison-Fuchs products. By using a limited-distribution model, the company had a degree of control of the channel and its offerings.

Over time, Allison-Fuchs products matured and became commodities (commodities exist when the application knowledge rests with the end-user). Because of this maturity, their products became the incumbent or default choice. This meant selling was no longer as necessary as products “sold themselves” through customers reading the brand on the work out part and simply reordering.

This caused channel conflict and two distinct channel-partner segments emerged. One segment of the channel is technical and “sells” the products while the other segment is logistic and cost-savings focused. These two segments are at odds both in terms of business model and ability to effectively serve or make a market.

The technical segment sells mostly to end-user engineering departments. Their approach is high touch and high engagement, often performing initial design work. This segment requires higher margins to operate and most are inefficient at managing flow business. They were actively pushing back against Allison-Fuchs because of share shift, or other distributors using pricing discounts to take business from them.

The logistic-focused segment sells mostly to procurement departments. Their approach is low touch and low engagement. They are efficient at managing flow business and able to support low margins (but always wanting more). They actively try to swap out Allison-Fuchs products for their own private-label offerings. They often use Total Cost of Ownership (TCO) as a reason to replace the company’s components and drive cost savings.

Allison-Fuchs was treating both segments the same and the result was lower-than-expected growth. While they were growing sales, they were not meeting their parent company’s expectations. The industrial market was growing 3% and while Allison-Fuchs was growing above market, year-over-year growth of 8% was “required” by their parent company.

The parent company, which acquired them as a strategic acquisition, had open distributions and believed the issue could be resolved by simply opening Allison-Fuchs’s limited distribution model.

To Allison-Fuchs, this meant the channel that helped create their market was not the one to take them into the future – a distinct break with closely held beliefs. Additionally, distributors were questioning their commitment to the limited distribution model that built their strong market position from the beginning.

To solve this dilemma, they needed to know two things:

1. How important is technical selling to Allison-Fuchs products?

2. What ability do logistical distributors have to swap out Allison-Fuchs products?

This is fundamentally an economic issue driven by degree of risk. Allison-Fuchs had attempted fixes but continued to hit internal constraints and were unable to improve growth. Progress had stalled and frustration was prevalent throughout the company. Indian River Consulting Group was brought in to provide clarity to the issue and external insight into the possible solutions.

Process

To answer these two questions, IRCG needed to understand two core traits:

  • Is Allison-Fuchs brand-led or channel-led?
  • What service outputs are end-users demanding and who in the channel is providing them?

Brand-led versus channel-led tells us where the channel power lies. Brand-led means the power lies with the brand and how that power is used matters most. A customer in this situation chooses the brand first and then finds the best channel partner that sells it. Channel-led means power is with the channel and the only thing the manufacturer can do is focus on being easy to do business with. In this situation, the customer chooses the distributor first and purchases the brand the channel partner recommends. Private label is a viable alternative for channel-led products.

Service Outputs Demanded (SODs) are the services that end-users require from the channel. Service Outputs Supplied (SOSs) are the services supplied by the channel. To understand the effect on the channel, it is necessary to know what services are demanded (or valued), who in the channel provides them and if they are being adequately fulfilled. Service outputs ultimately tell how fairly the channel is being compensated for the services it provides.

Methodology

Following a kick-off meeting to align expectations of the process and deliverable, IRCG undertook a series of interviews to answer the questions above including:

  • One-on-one interviews with internal stakeholders
  • Adaptive interviews with channel partners
  • Adaptive interviews with end-users

The channel partner and end-user interview set included large and small, geographically dispersed, OEMs, and a wide range of end users. Interviews were completed using a proprietary adaptive interview technique, creating a trusting conversation between peers.

Findings

IRCG found that Allison-Fuchs is brand-led and, more importantly, their channel power was being underutilized. Additionally, both Allison-Fuchs and their distributors had a heightened view of the value each provided in the overall value chain. End-users choose the brand first and the source of supply second.

This meant distributors have a low ability to swap Allison-Fuchs for other products (although that did not stop them from trying, adding to the channel noise). While the company’s products represented a very small share of end-users’ factory operating costs, their impact on the full system was outsized. Said another way, failure of an Allison-Fuchs product came with potentially high total costs to the system. Because of this, most orders were flow business and read and reorder was the standard.

A misalignment of service outputs supplied was also found. Technical selling was important and needed to be invested in and nurtured. End-user OEMs relied on Allison-Fuchs and the channel to provide the needed technical expertise. Allison-Fuchs relied on small specialty distributors that supported the specification and selection process in addition to the actual transaction.

Because of this misalignment, Allison-Fuchs was overcompensating the logistic-focused, market-serving distributors with both margin and allocation of resources. Their discounting and support were driven more by channel-partner-perceived takeaway power than the economic value of services actually provided to their customers.

IRCG recommended that leadership take two core actions to regain market power and sales growth:

  • Focus on OEM specification. The importance of read and reorder in the buying process highlighted the need to focus more resources on OEM specification and the “OEM Waterfall.” By getting the company specified with more OEMs, all vendors who sell to and support the OEM eventually will default to specifying Allison-Fuchs. The risk of swapping for lower cost or lower quality (with limited cost savings), ensured that specification work was the key to regaining market power.
  • Own total cost of ownership. Allison-Fuchs needed to own the total cost of ownership conversation with end-users. By directing the conversation with end-users, they could demonstrate the true cost of ownership and highlight the potentially exponential costs of product failure. Increasing direct contact with end-users while still serving them through distribution allows Allison-Fuchs to control the conversation about total cost of ownership without substantially increasing their cost to serve. It additionally lowered the ability of logistic distributors to attempt to swap out their products.

The recommendations meant Allison-Fuchs needed to treat the two channel segments differently, pulling back resources from market-serving channel partners and redirecting them to market-making efforts and partners. This did not mean cutting off market-serving channel partners but instead making a strategic investment in the partners and activities best positioned to grow business.

Finally, Allison-Fuchs was advised to ignore the channel noise. This was especially true for the logistic distributors. While the logistic-focused distributors might have the ability to make a lot of noise, their ability to retaliate was low.

Results

The open-distribution strategy of their parent was rejected as a result of the recommendations, and Allison-Fuchs was able to regain market power, better align resources to results and reduce the channel conflict to a healthy level. A valuable side benefit was bringing market data into the growth-expectation conversations with their new owner. The net result was a more realistic set of owner expectations; the channel changes also improved their ability to grow.

Allison-Fuchs met their owner’s growth expectation in the first year following the project.

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The No. 1 Mistake in Strategic Planning is Not Focusing on Customer Insight https://www.ircg.com/blog/business-strategy/the-no-1-mistake-in-strategic-planning-is-not-focusing-on-customer-insight/ Mon, 11 May 2020 20:29:54 +0000 https://www.ircg.com/the-no-1-mistake-in-strategic-planning-is-not-focusing-on-customer-insight/ The need for a strong strategy does not stop because of unprecedented times. If anything, troubling times should highlight the importance of a sound strategy based on customer needs and market realities.

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The No 1 Mistake in Strategic Planning is Not Focusing on Customer InsightThe need for a strong strategy does not stop because of unprecedented times. If anything, troubling times should highlight the importance of a sound strategy based on customer needs and market realities.

Strategy starts from the outside in. That is, strategy starts with your customers, both what they need and what they could do without. It’s not enough to just ask your sales team what they think because they won’t think objectively. They’re focused on selling (which is what you want them to do). Their every interaction with a customer comes back to “How can this help me sell them more in the future?” It’s not their fault; it’s the way they are wired. However, you need to be accountable to your customers.

Starting from the inside is the No. 1 error distributors make when creating a strategy. Rather, you must start with your customers and their needs, wants, desires and demands. Many distributors launch their strategies by doing a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). They get in a room, discuss what they think they are good at, bad at, could improve on and should keep an eye out for. The issue is that this runs a high risk of becoming an echo chamber. If customer challenges are changing, then their expectations are changing as well.

You may think you know your business and customers best and can evaluate what you are doing well or not. But how well do you really know your customers and their emerging challenges? Do you have a source of insight that does not rely on your sales force? How often do you take the time to truly understand what your customers value (or more importantly, don’t value) about your services?

You may have gotten away with building your strategy without proper customer insights in the past but the ability to do so is quickly disappearing. Worthy competition, internet transparency, industry consolidation and uncertain times mean gaining and keeping profitable customers is more important (and more challenging) than ever. Without a clear understanding of your customer’s changing expectations you run the risk of grossly under delivering (not satisfying their needs) and/or over delivering (wasting resources on needs they don’t have).

To build any true strategy, start with customer insights as your foundation.

What is customer insight, and why does it matter?

There are many types of customer insights and depending on your goal and use for the insights, some are better than others. When it comes to strategy, the best source of customer insight is qualitative interviews.

Qualitative interviews involve asking questions to drive an in-depth discussion between peers to find out what motivates or drives customer behavior.

Customer insight, then, is the resulting data. Without it, you are making decisions based on opinions. It takes discipline to utilize data, but it presents the best opportunity for actionable results.

How to get customer insight

The way your customer insight data is collected is key. The better the methodology, the better the results and the usefulness of the data. Poor methods mean constantly questioning the data and its validity. The best way to collect customer data is by going straight to the source. Below are some tips for creating better customer insights.

Conduct qualitative interviews. Qualitative interviews are a one-on-one discussion between trusting peers. It is not a group or panel discussion. It does not have to be in-person. In fact, phone is often better because it removes the temptation of discussing other business. Regardless, it must be a conversation and not an emailed set of questions. While some customers will continue to be in crisis mode, many will appreciate your interest in their business outside the normal chain of communication (especially if the interest comes from an owner or senior executive). Initiating a rapport today, even if it is an abbreviated version of a qualitative interview, may allow for deeper insights in the future with customers more willing to carve out time down the road to discuss broader strategic issues and insights.

Focus their attention. Any visit or call to discover customer insights should be singularly focused. Don’t try to tack it onto the end of a sales call or the beginning of a quarterly review. The interview should be the only focus, or it will be diluted and influenced by whatever the other conversations are about.

Ask guiding questions. Qualitative interviews start with an interview guide. An interview guide is a set of questions that help guide a conversation, not a form to be filled out and answered. The questions are a starting point and the interviewer must dig deeper and ask intelligent follow-up questions. An interviewer needs to understand the source of opinions and get past the surface “fluff.”

Encourage dialogue. Questions should be open ended and encourage a dialogue. Yes and no questions do not work, and will stop a conversation in its tracks. Consider provocative questions such as, “If we were to go away, what would you miss most and what would you do about it?” or “If you were king for the day, what is the one thing that you would change about your business?” or “What is the most persistent problem that you keep working on but it won’t go away?” Use this as an opportunity to better understand their business, not just what you can do for them.

Don’t be afraid of basic questions. Ask basic questions, and don’t worry about admitting you don’t know something. Avoid assumptions. If you don’t ask a question because everyone knows the answer you won’t know if your assumption is true.

Be curious. Always ask the next question. Always ask “Why is that?” Or “Why do you do that?” or “What does that mean?” Have them define terms like “service,” “responsive,” or “relationship.” What do those terms mean to them? Listen to understand, not to respond.

Listen for what’s unsaid. The things that are not said are as important as the things that are. If you do something unique and that you believe is truly valuable, but it never comes up with customers unless you prompt them, then it probably is not as valuable as you think. Pay attention to what you don’t hear. Here’s a great example: We were taking a client through the customer interview process. We conducted dozens of interviews with a wide range of their customers. At one of the read-out meetings, a senior VP interrupted as asked, “What about the gift cards? We need to make sure we don’t forget about the gift cards”. We exchanged looks and asked “What gift cards?” It turns out, every Christmas they give every customer a $200 gift card as a thank you for their business. The Senior VP was convinced that customers loved the gift cards and would buy less if the client were to do away with them. Yet in dozens of conversations, not a single customer brought up the gift cards.

Schedule multiple interviews. Encourage several employees to conduct the interviews. Don’t worry if they are not customer-facing employers. In fact, the ones that don’t normally ask questions tend to be the best at gathering customer insights. They are not concerned about looking foolish or asking obvious questions because they genuinely don’t know the answers. In fact, at multiple companies, the best interviews come from either the finance department or HR — often the least customer-facing of departments. Sales reps go to great lengths to never come across as anything but knowledgeable, which contributes to why gaining customer wallet share through product expansion initiatives often fail, but that’s a different article. Personnel in back-office functions don’t have the same concerns about maintaining the “expert” role.

Watch for themes. Discuss your customer insights as a team throughout the information-gathering process. This is often the most revealing part. Have interviewers share their notes and discuss the potential insights as small team, paying attention to themes as they begin to appear.

Keep it about the customer. Remember, with customer insights, it’s all about the customer. While it’s natural to talk about what you can do for a customer, try to avoid spending too much time on the subject. The goal is finding out what they need — even the things they are not getting from you. If you get stuck, try to get them to compare you with a competitor, or ask about an unrelated side of their business (something you don’t serve) to keep the ideas flowing.

Gathering effective customer insights is both an art and a science. It takes time and practice to perfect. Yet, it is immensely important and forms the foundation of any good strategy.

Remember, this is not the first time our backs have been against the wall. Our country has an unequaled legacy of innovation and your customers, like you, are coming up with creative ways to survive and thrive. These problem-solving efforts will undoubtably bring about permanent changes in the competitive advantage balance. Hearing from your customers today will give you early awareness of emerging solutions and allow you to react quickly to the new landscape.

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UID Sneak Peek: Dan Horan on Building an Intentional Brand https://www.ircg.com/blog/distribution/uid-sneak-peek-dan-horan-on-building-an-intentional-brand/ Fri, 20 Dec 2019 03:37:09 +0000 https://www.ircg.com/uid-sneak-peek-dan-horan-on-building-an-intentional-brand/ Of the 56 sessions offered at the University of Innovative Distribution in 2020, IRCG consultants will lead eight. Senior Associate Consultant Dan Horan will be presenting as a faculty member for the first time at the 2020 University of Industrial Distribution (UID). With a background in marketing and advertising, Dan will dissect the four aspects of an effective and profitable branding strategy in his session, “B2B Branding Strategies for the 2020s.”

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UID Sneak Peek Dan HoranOf the 56 sessions offered at the University of Innovative Distribution in 2020, IRCG consultants will lead eight. Senior Associate Consultant Dan Horan will be presenting as a faculty member for the first time at the 2020 University of Industrial Distribution (UID). With a background in marketing and advertising, Dan will dissect the four aspects of an effective and profitable branding strategy in his session, “B2B Branding Strategies for the 2020s.”

Dan talks about his goals for his session,  in this Q&A:

Why are you excited to participate in this year’s UID?
It’s a great learning opportunity and networking event, and educational to hear different people’s approaches and techniques.

Will you share a bit more about your course, “B2B Branding Strategies for the 2020s”?

One of the things I always try to tell people is that your brand is more than a logo, more than the typeface. It’s all the things that live in a customer’s mind when they think about your company. But you probably only get three or four words of what you are and how you exist in a customer’s mind. One of the exercises will be to write down four words you believe represent your company right now. And then, we’ll write the four words you want to represent you in the next five years.

People are starting to pay attention to branding, considering it intentionally as opposed to something that happened by accident. I hope to give students five things they can do as soon as they get back to their office that will have positive influence on their organization.

What can participants expect to take away from the course?
I’ll break it down into four primary elements. First, we’ll cover the foundations of a brand — what do you need to know, what are some assumptions? Then, we’ll hit on good and bad branding practices — taking examples from students’ own industry experience. We’ll continue with ideas on creating and building an intentional brand, as well as effectively maintaining an existing brand.

Read more about creating an intentional brand in Dan Horan’s article, 3 Steps for a More Intentional Brand.

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7 Strategies to Make Your B2B Marketing More Effective https://www.ircg.com/blog/b2b-marketing/7-strategies-to-make-your-b2b-marketing-more-effective/ Wed, 31 Jul 2019 03:44:54 +0000 https://www.ircg.com/7-strategies-to-make-your-b2b-marketing-more-effective/ Your customers are used to making purchases online in their daily lives. And, more and more, they expect ecommerce in the working world, too. Too many distributors don’t focus enough on their B2B ecommerce – in some cases because they believe in-person field sales is their one and only go-to sales method, or because they feel they can’t compete with Amazon, so it’s pointless to invest in ecommerce.

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7 strategies to make your B2B marketing more effectiveYour customers are used to making purchases online in their daily lives. And, more and more, they expect ecommerce in the working world, too. Too many distributors don’t focus enough on their B2B ecommerce – in some cases because they believe in-person field sales is their one and only go-to sales method, or because they feel they can’t compete with Amazon, so it’s pointless to invest in ecommerce. But in today’s market, you can’t afford either approach. And while it’s true you can’t beat Amazon at its own game, there are B2B marketing strategies distributors should implement to stay competitive. Here are seven:

Protect and Promote Your Brand. Your brand isn’t just a logo or a tagline. It is how customers – and your employees – view your company. And every contact a customer has with your company, whether online or in person, should reinforce your brand. Having an online presence makes your brand both more important and more vulnerable. Using the free tool Google Alerts is a good way to monitor your brand to ensure brand consistency.

Unify Marketing and Sales. Marketing and sales departments should work together as a team. That may be difficult at first, but conducting alignment meetings regularly allows both groups to develop a mutual understanding of companywide goals, and messages and strategies aligned with those goals.

Satisfy the Need for Speed. According to Hubspot, 47 percent of customers expect a webpage to load in two seconds or less. Keeping customers waiting is a sure way to convince them to take their business to Amazon. Making sure your site loads quickly is imperative for successful ecommerce. Check your site speed, and consider using Google Analytics to review its performance on an ongoing basis.

Get Mobile. According to the Boston Consulting Group, 50 percent of B2B search queries today are made on smartphones. That figure is expected to grow by 70 percent by 2020. That means your website must be mobile friendly. You don’t necessarily need an app, but you do need responsive design built into your platform so your site is mobile-friendly. If it isn’t fixing the problem, it may be as simple as switching your design.

Be Valuable. When you provide content that provides information customers need and shows them how to solve their problems, you increase your chances of getting found by customers, and becoming valuable to them. Inbound marketing is about providing value and multiple touchpoints until a customer needs you.

Get Social. Social media is important. You don’t need to be everywhere, but having a blog and LinkedIn page are great places to start. Limit your platforms by focusing on the ones that best represent your business, the content you create and your customers. Don’t simply rely on your team to post when the mood strikes. Instead, make social media a priority and budget time and dollars to it in order to create valuable content that reflects your business goals.

Measure to the Sale. B2B marketing often measures to the lead, but you need to measure to the sale. Measuring to the transaction will help you align with sales and leadership – reflecting profitability and not just the marketing effort. 

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9 Tips for Distributors to Make the Most of Social Media https://www.ircg.com/blog/b2b-marketing/9-tips-for-distributors-to-make-the-most-of-social-media/ Fri, 12 Jul 2019 03:22:57 +0000 https://www.ircg.com/9-tips-for-distributors-to-make-the-most-of-social-media/ If you’re still wondering whether your business should be on social media, it’s easy to learn the answer: Ask your customers.

If they’re using it, then you should be, too.

But don’t begin and end with that single question. Equally important is the follow up: Which social media platforms do your customers use most, and for what purposes?

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9 social media tipsIf you’re still wondering whether your business should be on social media, it’s easy to learn the answer: Ask your customers.

If they’re using it, then you should be, too.

But don’t begin and end with that single question. Equally important is the follow up: Which social media platforms do your customers use most, and for what purposes?

That is important information because you don’t need to spray posts all over the social media universe; instead choose the platforms that best represent your business, are the best potential homes for the content you create, and are the best way to deliver your message to your customers and prospects.

Once you have that knowledge, developing and growing a social media presence really isn’t as difficult as many distributors assume it is.

Here are some basic tips for getting started – or improving – your social media presence:

  1. Create a plan. Know what you want to achieve and who you want to reach, and use that as the foundation of your social media plan. From there, create a calendar so you’re posting regularly. This calendar should be separate from your overall editorial calendar, but the themes and messages you convey should be consistent.
  2. Choose the right platforms. You don’t need to be – and probably shouldn’t be – posting on every platform. It stretches your resources too thin and diffuses your message. Don’t know which platform are best for you? Talk to your customers. Where are they posting? What are they reading? What is important for them to know?
  3. Make sure the message matches the platform. What works on Facebook, ie, short-form content about employees, success stories, industry updates, etc. won’t fly on the visual world of Instagram, and maybe won’t work on the business-centric LinkedIn. And each attracts a different group of followers, so it’s important to know who your audience is, and tailor your message accordingly.
  4. Get help. Your team members are probably posting already through personal accounts. So tap into their expertise – recruit that sales team member who takes great photos to supply visuals for Instagram. But do this carefully. Before granting the keys to the posting kingdom to anyone who isn’t in the marketing department, be sure to review what’s appropriate and what isn’t, what messages you want to convey, and those you don’t.
  5. Get professional help. If your marketing plan includes blogs or other longer-form writing, it might be worth investing in a consultant or contractor with writing and communications experience to compose those, if you don’t have a marketing department.
  6. Create a system for posting consistently, and often. Often, of course, is a relative term. For giant corporations, often may be several times a day. For smaller businesses, it may mean once a week. Do what works best for your budget and resources, but try to avoid posting three times in one week, and then going silent for three weeks. Consistency is key, and achieving it is fairly easy, thanks to the numerous scheduling apps available.
  7. Be flexible. Don’t confuse consistency with inflexibility. If your company wins a major award, but a post about it wasn’t scheduled, post about it anyway. You can always postpone or re-schedule another post if necessary. But it’s important to recognize great opportunities and take advantage of them.
  8. Stick to business. Unless your company is involved in either of these fields, avoid politics and religion.
  9. Re-use and recycle. Don’t forget to like or forward content your suppliers, member associations and customers create. And don’t forget to send them your original content to share.

Taking advantage of the opportunities for exposure and messaging social media offers is not terribly complicated, and its benefits can be huge. So, go forth and post!

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In the News: What Motivates Your Customers to Buy More? https://www.ircg.com/blog/b2b-marketing/in-the-news-what-motivates-your-customers-to-buy-more/ Tue, 15 Jan 2019 05:42:27 +0000 https://www.ircg.com/in-the-news-what-motivates-your-customers-to-buy-more/ It’s important to know the difference between one customer’s needs and another’s. Associate Consultant Dan Horan recently wrote about this in a guest post for Modern Distribution Management, What Motivates Your Customers to Buy More? Horan outlines three ways distributors can segment their customer base: Internal segments (size of purchase, how often they buy, what …

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It’s important to know the difference between one customer’s needs and another’s. Associate Consultant Dan Horan recently wrote about this in a guest post for Modern Distribution Management, What Motivates Your Customers to Buy More?

Horan outlines three ways distributors can segment their customer base:

  • Internal segments (size of purchase, how often they buy, what they buy, etc)
  • Demographic segments (business size, business type, location)
  • Behavioral segments (what and why customers do what they do)

The last is the most valuable because it takes into account a buyer’s needs and motivation. It is however one of the most difficult for distributors to achieve.

Read more about behavioral segmention in this post: What Motivates Your Customers to Buy More?

Questions about segmentation? Contact Dan Horan at dhoran@ircg.com.

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3 Steps to a More ‘Intentional’ Brand https://www.ircg.com/blog/distribution/3-steps-to-a-more-intentional-brand/ Thu, 17 May 2018 23:13:23 +0000 https://www.ircg.com/3-steps-to-a-more-intentional-brand/ Dan Horan offers distributors a pragmatic way to narrow the gap between their current brand and their ideal brand.

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In the third part of this four-part series, IRCG Associate Consultant Dan Horan offers distributors a pragmatic way to narrow the gap between their current brand and their ideal brand by employing patience, humility and outside-the-box thinking. (Did you miss the first two parts? Get caught up by reading Part 1: What Makes a Brand in B2B? and Part 2: The Difference Between Good Branding and Great Branding.)

When is the last time you took steps to manage your brand? Considering how your company and your target markets have likely changed over time, you can’t let your brand be something that just happens to you. You must build your brand with intention.

For most distributions, there is no need to build a new brand from scratch, nor is that possible. Instead, distributors should aim to turn their existing brand equity into something stronger and more cohesive, taking control of what they already have.

Brand building does not happen overnight; it takes work and attention. In a perfect world, you would have months or years to craft, test and refine every element of your brand. In reality, you have a business to run and often need to be building your brand on the fly and in your and your employees’ spare time.

Here are three steps to help you balance your idealistic view of what your brand could be with a pragmatic assessment of what you can realistically achieve.

Step 1: Assess your brand

Before you start building your brand, you must first understand how your brand is currently perceived. While there are plenty of formulaic assessments out there that claim to be able to tell you your brand’s strength or value, the best brand assessment comes straight from your customers and potential customers.

As I mentioned in Part 2 of this series, be wary of relying too much on your sales team for customer insights. With only a single, internal input source to guide you, you run a high risk of falling victim to your own “echo chamber,” hearing only what you want to hear. Getting honest input directly from customers may make you feel uncomfortable, but it is required for an accurate brand assessment.

Don’t limit these conversations to just your best customers and your friends. Talk to a diverse group of customers/potential customers, including ones you have low wallet share with. Don’t try to sell your products or the added services you offer during these conversations – just ask questions and listen.

If you receive negative feedback, or if your customers’ perceptions are vastly different than your own, it can be intensely discouraging. Resist the urge to justify or defend your own position by recognizing that the feedback you’re receiving is a gift, an opportunity to make meaningful changes.

Another way to better understand your current brand perception is to compare yourself to the competition. Ask yourself: What niche do you fill in the marketplace? How is your brand different or unique? How do you compare to the other regional or national players? For the most meaningful comparison, consider your five biggest competitors (local, regional and national), and ask yourself how your brand is positioned to each – not just by strength or size, but by how your brand is unique and differentiated.

If your best answer is good people with great service, I would start looking for another source of employment. Everyone claims to have good service, so what do you offer that the competition does not or cannot?

Step 2: Envision your ideal brand

In a perfect world, how would you like to be perceived in the marketplace? How would you like customers to view your company, your products and your services? Even if you’re not clear on all the details, outline the basics of what your ideal brand would look like.

This idealized brand (how you are perceived) isn’t the same as your ideal business strategy (what you do), so it’s important not to confuse the two. You should also keep in mind that even with all the time and money in the world, you won’t be able to be all things to all people; even idealized brand strategies have tradeoffs.

Once you’ve outlined what your ideal brand would look like, ask yourself what your plan would be to get there if you had total control, unlimited time and unlimited resources.  That plan is your Ideal Brand Strategy.

Step 3: Reconcile your Ideal Brand Strategy with reality

Chances are good that there is a sizeable gap between how you are perceived in the marketplace now and how you’d like to be perceived. It’s also likely that there are many things outside of your control, and you’re limited in how much time you can invest in a branding project. The reality is that you may never achieve your ideal brand strategy, but you can begin to narrow the gap and make purposeful decisions on where you want to invest.

Whether you realize it or not, you are constantly investing in your brand through every customer interaction. So building a realistic brand strategy means not just deciding what new things to do, but also what things to stop doing. Many of your new brand actions will be replacements for old ones, helping you to make the most of limited resources.

You should also consider the size of the gap between each element of your current brand and each element of your ideal brand. If an element of your current brand is drastically different than your ideal brand, you need to consider whether it is worth the time, effort and money to change that perception. 

Don’t write something off just because it might not have been part of the original plan.  Think about what would happen if you embraced or doubled down on a certain perception instead of trying to change it.

For example, you might not have wanted to be the low-cost choice, but if you are already perceived that way, remember that there is value in the brand equity you already have. Consider the existing equity and the cost of building the same level of equity (especially if competition is fierce for a particular perception) if you choose another direction.

Finally, when it comes to brand strategy, remember that aspirational is good. You should feel like your strategy is pushing you and is a stretch to achieve, but don’t go too far. If all your brand goals are pie-in-the-sky, your execution will suffer.

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The Difference Between Good Branding and Great Branding https://www.ircg.com/blog/b2b-marketing/the-difference-between-good-branding-and-great-branding/ Wed, 25 Apr 2018 22:00:31 +0000 https://www.ircg.com/the-difference-between-good-branding-and-great-branding/ This is the second part of a four-part series on distributor branding.

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Brands are all around us. Most people can identify iconic brands and point out many of the traits that make them unique, but few can clearly define what branding is or explain why it is important to have a branding strategy. In the second part of this four-part series, IRCG Associate Consultant Dan Horan outlines a simple, team-oriented approach to brand consistency that helps build loyal, more profitable customers. (Did you miss Part 1? Access it here.)

Consistency is the key to making a brand feel more dependable. Giving consumers a dependable experience across all your communication channels works along the same lines as always putting out a dependable product. The more consistent you are, the more dependable all aspects of your business will appear.

Brand consistency helps you seem trustworthy and helps you build loyal customers. In a recent survey by Fierce Retail, participants cited brand consistency as one of the reasons they remain loyal to their favorite brands. Loyal customers are the ultimate goal of any company – they cost less to serve, will more readily accept price increases and are more willing to forgive errors.

As IRCG Managing Partner Mike Marks is fond of saying, “When I was young, I thought it was all about the money, now that I’m old, I found out that I was right: It is all about the money.” Consistency makes money. A consistent brand increases the overall value of your company by reinforcing your image in the marketplace and attracting more loyal customers. A 2013 McKinsey & Company study found that “B2B companies with strong and consistent branding are 20 percent more successful than those that are weak or inconsistent.”

The best way to protect your brand? Be consistent. Consistency gives you more control over how customers perceive you, helping you to present your desired image. You will never control your brand 100%, but by being consistent, you set guide rails for how you will be perceived.

Part of being consistent is creating, maintaining and making available your “brand standards.” As Duke basketball coach Mike Krzyzewski often says: “We don’t have rules, we have standards. Rules are meant to be obeyed or broken; standards are accepted and become a part of you.” This “standards, not rules” approach implies a more positive, less punitive approach to brand management that is team-oriented, not top-down.

Simple is best. Consistent branding is already hard enough, so don’t make it more difficult with unnecessary details and rules – decide what is most important and skip the rest. There is no reason to have dozens of variations of all of your images, designs and logos; just establish the base standard and stick with it. I once had a Fortune 100 client that didn’t take this advice and – after 46 revisions – ended up with a nearly 100-page “book.” By the time the book was done, they had to start working on the next one. To this day, no one reads it and it was not helpful to anyone.

When it comes to consistent branding, it’s important to remember to practice like you play. Your brand and best practices need to be ingrained. It does not matter if what you are doing is internal and will never see the light of day – the more you express your brand in a consistent manner the easier it will be executed when it matters. In fact, if it starts to feel a little repetitive for you, that means you’re doing it right.

Building a consistent brand is a process, not a finish line. Start by:

  1. Evaluating your internal branding. Do an informal survey of employees from different departments. Ask two questions: What does our company stand for? What does our company mean to you? If your employees don’t see your brand as consistent, how will consumers ever do so? The responses don’t have to be identical (in fact, it’s probably better if they aren’t – that means they have internalized your brand), but there should be commonalities in the words used or images invoked.
  2. Making brand guidelines widely available. I once consulted with a company that presented new brand standards to their team during a big meeting. When an employee asked how they could access the new assets, they were told to ask their manager, who would pass them along. This is a start, but not good enough. Everyone in the company must have easy access to the latest version of logos, colors and other brand assets. And your brand’s core values shouldn’t be passed down solely through a list of talking points – they should be embodied daily by the actions of company leaders, both internally and externally.
  3. Reviewing marketing materials, policies and processes. Does the same logo, color scheme and font set appear on all customer and internal materials (email, mailers, social media, letterhead, business cards, vehicles, buildings, notices, etc.)? Do all customers encounter the same processes when they interact with you, and are they subject to the same policies? If a customer calls two different sales reps, will they get the same (or a very similar) quote? Identify discrepancies and explore ways to correct them.

Building a successful brand strategy takes more than an outdated list of brand guidelines. It takes attention and hard work and the support of all your employees. But done well, it will make everyone’s job easier and ultimately, your company more profitable.

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What Makes a Brand in B2B? https://www.ircg.com/blog/distribution/what-makes-a-brand-in-b2b/ Tue, 03 Apr 2018 19:56:03 +0000 https://www.ircg.com/what-makes-a-brand-in-b2b/ IRCG Associate Consultant Dan Horan argues that a company brand is defined by much more than its logos or letterhead.

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Part 1 of IRCG’s Distributor Branding Series

Brands are all around us. Most people can identify iconic brands and point out many of the traits that make them unique, but few can clearly define what branding is or explain why it is important to have a branding strategy. In the first part of this four-part series, IRCG Associate Consultant Dan Horan argues that a company brand is defined by much more than its logos or letterhead and outlines branding guidelines that lead to loyal customers.

What is a brand? The American Marketing Association defines a brand as: “A name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.” I would argue that this definition is too narrow, that these elements in themselves are not a brand. Things like logos and slogans are “brand assets” that, only when combined with a company’s voice, tone and visual identity, contribute to a brand.

It’s true that logos are important for brand recognition. Intel’s “Intel Inside” logo, for example, helped customers distinguish between premium, Intel-powered computers and competitor products. The logo itself, though, would have been meaningless to customers if it had represented a sub-par product, or if it had existed without the support of an accompanying marketing campaign and Intel’s unique OEM marketing partnership.

A brand is made up of much more than your company’s logo or letterhead. Think of the Intel Inside “chime,” 3M’s iconic red packaging, Salesforce’s reputation for customizability or Oracle Founder Larry Ellison’s entertaining “rags to riches” story. None of these are a company’s logo, but they all contribute to a brand.

Paul Rand, the designer behind the iconic logos of ABC, IBM and UPS, said a logo “derives meaning from the quality of the thing it symbolizes, not the other way around.”

So a brand is more than the sum of its brand assets, more even than the image a company attempts to project through marketing and graphic design efforts. A brand is best defined as a customer’s perception of a specific product, service or company.

The key to this statement is a customer’s perception. It means your brand is not yours – it belongs to your customers. Intuit’s Scott Cook said, “A brand is no longer what we tell the consumer it is – it is what consumers tell each other it is.” It consists of both the tangible attributes of your brand (what customers can see, hear, taste or touch) as well as the emotional ones (how their direct or indirect experiences with your company – for better or for worse – make them feel).

It is created through the actions and interactions of every department, every operation and every employee. It is the way your customer service people answer the phone, the packaging you use, the vehicles your sales team drives and the services you offer. Even employees that are not customer-facing have an indirect impact on your brand.

A brand, broadly defined, is your first impression. In “Blink: The Power of Thinking Without Thinking,” Malcolm Gladwell writes that “Buyers make most decisions by relying on their two-second first impressions based on stored memories, images and feelings.” This impression is unique to each person, and it is constantly evolving your brand through each new customer interaction.

In B2B, where sales cycles are long and customer interactions occur regularly over a long period of time, brand impressions can make or break relationships. You could have dozens of great engagements with a customer (most you won’t ever know about) under your belt only to have one bad impression or interaction change your customer’s view of your company, requiring many new positive future interactions to rebuild the favorability of your brand.

Your brand is not something created solely by your marketing department, nor defined by something as simple and dimensionless as a logo. Your brand touches every aspect of your business, defined by everything you do.

How strong is your company brand? Find out by:

  1. Directly asking customers about their perception of your brand. Find out how both your “good” and “difficult” customers describe you to their friends, colleagues and customers. Don’t rely on your outside sales team for meaningful insights. If possible, have someone in a leadership position conduct these interviews to make customers feel special and encourage them to talk.
  2. Asking for suppliers’ perspectives on your brand. Do they value it? Do they feature you as a customer on their website or promotional material? If so, why? How does your company image compare to your competitors’, and what specifically do your suppliers like or dislike about working with you? Try to dig deeper than how they feel about your operations, logistics and sales processes to get to the heart of what they think makes for a strong brand.
  3. Comparing supply chain partner priorities with your own. Suppose your customers tell you that they place the highest value on working with a distributor with a reputation for helping select the right products for the right applications. Are your KPIs and resources aligned with this customer priority? Put metrics in place to assess your performance in this area, and leverage that data to identify investment areas with the highest potential ROI.

In the next blog in this series, I’ll discuss how to develop a consistent branding strategy that helps successful companies build a loyal customer base. To be notified when that post and other new blogs are published, join our “Industry Insights” email list via the form at the bottom-right corner of this page.

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