Mike Marks, Author at Indian River Consulting Group https://www.ircg.com/blog/author/mikemarks/ 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. Wed, 16 Nov 2022 14:53:44 +0000 en-US hourly 1 https://wordpress.org/?v=6.1.1 https://www.ircg.com/wp-content/uploads/2021/04/favicon.ico Mike Marks, Author at Indian River Consulting Group https://www.ircg.com/blog/author/mikemarks/ 32 32 Market Better: How to Segment Your B2B Customers Using Behavioral Analytics https://www.ircg.com/blog/b2b-marketing/market-better-how-to-segment-your-b2b-customers-using-behavioral-analytics/ https://www.ircg.com/blog/b2b-marketing/market-better-how-to-segment-your-b2b-customers-using-behavioral-analytics/#respond Wed, 16 Nov 2022 14:39:12 +0000 https://www.ircg.com/?p=12311 You want to improve your marketing strategy, but you’re staring down the abyss of options to take. For proven success, develop a laser focus on where you direct your marketing efforts. Pour energy into how you’re growing revenue, how you retain customers and how you can remain profitable in an uncertain and challenging environment.  The …

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You want to improve your marketing strategy, but you’re staring down the abyss of options to take. For proven success, develop a laser focus on where you direct your marketing efforts. Pour energy into how you’re growing revenue, how you retain customers and how you can remain profitable in an uncertain and challenging environment. 

The best way to do this is by investing in the technology needed to become an analytics-driven distributor.  

Looking at your real-time data, patterns will start to emerge. Customer behavior will make more sense. You’ll be able to sort customers based on what they care about, what they’re shopping for and how (and when) they shop. Armed with these insights, your sales teams can work smarter—not harder—to meet customer needs, remove tension from the relationship, close deals faster and pick up new customers along the way. 

The Problem with How We Segment Customers Now 

Back in the day, customer segmentation was all about Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes. Although this information is undoubtedly useful for- economists, it’s no longer useful for distributors by itself. 

The original concept of segmentation and marketing strategy used these codes and applied them to territory zones. It looked at the customer size, type and other basic firmographics.  

For example, when a small company usually has employees wearing more than one hat, you might have one or two on a field sales team. Looking only at territories, you were left operating in patch geography. It’s an inefficient way to do business.  

Given that same logic, the only way you could segment was to grow. Getting larger as a company, operating in more territories meant you could specialize. You could have inside sales, technical sales and other niche roles, which also meant you could target customers more efficiently.  

Despite this awareness and the availability of technology, some distributors are still scrambling to find high-profit clients and please their existing customers. They’re operating in the dark.  

-Then there are the innovators. These companies are focused and pick up share simply because they’re smart about the best way to make money. They’re using behavioral segmentation. The innovative distributors are looking at what their customers truly value—because there’s a difference between what you think you sell and what customers are actually buying.   

>> Six steps to improve your customer’s experience 

How to Segment B2B Customers with Analytics 

To unearth where your profitability lies, it’s necessary to clearly understand your customer segments. What kind of customer occupies each spot? What do they want, and what do they need? How can you fulfill those desires?  

Once you’ve analyzed all the data, you can home in on the segment in your sweet spot—that’s where the money is. 

  1. Sort customers based on what they care about.  
  1. Apply NAICS codes. 
  1. Incorporate industry demographics into the equation. 

It’s critical to have a scale for meaningful segmentation. The old criteria was geography. You base resource allocation on size; treat the big customers well, and earn a large profit margin off the small ones.  

But when you scale and grow, you begin to see patterns. You’re accumulating more information and, therefore, more data to analyze. Instead of self-directed sales teams going out into the great unknown of their region, all of a sudden, the data is revealing choices and opportunities.  

The original concepts of segmentation and market strategy are still important because they serve as a baseline. However, you need to build on that foundation. Most distributors know their top 10 customers well, but they don’t know the 10 largest users of products in their markets. Those analytics matter. 

Addressing buying habits, such as how much customers buy digitally or how often they interact online but finalize their order through sales reps is key.  

Strive for efficiency to remain competitive. Weigh in the elements of cost to serve. There are plenty of distributors that have lower prices and lower expenses.  

Another phase is the customer lifecycle management, where you analyze -retention strategies. Where do customers drop off in terms of their size and purchases? 

Real-time data analytics enables your organization to group people based on their behavior. Use your resources. Whether it’s an email, website pop-up or a discount shared through your field sales reps to your largest customers, use the data to be proactive. 

Consider this: according to a recent study published by Gartner in early 2022 only 17% of a buyer’s time is spent talking to salespeople, and all distributors in your industry are competing with each other for that precious time. How are you handling that remaining 83%?  

If you use the data right, you’ll never wake up too late to keep a customer who had all the red flags. There’s a reason they stopped their orders. Behavioral analytics can help you stay on top of these critical changes. Talk to the customer directly—and keep them as a customer.  

>> The biggest mistake in strategic planning is not focusing on customer insight 

Why Distributors Struggle with Behavioral Analytics

Many distributors have a hard time adopting behavioral analytics due to one (or more) of three things: 

  1. Their field salespeople don’t enjoy their autonomy and freedom -seemingly taken away. They don’t like to be held accountable. There will always be pushback to change. It’s human nature. Distributors fail when they don’t know how to handle the change management . 
  1. They begin the process thinking analytics can be managed via spreadsheet. It can’t. Applying data to customer segmentation, really diving into data analytics, is a project. It requires planning, infrastructure and design. Treat it like another big company initiative. When you don’t, you get stuck, and the project stops. 
  1. They don’t know where to start, so they chat with some friends, buy some random software and think that’ll be the solution. 

Every distributor can adapt and utilize behavioral analytics. The difference between the innovators and those who struggle lie somewhere in these three areas. If you’re willing, you must follow through and have a foundation to succeed.  

>> 3 Keys to Successful Sales Transformation 

How Can Distributors Facilitate Customer Segmentation Using Analytics? 

Map out the journey of your buyers.  

This somewhat simple exercise is always an eye-opening experience for distributors. Companies are usually shocked by what they thought their customer journey was versus what it actually is. In some cases, this exercise also reveals areas of friction for customers. And if a customer is used to an annoying process, 1) it’s no wonder you experience churn, but 2) using the data and changing how you interact will be all the more enjoyable for the customer.  

>> Learn how to map customer touchpoints and create a better customer experience 

Once the journey map is complete, you can start adjusting your sales process to align with that customer segment’s journey. When you can see that path from browsing to purchasing, you can begin to remove the friction from the relationship. 

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Managing Change in Digital Transformation: How to Build the Path of Least Resistance https://www.ircg.com/blog/digital-strategy/managing-change-in-digital-transformation-how-to-build-the-path-of-least-resistance/ https://www.ircg.com/blog/digital-strategy/managing-change-in-digital-transformation-how-to-build-the-path-of-least-resistance/#respond Mon, 14 Nov 2022 13:49:08 +0000 https://www.ircg.com/?p=12305 Let’s say you’ve greenlighted the adoption of technology in your business, whether that’s implementing automation for certain processes or adopting an ecommerce platform. That’s great – it’s important, in fact, especially if it’s the way your customers prefer to shop and buy. It’s also critical in an era of labor shortages – when productivity is …

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Let’s say you’ve greenlighted the adoption of technology in your business, whether that’s implementing automation for certain processes or adopting an ecommerce platform. That’s great – it’s important, in fact, especially if it’s the way your customers prefer to shop and buy. It’s also critical in an era of labor shortages – when productivity is top of mind. 

To ensure your digital initiatives stick, they must come from an area of real need to ensure that you’re not building bigger gaps between what your customers need and what you provide. It’s about the way your customers want to buy (and how your team can facilitate the smoothest process in doing so). 

A project that requires people to change won’t come without resistance. After all, the only people who like change are babies with dirty diapers.  

Executives must get everyone in the organization truly on board or the impact you’re looking for won’t be realized. And today, when employees are experiencing pandemic burnout and just trying to get their jobs done, you face even more hurdles.  

Before you even begin, what are the change requirements that are needed to bring your digital-transformation strategy to life (and sustain it)?  

Engage your team. 

The guiding light through your change management journey should be: Participation creates commitment. If a higher-up comes down from his office and shares a new plan with his employees, details how it’s going to work and then walks away … that plan isn’t getting adopted (or it’s not getting adopted to the level that the organization is hoping for). 

Get your team engaged from the get-go.  

  • Provide opportunities for your employees to participate in the idea stage because these are the people the change affects.  
  • Get feedback from your frontline workers and sales reps. Ask how the transformation will affect their daily interaction with customers. Get them excited about the possibilities by clearly demonstrating and why the changes are happening.  
  • What are the benefits? Make sure your team understands how it makes their life easier.  

Contrary to popular belief, digital change is not about replacing sales reps. Automation of mundane tasks or greater insight into customers enables reps to do their jobs more effectively and efficiently. Executive leadership needs to clearly define a desired state that leverages where their target customers will be in several years and pinpoint how their sales team can use the technology to achieve this.  

>> Read more on how to improve employee engagement 

Have plan clarity.  

Once you’ve spent the time getting your team to buy into the need for change and commit to a vision, the next step is to create a plan and communicate it clearly.  

Some common steps include: 

  1. Identify overall project objectives. 
  1. Define what products/services the digital transformation project will deliver, including client requirements. 
  1. Identify elements that are key to project success. 
  1. Map out and assign project team roles. 
  1. Map out and document the implementation process. 
  1. Document available resources. 
  1. Develop cost analysis. 
  1. Create a project schedule. 
  1. Create a risk management plan. 
  1. Define quality management plans as well as how and what you will monitor. 

Remember, everything depends on your people. A leader’s job is to get people to want to do  
what is in the organization’s best interests.  

>> Learn more about building an investment roadmap for digital transformation 

Change is complex. 

It’s like raising a plate of food. If you raise one side of the plate too high or too quickly, everything falls off. You want to apply some pressure to employees to adopt the change and implement the technology – a little pressure can create more output – but you don’t want to apply too much pressure, or everything will just break down. 

Understand that digital transformation at any scale will be revolutionary for your employees, but it might look incremental from an outside perspective. Focus on the internal. As Peter Drucker, a management guru, said: “Culture eats strategy for breakfast.” If you don’t deal with the culture, nothing will happen.  

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6 Steps to Improve Your Customers’ Experience with Your Company https://www.ircg.com/blog/business-strategy/6-steps-to-improve-your-customers-experience-with-your-company/ https://www.ircg.com/blog/business-strategy/6-steps-to-improve-your-customers-experience-with-your-company/#respond Tue, 23 Aug 2022 15:26:39 +0000 https://www.ircg.com/?p=12279 It’s probably safe to assume that we all understand what the customer experience refers to: how a business engages with its customers.  But the critical part of the definition is that customer experience, or CX, refers to engagement at every touch point in the buying journey, whether it’s an interaction with marketing, sales, drivers, or …

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It’s probably safe to assume that we all understand what the customer experience refers to: how a business engages with its customers. 

But the critical part of the definition is that customer experience, or CX, refers to engagement at every touch point in the buying journey, whether it’s an interaction with marketing, sales, drivers, or customer service.  

CX also includes personal relationships and trust. It’s the total of all interactions a customer has with your brand. 

In the past, it wasn’t uncommon for the customer to be taken for granted. Maybe you thought, “I have excellent products and customer service, and no one is calling to complain.” Makes sense: If no one is complaining, then there must not be a problem. However, that is probably not the case. 

Now more than ever, the customer experience can make or break a company. We live in a world filled with options, and customers can easily go online to compare products that meet their needs faster, easier and cheaper. Gartner found that companies who create complex, nonlinear paths for buyers create uncertainty during the buying process, resulting in a 30% decrease in purchasing. 

The companies that will succeed are the ones who are starting to take a closer look at the customer experience and buying journey to better understand how customers view and interact with them. 

It’s time to do something different to support your customers, and the first step to enhancing the customer experience is to map it out. Clearly define steps and actions to take to better the buying journey. 

Creating a good CX strategy requires a well-thought-out program, but there are a few things you can do right away for immediate results: 

  • Add more staff to do daily pre expedites  
  • Show customers how to order earlier to improve their fill rates 
  • Provide substitutions, including selling products sourced from competitors  
  • Allocate hard to get product to good – not big – customers  
  • And most importantly, create an ongoing program focused on the customer experience  

Remember, CX is also about building strong relationships and trust with customers. If you must market a competitors’ product to secure a customer’s regular order, it’s worth it. You’re now seen as reliable – a company they can trust and turn to, even when the supply chain threatens their order.  

How to Create a Program that Focuses on the Customer Experience 

Enhancing your customer experience requires you to go directly to the source: the customers. Don’t involve your sales team in this process. Although they’re great at their jobs, salespeople are trained to listen and respond rather than listening to understand.  

Set a Goal and Make a Plan 

What are you hoping to learn from conversations with customers? Define a goal. This is not about how you sell them more, rather it is understanding their life and their challenges. How do they spend a typical day, what are their responsibilities, what are the resources they have available to do their jobs, where do things go wrong,  what drives them up a wall, what brings them joy, and what are their goals and what would they like to change? 

Once you’ve determined your goal, identify the people to interview. The people you target should align with the goal of your program. For example, if you want to learn more about the perceptions of your company, talk to newer customers about how they found you and what they think thus far in the relationship. 

Create an Interview Guide 

Create an interview guide and design the interview questions around behavioral segmentation, which just means group customers by what they’re searching for and what they value. Keep the list of questions short; your customers are doing you a favor by being interviewed, and their time is valuable.  

Some questions to include could be: 

  • We’re trying to improve our customer experience. Can you describe the challenges and frustrations that exist in your role today? 
  • Without naming names, how does your preferred supplier hep you deal with those challenges?  
  •  What would help you the most in services or support that you can’t find in any of your suppliers today? 

Interview customers with non-sales staff, such as operations, human resources or finance folks, and don’t go in blind. Prepare for the interviews by building rapport with the customers willing to participate, pick the best time that works for their busy schedule, ensure you have a reliable way to record the conversation and practice the interview first. 

While in the interview, focus on self-reporting. The conversation should be all about the customer – not your company.  

The notes your team collects will help later on, and they’re critical in the ongoing evolution of the interview guide. The interview questions will likely go through multiple versions, and that’s okay. You want to optimize your guide: Delete questions if you already know the answer and add questions gained from new insight. 

The result of the adaptive interviews is that you have a better understanding of each customer segment, including how they interact with your company and what your value proposition is to them. 

Map the Key Customer Touch Points 

Build a list of pain points from the customer interview insights, focusing on the biggest areas of friction first. These could be things like order-to-cash process, the order fulfillment process for standard products versus custom products, demand forecasting or getting a quick answer without having to search through the company website. 

Add context from your customer-facing team to this map, then validate all the gathered information in a focus group of customers.  We recently completed a customer journey map for an industrial distributor and it was six feet long to provide readability.  The executive team has already made major reductions in the number of steps. 

In a McKinsey study about CX, almost two-thirds of their respondents cited “the ability to act on CX issues in near-real-time” was a top priority.”  

Armed with a detailed understanding of your customers’ pain, frustration and/or unmet needs, your next step becomes clear.  

Map the Steps for Each Process 

Design your own buyers’ journey map using a flow chart. (Gartner goes into detail about the new customer journey map, and this resource offers a step-by-step guide.)  Start with existing customers. The majority of a distributors’ revenue comes from flow business, or repurchases of product, so create different maps for flow and projects. Don’t forget to factor in the less-predictable human element (e.g. is there a bottleneck in the flow due to one person’s manual processes).  

Implement Solutions for Each Mapped Process 

Digitize everything possible, starting with your customers’ largest friction points. The ideal is to automate 20% of the events that create 80% of their friction. What tools can you implement to smooth those out? Understand that speed – and anything else that makes your customers’ lives easier – are weapons. Use them.  

And reduce the steps. Shift from a go/ no-go approval process that can delay service to a customer to post-action controls and conduct a LEAN analysis to eliminate waste and artifacts from the past.  

Recognize That This Is an Ongoing Process – Not a One-and-Done Project 

Much like the interview guide, the close attention to your customer experience shouldn’t be a one-and-done project. You want to ensure the buying journey is simple and the customer is happy, so build a data-driven performance feedback loop.  

  • Create a place to store and integrate data from multiple sources 
  • Use predictive analytics, such as machine learning and artificial intelligence, to anticipate customer needs earlier 
  • Conduct regular data reviews in scheduled meetings with defined actions 

By consistently setting aside time to identify pain points, you can ensure your customer experience is always improving. 

And don’t forget: If you want to succeed at this, you must get out of your echo chamber and separate the message from the messenger.  

Annette Franz, a customer experience thought leader, said: “You can’t transform something you don’t understand. If you don’t know and (don’t) understand what the current state of the customer experience is, how can you possibly design the desired future state?” 

Operating in your echo chamber gets you nowhere fast. Talk to your customers, get to know their struggles and learn how you can be a better partner for them, and your company’s profit margins and reputation will benefit. 

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6 Distributor Best Practices to Improve Employee Engagement https://www.ircg.com/blog/business-strategy/6-distributor-best-practices-to-improve-employee-engagement/ https://www.ircg.com/blog/business-strategy/6-distributor-best-practices-to-improve-employee-engagement/#respond Wed, 17 Aug 2022 17:24:44 +0000 https://www.ircg.com/?p=12265 Employees don’t want to be worker bees – they want to feel like they are part of something important. Great leadership and communication play key roles in employee engagement. Although many top executives love to talk about their “open-door” communication policies, how many follow through?   According to one Gartner survey, only 13% of employees are …

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Employees don’t want to be worker bees – they want to feel like they are part of something important. Great leadership and communication play key roles in employee engagement. Although many top executives love to talk about their “open-door” communication policies, how many follow through?  

According to one Gartner survey, only 13% of employees are completely satisfied with their workplace experience. In addition, McKinsey & Company also found that a third of employees who recently left a job quit because they didn’t have caring leaders. Another third left due to a lack of career development and advancement potential, and 35% more said they quit because they did not have sustainable work expectations.  

Monetary compensation is no longer enough to attract and retain great employees. To cultivate a thriving culture in the “Great Attrition,” leaders must go above and beyond to create an environment that values transparency, integrity and communication.  

Town Hall Meetings vs. the Grapevine 

Successful companies are made up of forward-facing employees who genuinely care about where the company is going and how they can play a part in its success. Unfortunately, getting people on board with a company’s vision can be challenging, especially if there is a lack of transparency.  

Most businesses have two types of communication: official communication and the “grapevine.”  

A grapevine occurs when employees talk amongst themselves about management, company policies and where the business is headed; it’s the perfect place for rumors to start. Without intervention, a grapevine can lead to unfounded fears about layoffs, poor management and budget cuts. Without clear communication, good employees may lose confidence and leave. 

Nature abhors a vacuum and if management is not forthcoming with what staff wants and needs to know, the grapevine will create the answers.  This then puts executives on the defensive trying to deny the rumors. 

Companies that focus on communicating with their employees with “town hall” meetings and one-on-one interactions generally don’t have a problem with grapevines because employees aren’t left to wonder about the company’s future. Instead, they are given information upfront and encouraged to be open and honest about their issues and concerns. 

When distributors value clear and transparent communication, employees feel more engaged, valued and purpose-driven, which will benefit your organization. So, how can you improve your company’s communication strategy?

6 Best Practices for Improving Communication & Employee Engagement 

With so many people working in remote and hybrid environments, companies must work harder than ever to keep up communications and encourage engagement. I’ve outlined several steps you can take to drive employee engagement and establish transparent communication in the workplace.  

1. Conduct employee engagement surveys 

Conducting an employee engagement survey every two to three years is a great way to get a pulse on your workplace culture. Ask employees if they know and understand the company’s values and vision and allow them to grade your management. Surveys can provide valuable insight into the effectiveness of your leadership, communication initiatives and employee satisfaction. Identify areas that need improvement, and make a plan to address them.  Sopmetimes it hurts, we recently had a distributor owner rated in the bottom decile of all CEOs by his employees. 

2. Allow employees to play a role in shaping goals 

Employees who have a role in defining their company’s goals will have a sense of ownership and be more engaged and committed. Remember, there is a difference between being compliant (following along with someone else’s objectives) and being fully committed. Employees who are actively engaged in their company’s future have higher labor productivity and make fewer mistakes. 

3. In volatile times, double down on transformation efforts 

When COVID-19 hit, many businesses focused on what was happening around them instead of looking inward. Supply chain constraints, customer relationship management and revenue losses demanded their attention. Unfortunately, this meant that distributors weren’t paying enough attention to their team; great employees left to find better opportunities, and mediocre ones stayed behind to collect a paycheck. 

In volatile times, distributors must intensify the focus on transparent communication and employee engagement. When customers are struggling, you need your best team members on the job to find solutions. Sit down with your employees and explain where you are going, what roadblocks the company faces and what they can do to improve things. You’ll be surprised by your employees’ resilience when they feel indispensable.  

4. Remove ambiguity by developing a clear plan with employee input 

Confidence comes from communication. Create a crystal clear vision for where your business is going, what that will look like and how employees can be involved. Then, communicate that vision to your team and give them the ability to provide feedback. Embrace employee-driven innovation – they’re the most familiar with day-to-day issues that need attention. 

The best way to remove ambiguity in your organization is to: 

  • Define your “North Star”  
  • Communicate goals with your team 
  • Give employees the tools to develop a plan 

5. Have “human” leaders in your organization 

According to Gartner, a “human” leader is authentic, empathetic and adaptive; they act purposefully, show genuine care and respect for their employees and support their team’s unique needs. Unfortunately, only 29% of Gartner survey respondents said that their leaders were “human” leaders.  

Outstanding leadership goes hand-in-hand with productivity and team performance. Great leaders will be open and transparent, create growth opportunities for their team and be open to feedback. Human leadership is only possible in an organization that has embraced transparent communication.  

6. Create a scoreboard to give employees something to strive for 

People are naturally competitive. One McKinsey study found that more than half of employees are driven by non-financial recognition. This means engagement often comes down to factors other than money, such as the chance to be seen and recognized by management and peers. Encourage engagement by creating a scorecard to reward motivated employees.  

The Need for Transformational Change in Distribution 

Widespread labor shortages have wreaked havoc on the global economy. Employees don’t just want bonuses and pool tables – they want flexibility, ownership and open communication. If you don’t make changes, you may wake up one day to find that your best employees are gone.  

Distributors who want to stay in the game must do something different; go the extra mile and create a roadmap towards establishing clear and transparent communication at every level of your organization. 

Think about all the studies cited about poor leadership and frustrated employees.  What is the commercial impact if a firm had strong human leadership?  What would that cost compared to other investments? 

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An Investment Roadmap for Digital Transformation for Distributors https://www.ircg.com/blog/blog/an-investment-roadmap-for-digital-transformation-for-distributors/ https://www.ircg.com/blog/blog/an-investment-roadmap-for-digital-transformation-for-distributors/#respond Tue, 05 Apr 2022 18:01:37 +0000 https://www.ircg.com/?p=12135 Digital transformation isn’t as simple as just selecting software and then hitting go.   To be successful, you need to do the research and build a technology investment roadmap. This roadmap should align with your customer base’s needs and go-to-market strategies.   It’s all about customer experience. What are the forces that customers are dealing with? How …

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Digital transformation isn’t as simple as just selecting software and then hitting go.  

To be successful, you need to do the research and build a technology investment roadmap. This roadmap should align with your customer base’s needs and go-to-market strategies.  

It’s all about customer experience. What are the forces that customers are dealing with? How are things changing, and how will they change over the next three to five years? 

With those answers, you can create a value proposition and customer experience that, even years from now, makes you the blindingly obvious choice.  

You need to build a roadmap to create growth and shareholder value by becoming your customers’ North Star. 

Where to Start  

Start with building a high-level digital transformation ROI model. 

Step 1: Executive Research 

Leadership should start with research on your digital technology options. Talk to experts, hire consultants, and discuss the ins and outs with peers who are ahead of you. Don’t consult your friends. Talk to people who will tell you about their wins and losses – not only the things you want to hear. Trade associations are a great place to make these connections. 

Step 2: Identify Your North Star 

Remember: Digital transformation is all about the customer – their experience and their buying journey. Start with gaining new customer insights. These insights should come from talking directly to the customer, not your sales reps. Conduct interviews and launch a trusting conversation between your marketing team and the customers. Ask customers what their pain points are, what the experience is like buying from you and what that journey looks like. Provide them with the space to answer rather than trying to guess what’s important to them. 

Step 3: Build and Launch the Minimum Viable Product (MVP) 

Build out a multi-year investment roadmap, and fund the first year aggressively. Monitor the results of this launch carefully to learn how to react and respond next year.  

Understand digital transformation is not one-and-done. Your feedback loop should be ongoing … never-ending. By continually evaluating your progress, you’ll stay ahead of the game. 

How to Calculate the ROI of a Digital Innovation Investment 

You know how to calculate ROI: the benefit (or return) of an investment is divided by the cost of the investment. 

However, the return on innovation investment is calculated differently. You need to compare the profits of the new product or service to the research, development and other direct expenditures generated by creating these new products/services.  

This new ROI calculation takes into consideration four investment stages that require executive time and capital: 

Research  

Executives must spend money to get smarter. Identify the impact of external forces that affect your specific market to the technology and tools required to create your North Star. Executives should be discovering how to create growth and shareholder value at this stage – often with the help of consultants.   

Although distributors can spend money on this research, they usually don’t understand enough about the technology and how the costs break down. There’s a reluctance to invest because of the perceived risks and their worry about investing in the wrong technology. This is where consultants can help separate the wheat from the chaff. 

Capital investment and non-recurring start-up costs 

These expenses bring the new model online at MVP performance. This version should have just enough features to be usable by early customers.  

The organizational change management process  

How do you make existing employees more effective and increase productivity? Answer this question and update your organizational structure accordingly. Embrace and utilize the new tech as clearly defined in a project plan. To do this, you need buy-in from the entire organization.  

Recurring costs to operate the model 

These costs are the technology upgrades so you can continue to use the most up-to-date software. 

Many distributors today are actually viewing ROI on innovation investments as more of an ROP, or return on productivity. By making their employees more efficient, distributors can unleash this newfound productivity in other areas of their business. 

Managing the Risk of an Innovation Investment 

The probability of success plus the probability of failure always equals one. Without taking that first step toward change, the cost of not doing so is a slow death. 

Here are some proven risk-reduction strategies when investing in technology: 

Ensure leadership knows and understands the North Star and Go-To-Market pivot project plans. Leading from the front helps get everyone else onboard. 

Invest with enough scale to warrant the necessary executive attention. In other words, ensure that the C-suite has skin in the game. 

Start on a smaller scale. Investing in a point solution has limited risk because it’s small and only addresses a single pain point. This is a manageable way to begin.   

Seek regular direct customer insight but not from your sales team. Sales reps are trained to listen to make the sale. They’re not trained to listen to understand. Although they’re very good at reacting to threats and opportunities, they’re not trained to truly understand life from the customers’ perspective. Have another department conduct these continuous interviews and feedback loops.  

Choose best-of-breed software rather than single software provider. Choose the best tools to solve particular problems, not a solution that provides everything from a single source. This strategy also provides breathing room and time to get familiar with the investments and changes. Incremental, short-term returns also help fund the next investment.  

Be a fast follower with a strong sensing mechanism. Know where the leaders are in your industry and gauge what they’re doing.  

Create Your Organization’s North Star 

In two to five years, you want your customers to look around at all their options and see your organization as the one they want. You have your act together. You might be more expensive, but the cost of working together is worth it because you know how to win. 

To create your company’s North Star, start by having discussions about your customers with key stakeholders and leadership. Sort your customers into categories: winners, losers and uncertain. How are you determining these criteria? List the selection details as well.  

Consider those change scenarios you created during the executive research stage. Think about your winners in these scenarios and how they’ll respond. Will they compete differently? Source differently? How do you respond to their actions and increase purchase concentration? 

Next, define any new capabilities those winning customers will need to succeed. With that information, you can create a value proposition that makes you the best, most obvious – and only – choice. 

Lastly, build plans to realign your resources to the emerging growth opportunities. 

Track Your Progress, Carefully, with Discipline  

According to the experts at McKinsey, prioritizing digital initiatives is essential to digital transformation. It’s the first step and falls directly on the CEO’s shoulders. They should monitor the five key performance indicators below to assess the company’s digital progress: 

  • Return on digital investments  
  • Percentage of annual technology budget spend on digital initiatives 
  • Time to market of digital apps 
  • Percentage of leaders’ initiatives linked to digital  
  • Top talent attracted, retained and promoted  

The Foundation of Your Innovation Investment 

At the end of the day, the CEO should be able to clearly identify a roadmap of digital priorities, rather than “a basket of digital projects.” Include these updates in formal quarterly reviews as well as monthly meetings. 

Invest time and effort before you invest financially. Create a plan, build executive buy-in into the process and don’t set unrealistic goals or deadlines. Given what a digital investment requires, you want to do it right. 

The details matter. Engage people who will benefit from the technology and get their input, then apply that to your plan. 

Talk to other companies who have implemented the technology and been successful. What did they do? More importantly, when you hit a roadblock, ask them how they overcame it.  

Lastly, don’t get upset when you start to see the differences between what you’ve always done and what the customer thinks. This moment of realization isn’t just an opportunity to see what you’re doing wrong. It’s an opportunity to be aware of your customers’ pain points and fix them. Become their North Star. 

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3 Strategies for Distributors to Weather the Supply Chain Crunch  https://www.ircg.com/blog/business-strategy/3-strategies-for-distributors-to-weather-the-supply-chain-crunch/ https://www.ircg.com/blog/business-strategy/3-strategies-for-distributors-to-weather-the-supply-chain-crunch/#respond Tue, 22 Feb 2022 16:00:36 +0000 https://www.ircg.com/?p=12115 The supply chain is now the equivalent of a wild pendulum with sporadic oscillations.

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As we’re all aware: The supply chain is no longer as dependable as it used to be. It’s now the equivalent of a wild pendulum with sporadic oscillations.  

Demand is also fuzzy and seems to be ever-changing. Think about the start of the pandemic, when there was a massive shortage of masks and gloves. People were doing some really interesting things to find and stockpile these supplies. Now companies give away masks and gloves because they have so much backstock. It’s the same scenario that’s going to play out in the automotive industry. Right now, there’s a shortage of chips. Manufacturers are still making cars while they wait, so once they have the chips, there’s going to be overstock of vehicles and companies offering major deals and incentives to buy a new car.  

The current challenge is inflation. There are steep increases across the board. Because of inflation and an uncertain supply chain, manufacturers are hearing the same refrain from their distributors: “You have to stop passing the price increases because I can’t pass them on to my customers” or “When are you going to deliver product to me?” 

It’s obvious that the exaggerated pendulum of a supply chain will be with us throughout this year and potentially into 2023. So how do distributors deal with the consequences and resulting inflation? 

In an inflationary environment, you have to watch closely for changes and, when you recognize a change, react quickly. You must be ready and able to make changes within the day or hours – not weeks. Being agile determines whether you succeed (and survive) an inflationary period. 

How Distributors Can Respond 

Distributors need to be closer to their supply chain partners. Share more data and look for the best price. The companies that are more aligned with their suppliers are the most successful during unpredictable times. 

Get customers to behave differently. You have to figure out what the customer really needs and provide that, which might go against what they “want.” For example, although the cleaning industry is a recession-proof industry, it’s still supply-chain-dependent. Distributors can tell their customers not to schedule orders for rush delivery. You could say, “I’ll deliver 80% of your A items monthly and cover the cost of the freight, and you can add to that order any time you want, but you can’t change the order without a 30-day notice.” 

Here’s another example from the healthcare industry: A hospital called their distributor and requested 80 respirators, but the distributor could only provide 20. Although the hospital was insistent, the distributor remained strong and said, “I can only provide 20, but I’ll give you 20 every month, and you can start to backfill the rest.” 

Use the features and parameter settings in your ERP system. Most distributors have dynamic scheduling and safety stock; however, many of them don’t actually use these features. If a distributor is using their inventory management system to its fullest potential, over 75% of the line items they order from suppliers should be computer generated. That means no human touches on those orders; they’re automatically being sent.  

Most distributors have about 30% of their orders being computer-generated because it’s hard for some employees to let go and let the technology run that part of the show.  

Surprisingly, you don’t have to buy more or new software to be successful: You just need to utilize what you paid for more effectively. If you don’t know how to use your systems, make sure your staff gets the proper training.  

If distributors follow these steps, roughly half of the supply chain crunch and resulting problems would disappear. You can weather wild swings in the supply chain pendulum. You just have to be agile and ready with the right tools and strategy to respond. 

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Supply Chain Resiliency – The Forces Reshaping Channel Partnerships https://www.ircg.com/blog/speaking-services/webinars/supply-chain-resiliency-the-forces-reshaping-channel-partnerships/ https://www.ircg.com/blog/speaking-services/webinars/supply-chain-resiliency-the-forces-reshaping-channel-partnerships/#respond Thu, 28 Jan 2021 19:00:00 +0000 https://www.ircg.com/?p=11532 Electro Federation Canada and the Canadian Institute of Plumbing & Heating are teaming up to feature our own Mike Marks for this timely webinar on Thursday, February 18 at 1:00 PM EST to discuss how the post-pandemic shift is shaping up. Previously, Mike Marks helped EFC create the top 10 lists of best and worst …

Supply Chain Resiliency – The Forces Reshaping Channel Partnerships Read More »

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Electro Federation Canada and the Canadian Institute of Plumbing & Heating are teaming up to feature our own Mike Marks for this timely webinar on Thursday, February 18 at 1:00 PM EST to discuss how the post-pandemic shift is shaping up.

Previously, Mike Marks helped EFC create the top 10 lists of best and worst trading practices between manufactures and distributors. Now, he’s returning to offer perspective on dealing with the accelerated changes brought on by the pandemic.  Mike’s framework for executive teams will help evaluate the external environment, seek out opportunities, avoid threats, and promote supply chain resiliency during what is likely to be another tumultuous year.

Supply Chain Resiliency The Forces Reshaping Channel Partnerships

The pandemic has condensed five years of the digital adoption progress into a matter of months. Register to learn practical tools on how to manage the impact of this major transformation:

Early bird pricing: $129 + applicable taxes (available until January 28th)

Regular pricing: $179 + applicable taxes (available after January 28th)

Register here.

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The 7 Deadly Sins of Manufacturer Channel Management https://www.ircg.com/blog/manufacturing/the-7-deadly-sins-of-manufacturer-channel-management/ Wed, 20 Jan 2021 05:38:29 +0000 https://www.ircg.com/the-7-deadly-sins-of-manufacturer-channel-management/ Manufacturers have many valid reasons to change channels in an updated go-to-market strategy. We know, as it is a core part of our consulting practice. But it may be unnecessary to make expensive and disruptive changes to a channel design when the easy answer may be to simply stop committing one of the deadly sins I outline below.

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The 7 Deadly Sins of Manufacturer Channel ManagementManufacturers have many valid reasons to change channels in an updated go-to-market strategy. We know, as it is a core part of our consulting practice. But it may be unnecessary to make expensive and disruptive changes to a channel design when the easy answer may be to simply stop committing one of the deadly sins I outline below.

As you read through these seven deadly sins of channel management, assess your own performance.

Ask the key stakeholders to privately rank the sins based on the company’s level of guilt.

Then meet and discuss any differences in views.

No. 1: Failing to have enough channel conflict

The first principle in channel design is that the manufacturer must sell to customers the way that they want to buy. If they want to buy through distribution, through the Internet or any other place, a manufacturer must incorporate those channels into an aligned go-to-market strategy. When you don’t have channel conflict, it’s a strong indicator of poor market coverage. Coverage definition: Do all the potential customers of your product see you in the way you wish to be seen?

The redneck definition of a channel: The manufacturer makes the hotdog while the channel provides the bun and the condiments – but remember the customer just wants lunch.

The channel is part of the customer experience of that brand. In other words, the brand goes beyond just the product itself. Sometimes a customer doesn’t need full service. Sometimes they just want something cheap because they don’t need service, so you can unbundle it and give the customer choices. It is a rare case today when an analytically developed channel design recommends a single channel to market.

The goal of channel management is to manage the conflict, and not avoid it. That may mean selling through Amazon in addition to distribution – but at slightly higher price – so that the customer who can’t get a part on a Sunday, can still order it on Amazon and get it in one day – maintaining that customer’s brand loyalty. That benefits the entire channel.

The best test for this is an evaluation from the senior sales executive with respect to two aspects of channel conflict:

  • Do we have enough channel conflict, which indicates effective market coverage?
  • Are we managing the channel conflict or is the conflict managing us as we react?

No. 2: Failing to have clear published rules of engagement to manage channel conflict

To manage channel conflict successfully, manufacturers must share guidelines that remove uncertainty with channel partners. Reducing uncertainty increases distributors’ willingness to invest in growing your line.

Clear rules of engagement avoid situations where a distributor might feel betrayed by a manufacturer suddenly going direct. Instead, a manufacturer should outline specific conditions under which they would take business direct; everybody should know in advance what those conditions are and what would trigger a change. Typical practices state five to eight factors for taking business direct, and any three in play make the decision.

The goal: giving distributors enough confidence to invest in growing a manufacturer’s line because they know they won’t have the rug yanked out from underneath them. When they have enough certainty around how a manufacturer will behave, trust is established and maintained. And please, never change those conditions retroactively.

This is easy to self-test because perceived or real betrayals are eternal in everyone’s minds. Because they are so memorable, take time to list the significant events you have inflicted on your distributors over the past three years. If there are no events that are remembered, then your guidelines are clear.

No. 3: Failing to let the field manage channel conflict

While headquarters needs to manage national relationships, they won’t be as effective at the local level. If fact, a worst practice is to change priorities or direction to the field, telling them to invest more effort with a location of a national distributor. Channel conflict must be managed in the field and all the channel partners need to see that their local contact makes powerful decisions. This enhances their market power. The reason is simple: The local rep is responsible for aligning and working with the best channel partners to maximize growth and share in their assigned geography or market.

If local reps have been ignoring locations of national distributors it is almost always because they are weak, whining and not in the local rep’s group of most desirable partners. Unless the product is a pure commodity, the rep can’t have every distributor location representing the product. National distributors bring significant value to the industry in the form of innovation. The national distributor often knows the location is underperforming as well and often asks suppliers to help improve performance. This is best ignored when the real issue is weak local management, and the distributor executive doesn’t welcome this feedback.

The right response for many of these situations is the VP thanks the distributor for the feedback and states that they will take corrective action (assuming a candid conversation was inappropriate); the VP calls the rep, shares the story, and clearly leaves any change in priorities up to the local rep.

To self-test this sin, ask the field sales team to rate the frequency of time their priorities are changed by corporate around local branches of national distributors on a high to low scale. Ask the same to the sales executives and compare the scores. There is often a large difference and the reasons should be discussed.

No. 4: Failing to have adequate personal relationship transparency that creates trust and lowers relationship friction

The ability to share information without the coloring of negotiation helps ensure effective alignment around real growth opportunities on both sides. Loyalty goes both ways, and the resultant trust has significant economic value to both. It dramatically lowers resource misalignments and reduces surprises and even conflicts while supporting mutual investments in growth.

The fact is that there is not enough trust – and far too many games. As a result, a distributor or manufacturer often does things that don’t make sense because they’re trying to comply with rules that don’t make sense.

If there’s trust, a distributor can outright say: “You’re not competitive on that product, so I don’t want to put a lot of effort into it.” And a manufacturer can say: “We’re working on it, but where can we grow? Let’s both find something specific to invest in that helps both of us.”

It is critical that the manufacturer behave based on their position in the distributor’s overall resale volume. Any manufacturer that isn’t in the distributor’s top 20 suppliers in descending order should very rarely require annual planning from them. Their appropriate role is to be easy to do business with.

On the other hand, national distributors are investing millions of dollars in their innovation efforts and are much further ahead of most of their suppliers. A level of trust would open some potentially powerful doors to collaborate.

To test your trust level, consider the differences in tone and transparency between two discussions about the distributor, where the only difference is whether the distributor is present or not for the conversation. There is high trust if there is no difference.

No. 5: Failing to make small channel changes to keep up with market changes and instead letting them accumulate, resulting in misalignment

The cost to fix a major channel realignment is a lot larger than the costs of tackling the little hiccups as they go. We often act as a marriage counselor to get a manufacturer and their distributors to talk transparently with each other. It’s better than letting the issues build. If I have relationship issues with my wife, and ignore them, we both start to hate each other. The divorce is ugly; it would have been easier to speak truth to each other along the way. The same is true with channel partners.

So why isn’t there more trust?  The reasons are simple. Start with the manufacturer’s sales force. They have one mission: Make the number. This runs deep in their DNA. Now some market change occurs that requires a small policy or practice change. Every one of these changes threatens one or more existing channel partners who could potentially retaliate. If retaliation can be avoided the probability of making the number is higher. Kicking the can down the road is fine at the time, but when these accumulate the manufacturer loses market power with the channel and end-user customers.

One of the early signs that this is a deadly-sin issue is the sales force increasing the frequency of their complaints about channel partners doing bad things.

No. 6: Failing to shift some channel compensation from scale and takeaway power to the actual value a distributor provides

Think of the margin that a distributor earns as compensation paid by the manufacturer to provide services to the manufacturer’s customer. Most distributors have customer repurchase rates well over 80%. Since customers are buying the same products again, they do not require active selling. On this repurchase rate volume distributors are simply providing a transaction management service to an existing customer base – or market-serving, rather than market-making.

Manufacturers need to hang onto as much channel power as they can, because if they don’t and let power migrate through the distributors, the distributors are able to extract more and more price concessions. Unfortunately, many manufacturers make the mistake of discounting based on distributor takeaway power, which gives up all control of the brand to the channel partner – meaning, the bigger the distributor, the more suck-up behavior.

The result: You end up compensating distributors that are trying to commoditize your brands because a lot of business is channel-led versus brand-led. Brand-led means the customer is looking for the brand first and will find the best place to buy it. Channel-led means a customer is choosing the distributor or other channel first and will buy whatever brand that channel offers. That’s why private label works really well in channel-led business.

Much of the MROP market is channel-led, which means brands get commoditized. In many cases, the big distributors end up switching the customer out to their private label. This can often double or triple the margin earned by the distributor.

The most common cure for this deadly sin is the introduction of functional discounting.

No. 7: Failing to compensate market-making activity differently than market-serving activity

Manufacturers almost always undercompensate channel partners for market-making and overcompensate them for market-serving. If you measure overall growth of distributors, and don’t look into the drivers of that growth, this may be occurring.

For example, the growth provided by the large distributors is often driven by acquisitions, which is accurate from an accounting perspective, but often very wrong. In many cases the national acquired an existing distributor so the manufacturer lost that business, and their revenue was simply reported under the acquiror. It is often instructive to go back five years and restate growth rates when these losses are factored in.

Gross margin dollars are the means that manufacturers compensate distributors for provided services. Serving the established repeat customer base (market-serving) should be optimized to minimize the cost to serve, and maximize customer retention. As compensation is removed from this provided routine service, the money can be invested in some combination of expanding the customer base, expanding the share of wallet, displacing a competitor, capturing a new market segment or any other strategic objective.

Changing the flow of distributor compensation requires metrics and processes that must be designed and put in place before any implementation.

Remember that poor channel design or channel management is often the root cause of low revenue growth. At times it can place your sales team into a gun fight with a knife.

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The Two Areas of Business Distributors Must Focus on If They Want to Win https://www.ircg.com/blog/business-strategy/the-2-areas-of-business-distributors-must-focus-on-if-they-want-to-win/ Wed, 30 Dec 2020 06:00:06 +0000 https://www.ircg.com/the-2-areas-of-business-distributors-must-focus-on-if-they-want-to-win/ As practices continue to shift, there are two trends distributors should be paying close attention to in today’s market. One is understanding the role of technology, and the other is attracting and retaining talent.

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talent and tech

This article was originally written in September 2019 and was updated in December 2020 to take into account COVID-19 shifts.

As practices continue to shift, there are two trends distributors should be paying close attention to in today’s market. One is understanding the role of technology, and the other is attracting and retaining talent.

Attracting and Keeping Talent

It cannot be denied that recruiting qualified talent is no easy feat. There has always been tension between the way “things used to be” from the experience of more mature leaders and “how it is today” from the mindset of younger professionals. That has not changed.

Distributors must revisit their recruitment strategies to reflect these questions. Training and education opportunities must remain at the top of this list. It does not end there. Compensation packages alone are not enough to lure potential applicants; they want to work for a company that values work-life balance and prioritizes social responsibility. Like it or not, that is the truth.

COVID-19 pushed most administrative jobs out of the office and into people’s dining rooms and home offices. There was growing pressure from employees over the last several years around working from home, which many companies resisted. The genie’s now out of the bottle and the focus needs to be on how to ensure employees retain the connection that sharing a workspace with colleagues provided. Forcing this with happy hour calls or other cyber-events is something Boomers would think is a good idea, but younger staff might find artificial.

Another consideration in keeping the team engaged: Despite having more time available from not having to commute it seems we’re all busier.

We all have nine hour-long conference calls scheduled back-to-back every day and end up running behind with our shirts advertising what we had for lunch. This might feel productive but it’s not. Try extending the duration of calls so there is time for catching up with your teams. Try to buffer calls by 15 or 30 minutes so there is time to digest and reflect on any new information that was received instead of just rushing to the next call, for which of course you’re already late.

Working from home has always brought productivity and data security concerns, but there are many ways to monitor these. The mistake not to make is to apply a lowest common-denominator approach and let the potential of having one bad apple guide policies that are big brother like and apply universally.  

The “we can attract millennials by having cool breakrooms” phase is over. A previous client went as far as to put a golf simulator in to try and attract millennial talent. It was never used. In fact, it became a company joke that the only employees that used it were already on their way out (or high enough up that no one could fire them for not looking busy all the time). Focus instead on training and work flexibility.

In terms of retaining top sales talent, there are additional considerations. Instead of throwing them to the wolves as was common back in the day, build them a playbook. Consider each employee as part of the team and teach them the plays they need to win. Specialize your sales team. Give each player their own job, their own unique set of responsibilities based on their experience and their ability. This will free up your most expensive talent to do the most valuable work at the greatest return. There is no reason your top-performing salesperson should be doing inventory counts.

Using Technology and Data to Add Value

Along with securing top talent, it is no secret that technology and data are driving the future, but there are pitfalls to collecting data that you will never use. If you are a data geek, you can never have enough data.  But if you are a normal human being, eventually the data becomes overwhelming and you suffer from data fatigue. Even if you collect every piece of data under the sun, only share what your employees really need.  Some distributors are using adjustable dashboards where leaders see the full picture, but employees only see what was necessary to their function. They are changeable in real time and data can be removed and added as needed, even throughout a day, week or month. This removes the noise of historical or non-essential at the end of a day when everyone is in crunch mode trying to get orders loaded.

Rather than throwing money at the latest and greatest software, invest in effective technology that can collect data that will help predict customer needs, anticipate market fluctuation, and make better business decisions.

At the same time, invest in getting employees comfortable with data. Putting in a CRM system and starting to collect data does not go far if employees are not onboard. A recent client had a robust Power BI setup that no one was using. The company was trying to force and mandate usage and it was having no effect or a negative effect as employees actively avoided using it. On our recommendation, they were able to shift their approach and pull employees along by showing the value the system could have to them. Employees who embraced and checked their Power BI dashboard were the ones that saw it make them more money (or helped them catch  sales or an error they would have normally missed). The key was to not get too frustrated with the lack of adaptability and instead learn why and prove the value in the only way sales reps understand ($).

Companies must blend experience with the data. Even the best data models could not have predicted the rapid change that COVID-19 has brought about. The models that have survived the best are the ones that used both data and the expertise/experience of people that have been through uncertain times. Trust and verify. Finding someone that can call BS when the data has holes (or no historical precedent) will be invaluable in time of uncertainty and rapid change. Distributors must know that if they continue to play with the old set of rules, they will lose.

Learn how Indian River Consulting Group’s strategic advisory, sales compensation and speaking services can help you respond to and leverage disruptive forces in the coming year.

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3 Distribution Trends to Take Advantage of in 2021 https://www.ircg.com/blog/distribution/3-distribution-trends-to-take-advantage-of-in-2021/ Mon, 28 Dec 2020 13:17:55 +0000 https://www.ircg.com/3-distribution-trends-to-take-advantage-of-in-2018/ Customer expectations have been changing for years, and the COVID-19 pandemic simply magnified and accelerated them in 2020.

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Customer expectations have been changing for years, and the COVID-19 pandemic simply magnified and accelerated them in 2020. Being on the defensive is only a strategy if you want to lose slower. For distributors who are willing to play offense, there are three major trends to watch and take advantage of in 2021

B2B customer expectations have changed online.

Customers are no longer happy to only have a basic online buying process; they expect their experience to be as good as the experience in their everyday B2C life. As a distributor, you are judged by the standards of Amazon or Uber, not the mom-and-pop competitor across town that still hand writes all their orders. Customers demand control, dynamic shopping experiences and access to what they see on their own landing page. 

With so many channels available, they will no longer put up with your archaic ordering system and will actively punish you for having it by buying less or buying elsewhere. Customers are often not broadcasting those purchasing shifts, and unless you are constantly monitoring, you may not notice the change for months.

Is your ecommerce giving you an advantage or holding you back? Do you have any data to support your opinion?

Technology natives influence buying decisions – and they don’t want to talk to you.

Millennial and Gen Z are the first generations to grow up completely immersed in technology. Technology is natural to them and their daily lives. Unlike previous generations, they have no need to adapt technology to their life, it is a part of everything they do. Because of the expectations of technology, the selling role has shifted so far that it has become an entirely new discipline. 

In fact, your customers do not want to speak to you. No matter how much your sales team wants you to believe differently, it is true in the vast majority of cases. In national interviews across a broad range of industries, the same theme is expressed: “I don’t want to talk to a salesperson unless I have a problem. I can check my own prices and if all you are going to tell me is what I can already find on your portal, what use are you to me?” 

The new expectation is to stay out of the way until you are needed. However, once you are needed it better be fast. In fact, they expect you to have anticipated it.  

Are you still “selling” your customers or are you anticipating their problems?

Uncertainty has grown.

There is not a consultant or industry expert worth their salt that is not talking about uncertainty. Things we knew with 100% confidence six months ago are now flipped on their head. Your customers are worn out and scared even if they will not admit it to themselves. Yet, with uncertainty comes opportunity. Every critical event is another opportunity for you to become “stickier” and more important to your customers. For successful distributors, the two biggest levers are credit and returns. 

  • Credit: Pick the companies that align best with your value proposition and extend extra terms or forgiveness periods. Break your rules, but give them piece of mind that you will not be their enemy when uncertainty comes to their business.
  • Returns: Get flexible. Projects dry up quicker than ever and a “guaranteed project” means nothing. As with flexible credit terms, pick your winners and be ready to do things much more leniently with returns to keep them happy and relaxed.

Are you the “trusted partner” for your customers?

Learn how Indian River Consulting Group’s strategic advisory, sales compensation and speaking services can help you respond to and leverage disruptive forces in the coming year.

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