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Competitive Differentiation: A Matter of Perspective

on Monday, 20 July 2015. Posted in Distribution, Manufacturing

The question of a company's strengths must be viewed from a customer's perspective.

We’re all familiar with the SWOT analysis and what that “S” represents: your company’s strengths. Common answers to the question of what a company’s strengths often come from the perspective of sales managers or fellow employees, such as how great people are to work with or how experienced sales reps are.

But if the goal of the analysis is to guide the distributor closer to competitive differentiation, the question of a company’s strengths must be viewed from customers’ perspectives. A “strength” as identified in a SWOT analysis is not truly a strength unless it provides value to customers. A customer that values reliable inventory above all else, for example, will not find much value in frequent sales visits, even if reps are knowledgeable and offer high levels of customer service.

Recognizing this, many distributors count on sales reps to learn more about what their customers really want and to report these insights back up the chain. But deep insight into customer needs rarely comes from sales reps, who are much more focused on new orders than on the underlying drivers of those sales. To understand customer needs beyond the sales rep’s perspective, managers first need to realize that reps execute strategies. They don’t develop them.

It is management’s job to understand what truly drives sales. One way to do this is through an open-minded analysis of their customer segments. An analysis of customers’ buying and other behaviors can lend insight into what is most important to them. This “one thing that matters” is likely driven by your customers’ own customers, so it is vital to keep those customers in mind when conducting your analysis.

Value creation strategies for wholesaler-distributors

For example, a regional construction products distributor we worked with kept in mind his customers’ customers, who selected contractors based on a reputation for getting things right the first time. When the distributor learned this, it realized that its contractor customers were obsessed with two things: getting small jobs done quickly and avoiding return trips at all costs. Aided by this perspective, the distributor realized that having reliable inventory close to the job site was really all that mattered.

This fresh perspective allowed the company to reallocate resources from less valued things like technical sales resources to focus on their customers’ greatest need, which reduced costs, streamlined business and ultimately resulted in greater profits.

Learn more about this topic in the book Value Creation Strategies for Wholesaler-Distributors, published by the National Association of Wholesaler-Distributors.

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