What have you done for me lately?
Distributors must do more to recruit and retain profitable customers
By John F Monoky -- Industrial Distribution, 7/1/1998
As large customers become more powerful in the channel, they are becoming more demanding in terms of service requirements and they are asking harder questions than ever.The question distributors are hit with most frequently is, "How have you changed the way you do business to better serve your customers' changing needs?" This question, or some derivation of it, often comes from customers that have gone through significant change driven by changes in the markets they serve. These customers understand that their ability to differentiate themselves with their customers is impacted heavily by the quality of their distributors. Consequently, they are pushing their distributors to reconsider how they do business, rather than just trying to do the same things incrementally better.
Lets get back to the question of, "How have you changed to better serve our needs?" Why is this such a difficult question for distributors? Because most distribution organizations have not made significant changes in today's fast-changing environment. What they have done is react to what their large customers request.
Many distributors have embraced some of the technology that will speed up their current processes and reduce the errors associated with manual processes, and many have attempted to apply total quality management. However, most have held off on change due to organizational resistance from employees who fear that anything new won't work. Besides, many salespeople have a vested interest in not changing, as their responsibilities, the functions they perform, and their salary structure could be affected.
As we have discussed before, any real change in the way an organization behaves starts with a strong understanding of the markets it is targeting and the current customer base. Many distributors don't have a database on their existing key customers that provides detailed account information that can be used to determine what distributors need to do to succeed with certain customers. Collectively, these databases can provide insight into the kind of process changes the organization needs to make to sustain and strengthen its position in targeted markets and with its entire customer base.
Why do some distributors lack this information?
You can make a strong argument that one of the most valuable assets a distributor has is knowledge of its customer base, particularly detailed account data on its key accounts. Yet very few distributors have a process for collecting and using this information to make better decisions. At most distributorships, there is significant resistance on the part of the sales force to gather data on key customers. For those who possess the data, there is resistance to sharing it. In a way, keeping the information to himself or herself makes the seller feel more valuable.
The point is that the sales force has a vested interest in not providing information that can be a critical part of determining how the distributor can better serve the needs of its changing customers. The irony is that as the role of the sales force shifts from selling products to selling processes, the sales force must explain to the customer why their company is the better supplier in terms of processes, as opposed to products. Ironically, the distributor's ability to redesign processes is dependent on the sales force sharing information that can help in the redesign.
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