Why some distributors still resist CRM

By Thomas Cutler -- Industrial Distribution, 5/3/2007 8:07:00 AM

Most North American distributors have eliminated waste on the plant and production floor, warehouses and back office administration.

Years of lean mantras have resulted in behavior to maximize productivity and performance except in one primary and critical business function: sales and customer relationship management.

This is one function, not two.

Distributors and manufacturers rarely know the status of potential customers who visit their Web sites or provide contact information at a conference or tradeshow. These names (often stacks of business cards) are lost and wasted because a consistent method of tracking sales leads is missing.

“The main point is that traditional, one-stop shopping CRM solutions are not designed to meet the needs of manufacturers and distributors,” says Larry Caretsky, president of Commence Corp., which specializes in CRM. “Distribution management who run out and buy a CRM solution without proper planning almost always fail. These guys plan for a year to purchase and implement their ERP system, but CRM is treated as a commodity desktop application that you simply install and use,”

In his book, Practices that Pay, Caretsky details many elements of industrial CRM including:

Marketing Strategy
 • Focus on defined market segments
 • Communicate value consistently
 • Organize sales by accounts

Sales Management
 • Implement a consistent sales process
 • Hire salespeople to stay in the office
 • Assure salespeople are tightly accountable
 • Coordinate planning efforts with channel partners

Today’s industrial sales environment is characterized by intense competition, strategic sourcing contracts, online auctions, customer pressure for self-service, and the ongoing debate over fee-based services.

To thrive in this environment, industrial distributors and manufacturers need more than leading technology or efficient warehouses to achieve long-term growth.

Leading industrial organizations are looking to their customers for growth ideas. By leveraging the voice of the customer, these organizations achieve a competitive advantage in redefining sales and marketing, the all-important customer-facing portion of their operations.

Caretsky touches on many smart practices in industrial selling, culled from interviews with leading executives within high-growth companies, and building on a comprehensive review of published perspectives on industrial selling.

The keys to successful industrial selling can be enhanced with proper application of technology. However, many information technology investments are wasted due to failed implementations.

“The only path to success is to first develop a consistent marketing and sales process, then utilize the process in a disciplined manner reinforced by training and carried forward through effective coaching,” says Caretsky.

Many industrial companies, particularly distributors, are contemplating adding centralized sales and marketing database systems, whether called Customer Relationship Management, Sales Force Automation or Contact Management. These initiatives are critical to the promise of lean operations.

Enforcing technological consistency and continuity appears to create significant reluctance on the part of distributors and senior management. With a disparate staff around the country and the world, the attitude of “every person has a unique way of managing clients,” neither serves the customer nor the company. 

Without consistent, measurable and accountable CRM there is increased inefficiency and waste—the antithesis of lean.

Thomas Cutler is president & CEO of TR Cutler, a Ft. Lauderdale, Fla.-based manufacturing and marketing firm. He can be contacted at trcutler@trcutlerinc.com.