In this month's cover story (p. 22), we profile Lane Systems & Supply, which has the reputation not only of being an excellent distributor but one that focuses on solving problems rather than just selling products.

Tim Cowan, an executive with Lane, summed up the company's business philosophy with this comment: “We sell what we know, not just the product.”

That's a statement that should resonate with every distributor. Are you getting paid for what you know?

For years, too many distributors sold products by telling customers, “We can get it for you cheaper than the price you're paying now.” Often, buyers told us, distributors were the first ones to bring up the issue of price, making that the differentiating factor in the buying decision.

That certainly isn't the case anymore. You can't compete on price because there will always be somebody who will sell it cheaper than you can—until they go out of business.

So how do you ensure that you keep your customers? Become indispensable to them. For example, we know distributors in Ohio and Michigan that are selling annual contracts in which customers pay monthly retainer fees for technical service and maintenance services on equipment.

The good news for many distributors is that more and more customers are cutting back drastically on their number of production and maintenance employees. That means companies no longer have the technical expertise in-house that existed before and it creates opportunities for distributors to take over many of those functions.

A few months ago we asked a buyer why he chose to do business with a particular distributor. He told us, “They anticipate problems. They know our equipment and machinery better than our own employees.”

Knowledge has been, and will continue to be, the cornerstone of success for industrial distributors.

Even today, when competition is fierce and margins have been reduced, distributors' technical expertise is paramount. Information from our 61 Annual Survey of Distributor Operations shows that more industrial distributors are adding engineers and product specialists to their staffs to better serve customers.

Adding knowledge to products and, in turn, providing solutions to problems even before customers know they have them ultimately leads to success.

Getting paid for what you know is a giant step in that direction.

jkeough@reedbusiness.com