New Study Deconstructs Customer Loyalty In Industrial Distribution

Industrial distribution has long-been an industry built on relationship selling. Yet recent research shows that many customers have become more apt to emphasize things like the convenience factor of buying from a distributor, rather than loyalty to a specific company or salesperson.

So, how do distributors best adapt to this changing buyer, and provide the vital components required to keep a loyal customer base?

UPS recently embarked on a study of the behaviors, preferences, and perceptions of industrial products buyers and they uncovered some interesting trends on how “customer experience” is really coming to the forefront of the loyalty equation.

It once was a matter of good product quality, the right price and, perhaps, a solid relationship between salesperson and customer. Now, explains Brian Littlefield, Director, Industrial and Automotive Marketing for UPS, "you have to create a positive experience for the buyer; you have to know me online, and have my history available. There are things like user-friendliness, visibility – features that, in the past, you may not have spent much time building into your solution as a distributor."

One of the most compelling finds from the UPS report was on the concept of loyalty, and how conflicted today’s buyer might actually be. Specifically, 38 percent of respondents said they’d already gone outside of their normal supply base to buy online from someone for the first time. Adds Littlefield, "And over 70 percent would consider shifting spending to a new distributor with a more user-friendly experience when buying industrial products."

The stakes can be even higher for a smaller distributor, as many find their competitive advantage lies in the more personalized service they provide. While service has long-been a foundational component to customer experience, it seems that the digital shift might be paving new roads for larger distributors to compete in the area of experience. According to Simon Bhadra, UPS Senior Marketing Manager for industrial distribution customers, "The reason some buyers bought from smaller distributors was the higher level of personal service they provide. If larger distributors are able to provide more personalized service through both electronic and other channels, it begins to marginalize smaller distributors over time."

The survey results also reflected some interesting data around how other factors impacted customer loyalty to a specific vendor. "If I’m buying normal industrial supplies for my business, I don’t want the transaction to take a long time. I want a broad selection – a one-stop-shop – and I want it to arrive in a speedy fashion, and I want my price to be what I expect," explains Littlefield. "All of those steps may be compressed into a very short transaction. But it’s important for distributors to see that quick transactions are the way most business relationships are being delivered and fostered today."

One thing is for certain, says Littlefield: "If you think your customers are loyal to only your business, the study we’ve shared indicates otherwise." He goes on to caution distributors that their future revenue streams are dependent upon understanding how buyers are changing. "In most cases, distributors don’t have the resources to overhaul their entire ordering process, but there are relatively turnkey technologies that, if incorporated the right way, can help them catch up more quickly to their customers’ changing needs. Not taking the changing demands of the buyer seriously may be the biggest threat to distributors today."

For the full results of the UPS report, click here to download the UPS Industrial Buying Dynamics Study – Evolution of the Distributor Value Proposition.