Distribution Customer Retention — Then and Now

While some old tactics to keep customers still work today, newer technologies that help guide customers to run their facilities more efficiently and possibly reduce costs are becoming powerful "customer retainers."

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A little more than a decade ago, a premier publication for distributors in the professional cleaning industry published an article or what they called a “survival guide” to help distributors retain their clients. While the article pointed out that a 10 percent attrition rate is likely to happen no matter what steps are taken, there are ways distributors can potentially minimize this attrition and certainly make sure it does not exceed 10 percent.

According to the article, and as most distributors knew then and certainly know today, it takes “a lot of time and investment to gain a customer’s business…and keeping them will require the same.” And this was becoming all the more difficult because by 2005 most distributors knew without question that their customers and potential customers had an assortment of venues for obtaining products—far more than they had just five years earlier. Furthermore, many customers preferred, at least at that time, purchasing from these other venues—e-market sites, mega-retailers, etc.—rather than working with a distributor.

Aware of the concerns distributors were facing, the “survival guide” offered several suggestions to help them keep clients; most of this advice is still applicable today. These suggestions included the following:

  • Having an effective complaint handling system
  • Taking regular surveys to measure customer satisfaction (looking for trends as well as pinpointing specific problems and unhappy customers)
  • Knowing exactly what your customers are purchasing and not purchasing
  • “Naturally” using the customer’s first name in conversations
  • Showing confidence in the distributor’s company and its capabilities
  • Ending all phone calls on a positive note
  • Finally, informing management of endangered customers so the distributorship can bring in the “big guns” to help keep the customer onboard

This is all good advice and, as mentioned, most all of it is as applicable today as it was in 2005 and for decades earlier. However, some things have changed since 2005. Very simply, technologies that help guide customers to run their facilities more efficiently and possibly reduce costs are becoming powerful “customer retainers.” 

In essence, these new technologies acknowledge the fact that many distributors’ customers like to go online to learn and shop for products; many clients would also like to be less reliant on the distributor for basic product information. Still, many cleaning product purchasers want to be able to call in the distributor when and as needed. Additionally, buyers need distributors to help them in accomplishing different business operations goals, which ultimately is what helps solidify the distributor-customer relationship.

Enter the Dashboard

Movie buffs may remember the original 1968 version of the movie, The Thomas Crown Affair, starring Steve McQueen and Faye Dunaway. Now considered a classic, there is a scene where McQueen, playing a very successful businessman, accesses a computer (quite a novelty in 1968) and in seconds, all kinds of financial stats, graphs, facts, and figures appear on the green and black screen.

That, my friends, was an early example of a “dashboard” system at work. It presented up-to-the-minute information, allowing the user to detect trends and make decisions based on factual data.  Similar systems are now coming online for distributors as well as their customers. Some are in the form of software, while others are web-based; some are costly or have some type of monthly subscription tied to them while at least one is totally free.

We also must note that while these systems may work in similar ways, not all of these technologies work the same in achieving the end result. Because of this, and to clarify how some of these dashboards work, we can use one web-based dashboard process as an example. 

The key to this system is to ask the user a series of questions. If, for instance, a building owner/manager is considering implementing a green and sustainability strategy for the facility, some questions that might be presented include the following:

  • Why do you want to become greener and more sustainable?
  • What steps have you already taken in this regard?
  • Do you currently monitor water and energy use?

If cost reduction is an issue for the customer, and invariably it is, some of the questions presented on the dashboard would likely include these:

  • What efforts have you taken to reduce supply chain costs today?
  • Considering your operating budget, would reducing procurement costs, lowering carrying costs and warehousing, or minimizing labor deployment prove to be your biggest cost savers?
  • Do you currently utilize any forecasting and budgeting tools to have greater predictability when it comes to supply chain spending?

What essentially is happening here is that by using a question and answer format, users—your customers—can better focus on where they are now as well as where they want to be. The process offers a significant degree of clarification that is needed before any implementation strategies can be undertaken, whether the goal is becoming greener and more sustainable or reducing supply chain costs, as examples.

The “Customer Retainer” in Action

While the Q&A can help a customer define goals, it is the last stage, the analysis which some of these systems offer, that is most important—to the customer and the distributor. For instance, at this final stage, the user might discover an area of improvement not originally considered, such as improving worker safety.

The dashboard can then suggest products and tools that can help the customer improve worker safety in warehouse areas, office areas, etc. At this stage, the system can also help the customer further with worker safety implementation by calling in a local distributor to guide them through the process. 

It certainly cannot hurt using the customer’s first name in conversations. And always making sure to end all phone calls on a positive note is quality advice as well. However, giving the customer tangible information that can help them operate their facilities in a safer and healthier manner and potentially reduce their costs to boot is likely a far more commanding way today to keep a customer from drifting away.

Michael WilsonMichael Wilson is vice president of Marketing for AFFLINK, a global leader in supply chain optimization, providing clients with innovative processes such as the ELEVATE process as well as procurement solutions to drive efficiencies in today’s leading businesses. He can be reached thru his company website at www.AFFLINK.com

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