The pandemic accelerated the rapid shift to digital for shopping and buying in B2B markets. Super disrupters like Amazon Business have raised the stakes further. Add the reduced role of field sales and the ongoing commoditization of the distributor’s value proposition, and you have a problem that can’t be solved by simply adding more field sales.
If, according to our surveys of end-users, 80 to 90 percent of your customers prefer to shop online (researching the product, not transacting), marketing is more important than ever.
Unfortunately, marketing as a function is rarely elevated to a position where it can influence how a distribution company responds to these trends. Usually, the title vice president of sales and marketing in many distribution organizations is a misnomer — in reality, it’s a sales leadership position, filled by someone with a background that includes little to no experience in marketing.
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Customers’ expectations may feel like a moving target these days. Distributors need to recognize the role marketing professionals can play in meeting them anyway. If they don’t, they’ll quickly become irrelevant and lose out to competitors that integrate tried-and-true marketing strategies.
The Traditionally Limited Role of Marketing in Distribution
Historically, if a formal marketing role existed in a distribution company, it was tasked with the proverbial trinkets and trash, sales-driven events like golf outings, and supplying sales teams with flyers. It’s often a low-level position with very little influence on high-level strategic and tactical decisions.
But marketing can’t be just swag and promotional flyers if distributors are to compete successfully in this decade and beyond. A strategic approach to marketing tackles fundamental challenges like:
How to position in your market: Traditional positioning on selection, availability, delivery and service will no longer cut it for distributors. They are table stakes and most distributors cannot compete on those alone. Instead, distributors need a clear and compelling value proposition that tells customers who the company is and why they should do business with them; without it, distributors will either get acquired or go out of business. Thoughtful, differentiated positioning helps distributors communicate effectively with customers, choose target markets and align their services around what customers value. And it’s a key part of the marketing role.
How to create demand: Marketing can help distributors understand who is buying which products and services from them — and why. Marketing also helps a distributor understand how customers prefer to buy. With this data, an effective marketer can generate brand awareness with prospects, better identify and qualify opportunities for sales, and grow wallet share with existing customers.
What Marketing Needs to Be in Distribution
Distributors need to elevate marketing to a strategic position. They need to shift all or at least some of the four Ps of marketing to that role:
Promotion: Email, websites and search can be more effective than the traditional promotional vehicles of print and advertising. That’s not to say the latter aren’t effective when well-targeted, but distributors need to have a much more comprehensive promotional plan incorporating multiple channels and more targeted messaging. The spray-and-pray method no longer works. Regardless of the medium (digital, print, mass media, etc.) distributors looking to compete in this decade and particularly after COVID, need to design and implement sophisticated, data-driven promotional campaigns with relevant offers for targeted customers.
Place: Where do buyers look for your product or service? Often, they are starting online and usually with a search on Google. How can you provide the right access to the right channels to the ideal customer for your business? Distributors must formulate effectiveness and diverse channel strategies that go beyond direct sales and could include proactive inside sales, e-commerce and marketplaces.
Product: The product and service assortment is the foundation of a distributor’s value proposition. Creating an effective product management, service development and marketing function as part of the CMO role is a key step to getting the marketing mix right.
Price: Distributors are continually dragged into price-related discussions; that won’t go away. They must build strategies to compete more effectively and avoid the race to the bottom. Most distributors leave pricing up to the branch or field sales rep. Those that have centralized pricing functions often hand the responsibility to the CFO or VP of operations. A competent and effective marketing department will often be best-qualified to manage pricing strategically.
The four Ps have historically belonged to other roles in distribution companies. In fact, in most organizations, marketing doesn’t own any of them. For example, the promotional part of marketing is usually beholden to sales.
In addition to structure, we’ve found that many distributors minimize the importance of marketing culturally, with some even cultivating an outright hostility to the marketing function. Consider the tension that often exists between the sales and marketing teams — two teams that should work well together given similar goals, but usually don’t.
This isn’t sustainable. Something has to change. We’ve found in our research that adoption of e-commerce platforms is rapidly increasing in distribution. But once those platforms are in place, distributors will need to take their efforts a step farther to ensure continued growth beyond simple order-taking online. They must drive sales through better user experience, personalization, targeting and conversion rate optimization to truly leverage the benefits of digital. That’s the role of marketing.
What Distributors Need to Do Next
Is your business deficient in marketing? If you don’t have a marketing professional in a high-level strategic role — who also has a seat at the table with other leaders — start there. And then shift as many of the four Ps to that function as possible.
One important step is to wrest back control of pricing from the salespeople. Get your digital act together and leverage powerful marketing tools to drive sales. Develop a unified channel strategy to reach your customers the way they prefer. Go beyond discounts in your promotional strategy by focusing on a differentiated value proposition.
Customers have a lot of choices today. A traditional field sales approach is not going to cut it in the race toward sustainable competitive advantage. What’s more, more manufacturers are planning to reduce their reliance on distributors over the next five years, a trend that distributors must take note of. Show your value in the channel, and take advantage of manufacturer co-op funding to remain relevant to your supplier partners.
If you’re like many distributors, you’ve made or are starting to make critical improvements to your operations and digital presence to help you keep up in this fast-paced market. But to make those investments a true competitive advantage, you need the right marketing strategy — and leadership — to drive revenue growth, customer retention and loyalty, and improved profitability.
Jonathan Bein, Ph.D. is managing partner at Distribution Strategy Group. He’s developed customer-facing analytics approaches for customer segmentation, customer lifecycle management, positioning and messaging, pricing and channel strategy for distributors that want to align their sales and marketing resources with how their customers want to shop and buy. He can be contacted at firstname.lastname@example.org.