Many distributor sales reps focus on product and price. When they lose a sale, they think it’s because the discount isn’t low enough or the product doesn’t fit.
Is this really accurate? Is the product quality enough to create a competitive advantage for your distribution business? Won’t there always be a bigger distributor with the same product and a lower price to steal your customers away?
If your point of differentiation isn’t product or price, what is the secret to consistently attracting and retaining customers?
An even better question is: What do distribution customers really want?
Selling on Product and Price? Not Really
In my role, I regularly speak with distributors and their sales reps. But I rarely get to chat with distribution customers. Recently I spent a day with a customer of an industrial distributor – a purchasing manager at a factory that makes car parts.
Growing up in my family’s distribution business, I witnessed an ongoing debate: What do our customers care about? What should distributors optimize to sell more?
I enjoyed going straight to the source to find out.
Here’s what I learned.
Distribution customers rely heavily on distributor sales reps to tell them when to reorder specific products. When they repeatedly buy a product from the same distributor, there’s a high degree of inertia in our favor. Typically, existing customers lack a set cadence for evaluating their distributor relationships. They’ve just always bought product X from distributor Y. The only situations that can shake them out of that inertia to move to a different distributor are:
- If the service is dramatically better (at a similar price) or;
- If the price is dramatically better (with a similar service level).
In a competitive market, it’s hard to dramatically undercut an incumbent on price, so service level is really the best way a distributor can differentiate themselves to attract and retain customers.
It’s not the product. It’s not even the price. Your customers want better service. But what does that mean, exactly?
How to Sell Through Better Customer Service
According to the customer I talked to, it usually requires a proactive visit or call from a competing distribution sales rep for him to shop around. When a distributor sales rep comes to him proactively with a better price or product, switching his business to someone else is enticing. But they probably wouldn’t shop around without that rep proactively pitching to his needs, wants and priorities.
When his company did switch from one distributor to another, it was usually because of that level of “I know what you need” service. Of course, the price must be competitive, and the product must meet their needs. But the #1 factor for who they chose to work with was having a responsive sales rep communicating proactively, jumping on their needs and doing whatever it took to get them that product.
Based on this proactive service approach, this customer had multiple stories of switching a category from one distributor to another. For example, this customer stayed with the sales rep who jumped through hoops to source out-of-stock products. This extra effort means the best sales reps are the ones that also spend time on sourcing and procurement — which is a customer service function. Ultimately, they win the sale by taking care of their customers and getting them what they need when (or even slightly before) they need it.
At this point, I started to believe selling isn’t about price and product at all. Maybe selling more in the distribution world means servicing your customers. Can it be that simple — and that complex?
Go from Sales Rep to a Trusted Advisor
I like this example from Amazon: Jeff Bezos attributes his success to not chasing trends. Instead of jumping from trend to trend, he focused on improving the things that stay the same. It helped him prioritize company wide initiatives. It fueled his creation of one of the most successful companies in the world.
Distributors can go through the same exercise by asking what’s true about their customers that will never change:
- Will customers ever want worse service? No.
- Will customers ever want less information about the products you carry? No.
- Will they want less availability and selection? No.
- Higher prices? No.
The starting point is knowing that your customers want a more proactive, consultative sales experience.
I’ve met with a handful of distributors who know this in theory but need to figure out how to implement it in practice. When I shadow their sales reps, I often witness them defaulting to talking about the top-of-mind products their customers are already buying. It’s often not even the sales rep driving the conversation, but the customer asking what they need. It leaves your sales reps reactive, always behind the curve, responding to the customer’s questions.
It’s not even the sales rep’s fault; they’re often stuck with a clunky set of technologies (many of which don’t work on mobile). Or they’re handed an Excel spreadsheet and expected to mine it for insights. A tall order!
Today, technology can provide you with the tools you need to proactively take care of your customers and give them what they want — even if your rep isn’t an expert in the game of distribution sales.
Artificial intelligence (AI) software has leveled the playing field. Without being a talented artist, I can create an impressive piece of art using DALL-E. I can use ChatGPT to write a short story without being a skilled author. Without being a data analyst, a distribution sales rep can easily see the products customers are due to reorder and gaps in their spending by category.
I recently talked to a VP of sales who said the best sales reps are good at selling and data analysis. The beauty of AI in distribution is you can arm field sales reps with a tool that offers insights so they can act like forecasting analysts without having to be one.
AI-powered sales technology has been serving distributors from all industries by turning reactive sales reps focused on product and price into proactive trusted advisers who know precisely the right time and product to sell. These tools enable distribution sales reps to answer what their customers want. With AI, we know what our customers want and need even before they do and can give it to them.
Benj Cohen is the founder and CEO of Proton.ai.