How people, processes, experience and trust differentiate distributors
When we think of differentiating ourselves, we often fall back on the type of products / services we are selling. But if we take a page from Simon Sinek Start with Why, what we actually sell is not very differentiating, at least in terms of loyalty.
You can offer more products than your competition, increasing your ability to attract customers. But what is stopping your competition from buying these products?
No, the differentiation comes more from your people, your superior process, the experience and (most importantly) the trust you can build with your customers. Let’s take a look at the data to support this claim.
It’s about people
In a recently conducted HMI Performance Incentives study on the habits, opinions and preferences of subcontractors, we found that while subcontractors generally remain loyal to their chosen distributors, there are elements that keep them away from a distributor. and to another. These key factors, in order of importance, are: people, process, products and, to a much lesser extent, price.
For starters, entrepreneurs see relationships with distributors as the most important. In particular, we found that relationships with a distributor’s internal sales teams are paramount, with over 45% of respondents indicating this was a key differentiator, compared to just 32% for retailers. external sales teams. This seems to suggest two things:
- That despite the inevitable rise of e-commerce in the distribution space, distributors cannot neglect the role their salespeople play in helping them stand out.
- That the internal seller has become the backbone of the entrepreneur-distributor relationship.
The trust that entrepreneurs feel they can place in vendors from their suppliers is essential to this relationship. This includes:
- Reliable business communications, potentially via SMS text messaging.
- The ability to provide personalized customer relationships.
- Knowing that their suppliers understand the challenges they face and how best to help them overcome those challenges.
This last point has been especially important for mid to large-sized entrepreneurs, who have needed speed and size to meet the overwhelming demand over the past 18 months.
It’s also a matter of process
The next part of Distributor differentiator is the process, which can be roughly broken down into day-to-day reliability and overall ease of doing business. How you do business can be just as important as who you bring:
- On the one hand, subcontractors believe that if a distributor can always perform well, can provide what they need, when they need it, this is valuable enough to build loyalty.
- On the other hand, entrepreneurs also want to know that the relationship with their supplier will be relatively straightforward and hassle-free, and their interactions tend to increase in value as opposed to a series of hurdles to overcome.
This is where omnichannel offerings can fit best, as they can help streamline communications, troubleshooting, delivery notifications, and more.
This is a better experience
Finally, products and services are a valuable part of the customer experience of entrepreneurs. In another question, we asked why subcontractors are loyal to distributors, the responses focused on a holistic approach to what distributors can provide to their subcontractors. Simply put, entrepreneurs are looking for all the additional value-added services that their suppliers can offer them and the availability of the brand.
Value-added services go beyond things like speedy delivery. They may include:
- On-site storage capacities
- Specialist availability
- Design services
- And more
It should be noted that product availability has been hit hard during the pandemic supply crisis. Small entrepreneurs in particular have had to focus more on the basic task of securing the products needed to complete day-to-day projects.
Price does not play a big role for entrepreneurs when it comes to choosing a supplier, as it is shown in both questions that the lower price does not seem to matter. In fact, less than 6% of entrepreneurs said the suppliers with the lowest prices were a key differentiator for them. However, it should be noted that competitive pricing is still very important.
This suggests that price has either become a table stakes item in the entrepreneur-distributor relationship, or entrepreneurs recognize the inevitable price volatility currently at play due to the pandemic. In either case, the survey results clearly show that a race to the bottom in terms of price should not be a priority for distributors at this time.
Strong relationships, streamlined processes
Think about it from a B2C perspective. Take Amazon for example. If we didn’t trust Amazon to deliver within the expected two days, would we ever buy Amazon Prime? Or if their only excuse were logistical errors, would Amazon even be the company it is today?
Lately, it seems that everyone is talking about e-commerce and the digitalization of the customer experience. But as these technology-based strategies have gradually shifted from innovative trends to necessary practices, it can be easy to overlook the fact that what has made many Distributors successful over the years – strong customer relationships and processes. streamlined – is still what remains most relevant today. .
In fact, where distributors really stand out from Amazon is this: the human relationship. In light of things like chatbots and virtual assistants that have depersonalized the customer experience, it’s the personal touches that are more important than ever.
Because at the end of the day each of your competitors – if they’re still around – will end up having an e-commerce site, mobile ordering, SMS messaging, etc. As savvy distributors upgrade their technology stack and digitize their customer experience, the margin for these tools as differentiators will get thinner and thinner. But what seems to endure is the desire of customers to work with partners they can count on, with people they can trust. So if your team can find ways to stand out from the crowd, and you can combine that with digitally driven and ecosystem-level upgrades, you won’t just show your customers that you are different. , you will show them why you are doing better.
If you would like to download the full report, visit the HMI Performance Incentive website here.