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How Well Do You REALLY Know Your Customer? Part II

How Well Do You REALLY Know Your Customer? Part II

There’s a delicate balance between getting the customer data you need to do a good job and asking for too much. Here’s how one data expert would approach the issue in today’s competitive electrical distribution environment.


As chief information security officer (CISO) and head of technical operations at San Francisco-based Tradeshift, Nate Lee knows a thing or two about customer data. His company makes a platform for supply chain payments, marketplaces, and apps, and Lee himself is a long-time tech guru whose previous engagements include serving in an engineering or operational capacity for Verus Corp., Target, and Fuze.

In an interview with tED magazine, Lee discusses the main customer data challenges facing distributors right now and shows how B2B companies can work through these issues and do a better job of really getting to know their customers.

Q:  Why should electrical distributors work to hone their customer data strategies?

A:   When you look at a company like Amazon Business or Grainger, part of the power of their platforms is that they know their customers very well; sometimes better than those customers even know themselves in terms of their needs. So, depending on the relationship, you’re certainly able to provide a lot more value by making suggestions based on data. Some of it might be personal data, but the rest can just be purchasing history or even aggregated purchasing history. For example, you can look at when people buy what types of items and then figure out what ancillary products they may need. Then, you can upsell them in a way that actually meets their needs while also adding to your revenues. There’s value on both sides of the equation at that point.

Q:  What’s a good starting point for a distributor that doesn’t have its act together in this area?

A:  Don’t be intimidated by it. A lot of companies aren’t going to know where to start, and that’s okay. Electrical distributors are experts in their domain, and that means they have a fairly good idea of current industry trends, customer preferences, and customer pain points. They talk to their customers regularly and understand their challenges. With this in mind, a great starting point is simply to ask yourself: How can we use data to help our customers solve these problems?

Q: Is there a limit to how much B2B customer data should be collected and used?

A: Yes, and the key is to make sure what you’re doing adds value on both sides (both for distributor and customers). If all you’re doing is gathering data and processing it for your own good, then people will be less likely to want to share their information. However, if you’re returning value on both sides and being transparent about the information that you’re collecting—and what you’re using it for—customers will be less reluctant to share. And even better, they’ll be much happier with the end result.

Q: Knowing that outside sales reps gather and retain tons of customer information, how can distributors bridge the knowledge/data gap between these teams and their customer service departments?

A: The problem is that sales reps aren’t necessarily thinking about how they can share and reuse that valuable data. So even for the ones who are using technology and storing customer information on their iPads, the technology itself is just a means to an end. This isn’t a problem for IT to solve; this has to be literally sewn into the DNA of how people think about these processes. That way, when they see a problem they can start thinking about how to solve this for customers—given the data on-hand, or by collecting and processing more data. For instance, if you have contractors who use certain products only during the winter months, you can start proactively reaching out in October to let them know what’s new on the market, what’s available, and helping them stock up on those items in advance. Or, if your market research reveals a potential product shortage looming, you can encourage super-users of those items to get their pre-orders in now. These are all good selling strategies that are enabled both by data and by the knowledge that rests in an outside sales team’s memory banks.

Q: Where do B2B companies go wrong when collecting and using customer data?

A:  The biggest one, especially for smaller companies, is how to get started. It can be very intimidating if you’re looking at an Amazon Business or some of these multibillion-dollar multinationals that have tons of resources to throw at some of these problems. It’s a core competency for a company like an Amazon, where if you’re a much smaller distributor you might not have any technology background to do it. However, you do know your domain really well, which is a plus. To work through some of these issues, it starts with really understanding your strong points, your future vision, your niche (if you have one), and your current customer relationships. Start small and understand that there will probably be some learning curves thrown at you along the way. Ask yourself: What are some of the ways we can use our data? And, what data do we need? From there, you can start building out your vision.

Q: What are the rewards of doing this?

A: We’re already seeing a transition over to companies that are able to service their customers in a more proactive and efficient manner. So if you don’t do this, eventually it’s just going to be a bit of a slow death.  If you’re just not able to react as quickly as your competitors do, you’ll wind up out of business. Again, the key is to start small and be realistic. If you’re not a technology company, you’re going to face some hurdles as you move along in this direction. Just like in the offline world, work to better understand your customers’ problems—only this time you’re using data to do at least some of that—and then figure out how to solve those pain points.


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Bridget McCrea  is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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