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Using Data to Develop a Customer-Led Distributorship, Part I

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Using Data to Develop a Customer-Led Distributorship, Part I

How the right blend of data, business intelligence, and customer insights can help independent electrical distributors develop customer-led organizations and thrive in even the most competitive marketplaces.

 

Few electrical distributors would argue the need to be the “right hand” of their contractor-customers. Put simply, they have to know what the customer needs before they know it themselves, and they have to coordinate as much of the order as they can themselves – from knowing what the customer needs before he needs it to suggesting products to go with other products the customer orders, and from having the most essential items in stock to kitting products in a way that meets a specific contractor’s needs. Finally, the distributor must be able to deliver the orders in the right condition to the right place and at the right time.

Now, it may sound like a bit of mind reading is in order here, correct? While that may have been true 10-20 years ago, the rapid advances in technology have made it a lot easier to track what your customers want and when they want it. The big “playing field” leveler, in this case, is data—a concept that distributors seem to either be embracing or ignoring, depending on what day it is. In fact, when they hear the word “data” a lot of small to midsized companies completely disconnect, assuming it’s an abstract concept that doesn’t apply to them.

The latter couldn’t be further from the truth. In a recent IDC report on analytics, Ray Boggs points out that large companies aren’t the only ones that are using business analytics (i.e., the study of data through statistical and operations analysis) to improve decision making. In fact, companies with less than 1,000 employees—a category that the majority of independent electrical distributors fall into—are “sharpening business policies and practices while leveraging and coordinating new information resources to take advantage of the changing business environment,” Boggs notes.

And as part of that process, those firms are making increasing use of business analytics to improve their understanding of current business operations, assess changes in their external environments, and identify the most effective actions for the future. And in today’s data-rich business environment, data serves as the common denominator across all of these functions.

“The benefits of advanced business intelligence can come not just from better/faster answers to current business questions,” Boggs writes, “but [also] from an appreciation of what the most important questions are that aren’t yet being asked.”

Bridging the Great Divide

As Denise Keating, president of Sycamore, Ill.-based DATAgility, surveys the electrical distribution industry, she sees a divide between the companies that are embracing and leveraging data, and those that are not. In general, she says B2B as a whole—and more specifically, wholesale distribution—has been slow to adopt an omni-channel strategy (i.e., a multi-channel approach to marketing, selling, and serving customers in a way that creates an integrated and cohesive customer experience no matter how or where a customer reaches out).

Many of the same distributors that are not taking an omni-channel approach are ignoring their data, says Keating, and still stuck in the “customer-aware” operating models (i.e., those that are focused on getting customers to buy your products). “It’s time to move over to being a customer-led organization, which really changes the focus for many companies,” Keating points out. Explaining further, she says customers buy benefits from their distributors—not products or services. They look to their distributors to solve their most pressing pain points, offer solutions, and not just push full catalogues of products or services that they don’t need.

Differentiating Themselves in the Marketplace

It’s no secret that companies have a lot of data at their fingertips, stored in their databases, and filed away in physical cabinets. Unfortunately, most of those companies are not utilizing that information, nor do they know exactly what to do with it. “Not only are distributors not doing anything with it during the individual interactions that they have with customers,” says Keating, “but they’re also not sharing the data in a way that helps the industry as a whole rise to a new level.”

Compare this to an online retailer like Amazon, which has tons of content and customer data at its fingertips, and that’s continually analyzing that data to enhance its platform functionalities and offer new services to its customers. Keating says electrical distributors of all sizes can borrow a page from Amazon’s playbook and start leveraging their data to work better, smarter, and faster in today’s competitive business environment.

As a starting point, Keating says companies can take snapshots of their customers’ transaction histories, including what they purchased, the frequency of their buying habits, and the products that they did (or didn’t) bundle together with other items. “This will help distributors figure out how to present products on their websites,” says Keating, “and move beyond the basics to get to the more advanced content that will help distributors differentiate themselves in the marketplace.”

The Secret Sauce: Service After the Sale

Figuring out how to be a customer-led organization has become easier in recent years thanks to the proliferation of technology and data. Keating sees the post-sale process as one of the greatest areas of opportunity for electrical distributors that want to leverage their data and use it to “get out in front” of their customers’ wants and needs. Ask yourself, for example, what type of content will be valuable to your contractor-customer after he purchases a circuit breaker from your company. Does he need to know how to install it? Maintain it? Adjust it? Tear it out and install it somewhere else?

If your company’s CRM reveals that more than one customer has requested installation instructions for a specific product, then it’s time to develop a PDF document and/or online video (make a fast-motion video for contractors that just need a basic overview and who don’t have the time to sit through a 5-minute clip) that addresses the most important installation points in a concise, direct manner.

“Look carefully at what do you need to do to help that contractor as he buys your product, and you’ll find that it’s usually related to the installation or maintenance of that product,” says Keating. “We don’t talk about that as an industry, and I think that’s the low-hanging fruit for data usage among electrical distributors.”

 

In Part II of this article series we’ll delve deeper into the data conversation, explore its relevance in the electrical distribution field, and show how distributors can leverage it to their advantage when developing customer-led organizations.

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Bridget McCreais 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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