Is data your electrical distributorship’s kryptonite—or its superpower?
In Part I of this article series we discussed 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.
In the business-to-business (B2B) selling environment, roughly half of all decisions are based on intuition and experience versus quantitative data analysis, according to Forrester Consulting. Put simply, companies aren’t fully leveraging their data to engage with, connect with, and sell to their current and prospective customers. In fact, Deloitte’s recent CMO Survey found that B2B firms utilize marketing analytics for decision-making for about one-third of their projects (versus more than 50% for B2C organizations).
Meanwhile, just 43% of B2B companies feel that they’re doing “very well” at integrating and sharing data across the organization, according to D&B, and only 42% say that they’re doing a “great job of converting data into insights to quickly act on customers’ immediate needs, interest, and behaviors,” Marketing Charts reports in B2B Firms Struggle With Data Activation.
These numbers are telling, and they paint a picture of a business environment where B2B firms—electrical distributors included—have yet to embrace and utilize the huge volumes of new data that their companies are creating on a daily basis.
“The first challenge that distributors have is that, for the most part, their data sucks,” says Steve Damerow, CEO, at Incentive Solutions in Atlanta. “We’ve found that when we start doing programs for distributors—and they give us their data to analyze and use—about 95% of that data is incorrect.”
A common challenge for most B2B companies, Damerow points out, is understanding who the actual client is (i.e., the person who makes the decisions about which distributor to buy from).
“Is it somebody in the office? Is it the contractor-principal? Or, is it the guy on the street who is actually doing the installation?” Damerow asks.
Until you have the answer to these questions, you can’t properly target your customers with incentives and other perks (e.g., a $25 gift card for a certain-sized order from a specific product line during the month of July). “If the guy on the street is influencing the sale, and if you don’t have his contact information,” he points out, “you’re not even reaching him.”
Getting Back to Basics
Consulting academic Dr. Isaac Mostovicz of Janus Thinking works with companies that are trying to wrap their arms around their data and use it to their advantage. During those engagements, he usually starts the conversation with questions like: Why are you collecting data, numbers, facts, and figures in the first place? And, what is your goal at the end of the day with all of this data? “It’s because you have a business that needs to survive and be successful,” says Mostovicz. “To do that, it needs solid margins and a customer base.”
And the more a company knows about its customer base—and its wants, needs, and pain points—the better its odds of survival. It’s as simple as that, says Mostovicz, who tells distributors to start at ground zero when developing a data strategy: the customer. “First of all, they have to understand who their customers are and why those clients come to them,” says Mostovicz, “versus the six other electrical distributors that are in the area.”
Factoring out the 5-10% of customers who will always buy on price, Mostovicz says distributors should survey the rest of their client base with questions like: Why did you buy from us? What value did we bring to the table? How was your customer service experience? What else can we be doing for you? The answers will help you segment the market, he says, put customers into groups, and develop different buyer personas (i.e., semi-fictional representations of your ideal customer based on market research and real data about your existing customers).
From there, distributors can begin to develop sales and marketing approaches—based on the customer data that they’ve collected and assessed—that target those buyer personas. This approach may go against the grain for the typical company, which tends to put itself at the center of its promotional efforts. “Ninety-five percent of companies think about themselves, and just want to be able to put in one dollar and get back two,” says Mostovicz. “They work hard at pushing their own products and never really figure out who their customers are and what they want.”
4 Steps to Real-World Data Success
Knowing that B2B companies are facing some key challenges right now in their quest to harness and utilize data, Mostovicz offers these four tips for using data successfully in the real world:
- Collect customer data in a program that everyone can use. It’s no secret that many distributor sales reps go about their daily business with a lot of tribal knowledge stored in their heads. They know who their customers are, who their prospects are, what those buyers want, their likes and dislikes…the list goes on. One of the best starting points for a solid data strategy is to get that knowledge into a customer relationship management (CRM), enterprise resource planning (ERP) system, or some other tool that can then be shared across the organization. “The database is just a tool for gathering the information,” says Mostovicz, “which then can be analyzed and leveraged company-wide.”
- Make a list of your happiest customers and start talking to them. Find out what you’re doing right, what you’re doing wrong, and where improvements can be made. Ask them why they came to your company in the first place. “You have to delve deep,” says Mostovicz, “in order to truly understand what their needs are and why you’re solving those problems better than anyone else can.”
- Assess the data you’ve collected. Once you have a good view of your market, and you understand your buyers’ motivations, take a step back and look at the data you’ve collected. Look for patterns (e.g., multiple customers that come to you for value-added services that no one else in the market offers), adopt the customers’ point of view (versus just trying to “push” more products out in hopes that they stick), and then use that information to develop more targeted, successful sales and marketing programs.
- Get outside help if you need it. Armed with the clean, accurate data, you can now go back to step one and ask even better questions and drill down even deeper into your customer base. This will, of course, generate even more data that will have to be assessed, dissected, and reviewed, but Mostovicz tells distributors not to be intimidated by it. “Dig down deep and you’ll find some very useful answers,” he says, “Or, have someone (an outside third party, for example) help you and guide you through the process.”
In Part III of this article series we’ll look at how one distributor is grabbing the data bull by the horns and turning it into a competitive advantage in its marketplace.Tagged with best practices, data, e-commerce