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

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

Here’s how one electrical distributor is using its data to work smarter, better, and faster in today’s competitive business environment.

 

As you read in Parts I and II of this article series, business-to-business (B2B) firms know that data should be an important part of their go-to-market strategies. However, as Forrester Consulting found, roughly half of all decisions are still based primarily on intuition and experience (versus quantitative data analysis).

Werner Electric in Cottage Grove, Minn., is one industrial distributor that’s bucking that trend by embracing data, extracting the most important points from that data, and then using that intelligence to better serve its growing customer base. To oversee this initiative, the distributor employs a full-time contract/data manager who focuses on obtaining pricing and product data from suppliers; loading that information into Werner Electric’s own systems; and then tying that data back into the distributor’s activities, back-end reporting, and other functions.

After going operationally-independent from its parent company (Van Meter Inc.) three years ago, Werner Electric hired Bill Gilpin to manage its data-related activities, among other projects. “When I moved into this role we started getting heavily integrated with all of the data that we’re receiving and generating,” says Gilpin, who has been in the electrical distribution industry for about 14 years. During that time, he’s seen a major shift in the way distributors accumulate, generate, and utilize data to run their businesses.

Gilpin says e-commerce stands as one of the key drivers of the need for good, clean data. “As e-commerce gained in popularity,” he says, “it really pushed distributors and manufacturers alike to have good quality data that is clean, accurate, and normalized. That’s one of the bigger driving factors behind our efforts in this area.”

Addressing Issues, Minimizing Gaps

So, what does it really mean to have good data and utilize it to your distributorship’s advantage? For Werner Electric, it means that all decisions are backed up by data. If the company is considering an operational process change in order to gain efficiencies, for example, or looking for new ways to continuously improve its quality, then it turns to data to support those initiatives. In most cases, that data is either pulled from the company’s enterprise resource planning (ERP) system or produced internally, and then transferred into its PowerBI data visualization tool.

From there, Gilpin and his team chart, graph, and track the front-end data to determine which operational areas are ripe for improvement. “Once we make the changes, we’ll continue to track them,” he says, “to determine whether or not our improvements have yielded the desired results.”

The same process applies on the sales side of Werner Electric’s business, where customers and selling data both play key roles in its day-to-day operations. “I work with the sales force pretty regularly on the pricing side of things,” says Gilpin. On any given day, for example, he’ll analyze sales and margin data to assess current and historical sales and margin growth patterns. Then, he’ll dig down into deeper questions like, “Why are sales patterns trending this way?” “What blips on the radar should we be concerned about?”, and “What caused these blips in the past?”

The answers to these questions serve as a valuable sales training, guidance, and behavioral tools for Werner Electric’s management team, which is always armed with the data points they need to back up their observations, training, and directions. “It’s easier to get your message across for any type of change when you have data to back it up, and a graph to show everyone what it looks like in black-and-white,” says Gilpin.

“Thanks to our rich data and our business intelligence tool,” says Gilpin, “were able to readily detect gaps and issues, prove them, and then work to minimize them quickly.”

Key Data Points

Figuring out which data points to track and how to utilize that information isn’t easy in today’s data-rich business world, but Gilpin says there are some straightforward strategies distributors can use to cut through the clutter and create an efficient data management approach. For example, he says some of the key points that Werner Electric pays attention to on the e-commerce front are: What product lines are most profitable, which are selling the best, which are moving the fastest, and who’s buying what?

From there, the company can figure out which products it wants to display prominently on its website and which products it should be directing its customers to online. It also uses the data to break its customers into groups, determine which ones are buying online, and then come up with new ways to display its products online to those buyers. In return for these efforts, the distributor has gained a “confidence in the decisions that we’re making,” says Gilpin.

“In the past, if we had a gut feeling or knew that it was time to make some changes, we didn’t necessarily have the data at our fingertips to support those initiatives,” he points out, “nor did we have the justification we needed to be able to get management buy-in and/or create a strong case for change management. That changed when we implemented a strong data management plan.”

The benefits don’t end there. According to Gilpin, the data-driven distributor has also been able to tie together its customer, sales, and marketing intelligence under one umbrella and use the resultant information much more efficiently (versus having that information stored in different databases or in its sales reps’ own files). “When the data is segmented like that, you can only get certain pieces of it and not necessarily tie it together with other important indicators,” says Gilpin. “Using our data visualization tool, we can have master databases running in the background and then pick and choose the pieces of information that we want to tie together.”

Front-End Controls

Like many electrical distributors, Werner Electric still faces its share of data-related challenges. Getting clean, consistent data from its manufacturers isn’t always easy, for example, although the standardized options (IDW, AD, Rockwell, etc.) have made progress by creating a standard that all manufacturers must adhere to. “There are still a lot of smaller suppliers that aren’t technically-advanced enough to provide some of the data we’re looking for,” says Gilpin, “namely from an e-commerce and reporting standpoint.”

Normalizing the data and keeping it clean is also a challenge for companies like Werner Electric, where Gilpin says there’s “a lot of front-end work” that has to happen before the data itself is useable and relevant. “Keeping our data accurate and clean requires continuous maintenance,” he says. “Duplicate or non-validated data in the system, for instance, can create reporting-related issues.”

To other electrical distributors that are developing or honing their own data-driven strategies, Gilpin says “don’t be afraid to break things down and start over,” if need be. During the rebuilding process, be sure to implement controls in the front-end (e.g., delegating one or more individuals who are authorized to enter information into the system) and regularly assess the way in which the data is getting into the system. “If there aren’t controls on the front end, you wind up with a lot of messy stuff that you’ll have to weed out on the backend.”

 

In Part IV of this article series we’ll hear how one VP of sales for an electronics manufacturer works to close the data “gap” between his company and its distributors (and why electrical distributors need to work toward this goal).    

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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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