Striving to Become the Indispensable Partner – Distributors in the Digital Era #39
Over the last few weeks, I’ve been looking for threads and themes in my conversations with distributor leaders. In this post, I discuss new mindsets around partnering and becoming indispensable as a challenge for distributor leaders to think deeply about—a challenge that can help your business move forward in today’s changing markets.
In the next post, I will discuss the evolving concept of community as a replacement for segmentation. Segmentation is about grouping customers for your advantage. Community is about creating mutual advantage and sometimes, conscious capitalism. More on that in my next post. For now, let’s explore if your business is an indispensable partner, and whether you should be.
Why Adopt a Partnering Mentality?
One important reason to adopt a partnering mentality may be because disruptors, like Amazon, don’t want to partner. Rather, they seek to establish an online marketplace where business is transacted, but little is done to promote business-to-business relationships. If this is true, then a space that distributors can claim would be to focus on “building modern, value-creating partnerships.” It is important to note that this is not an old-school approach. Rather, today’s trends—including a generational turnover of business people, the adoption of digital technologies and the threat of disruption—mandate a new approach to creating partnerships based on new business processes, organizational capabilities and measurable results.
Another reason to consider adopting a partnering mentality is that a focus on partnering—with both customers and suppliers—forces distributor leaders to think in terms of changing their business model and offerings. Traditional marketing techniques, such as segmenting, targeting and positioning, imply a static market that is known, understood and, to some extent, mastered. Partnering requires an open mind for understanding another business’ priorities and needs, and a willingness to convince the other party that you bring something to the table. Partnering is about one-on-one victories. It is not about driving toward a fair share that assumes some business will be won while other opportunities are lost. Partnering is about surviving one opportunity at a time.
Why Aim to Be an “Indispensable” Partner?
Distributors should strive to become an indispensable partner because another word tells the tale: Distributors are inherently “substitutable.” While distributors seek to differentiate from each another, when many distributors are asked to explain while customers (or suppliers, for that matter) should favor them over another, there are few actual differences. Answers from each new distributor begin to sound very much like the answers from previous conversations with other distributors. Moreover, industry research and trade association efforts tend to enforce conformism through best practices, benchmarks, publications, working groups and so on. All of this is valuable of course, but it tends to help distributors evolve as a channel. Just as customers can choose to buy from one salesperson over another, so can they shift their purchases from one distributor to another. Disruption can be managed through service arrangements negotiated in advance or by gradually shifting business over time.
Substitutability is (arguably) fine in markets that are growing. One lost piece of business can be readily replaced with another. To be sure, this is a less-than-respectable strategy, one that implies a certain laziness or sense of inevitability. While accepting substitutability may offer a measure of short-term success, it is not acceptable when new mass offerings threaten the customer’s (and supplier’s) view of distributors as a channel. In these cases, which are very much the case today, customers and suppliers may begin to think that all distributors collectively are not an acceptable source … or a source that is only used under certain circumstances. If this happens, you can be sure that the circumstances will not be favorable to distributors, and distributors may even be perceived as a low-price option, a source of last resort, or a stalking horse intended for obtaining more favorable terms from a preferred channel.
Setting a New Standard for Survival and Excellence
Combing my thoughts above, a useful exercise for distributor leaders in 2018 may be to go through a list of top suppliers and customers and ask yourself two questions:
- Is this relationship a partnership?
- Are you indispensable?
In many cases, your answer to each will be “no” or “it depends” or “maybe.” Your answer will definitely not be “yes” to both questions. And out of these answers, you may find new standards of excellence that will help your business survive and prosper in the digital age.
Please Share Your Ideas and Experiences
I would very much like to hear your ideas and experiences on any aspect of this post and on the notion of becoming an indispensable partner. Your input will help me continually direct and manage the contributions that I can deliver as a Fellow for the NAW Institute for Distribution Excellence. Please feel free to reach out at any time to firstname.lastname@example.org. My new research report, CEO Insights on Innovating the Distributor for the Digital Age, includes a call to action for distributor leaders to adopt a new mindset for competing in the digital age—on that is armed with foresight about the direction of your market and a vision for leveraging digital tools. I hope you’ll read it.