Delivering for Best-in-Class Wholesaler-Distributors
July 31, 2019  |  ByJ. Michael Marks, NAW Institute for Distribution Excellence Fellow

Most distributors think they know their customers, until they actually talk to those customers. That is because wholesaler-distributors often operate in an echo chamber, talking to their sales team, but not to their customers.

Distributors in an echo chamber don’t measure anything, so they don’t understand what is working and what isn’t. They also focus a lot on the day-to-day minutia without seeing the big picture. So, they don’t know what is really going on in their market. And, they don’t get a true picture of what customers value and don’t value about their products and their service, much less understand how their customers prefer to do business.

One more thing they probably don’t know: Hearing what customers have to say isn’t all that difficult, and the payoff is huge.

Back in 1996, Andersen Consulting did a study for NAW on how distributors could best face the cataclysmic changes that were about to hit the industry. The study mapped nearly 200 practices that high-profit, high-growth distributors had in common and things that less successful distributors didn’t do. The single practice that was by far the greatest predictor of success was that the distributor had a source of information about what customers thought of them — a source that was not their sales team. Most sales forces “listen to respond,” but real insight comes from “listening to understand.”

Practically everything in the distribution industry has changed since 1996. The one constant, though, remains: the importance of understanding your customers and of taking the time to ask them what they want and what they value.

Amazon is estimated to be about 10 years ahead of other companies in meeting customers’ purchasing expectations. That is not because they have better software than everybody else, it’s because they listen to their customers and adapt based on customer feedback.

The Amazon feedback loop creates continual improvement in the customer experience. Most distributors wait for a problem or issue to emerge before reacting and making a change. Which process is going to win the customer experience race?

Amazon goes further than simple market research. Distributors need to do the same: Get out there and talk to your customers. Ask them about their challenges and their goals. And, when they tell you — which they will be more than happy to do — really listen to what they have to say.

To compete with Amazon, distributors need to innovate and grow, and sell to customers the way customers want to buy. And, they must make the process about the customer and delivering what the customer values and on the platform that the customer prefers.

The good news is that when distributors combine innovative technology with the insight that comes from listening to customers, they have a real advantage — they understand the value of real human interaction.

Bottom line: Get out of your echo chamber if you want to know what is really happening and what customers want. Because once you do that, Amazon isn’t so scary after all.

To learn more about Mike’s approach to value creation in distribution, read his NAW-published books: What’s Your Plan? Smart Salesforce Compensation in Wholesale Distribution, Working at Cross-Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully and Value Creation Strategies for Wholesaler-Distributors

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J. Michael Marks, NAW Institute for Distribution Excellence Fellow
J. Michael Marks, NAW Institute for Distribution Excellence Fellow J. Michael Marks is Managing Partner of Indian River Consulting Group (IRCG). He became a NAW Institute for Distribution Excellence Fellow in 2002. IRCG is an experience-driven firm that continues to focus on the wholesale distribution channel. Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, a vertically integrated electronics distributor. Prior to that, he was Director of Corporate Training and Development at Ducommon Inc., an industrial distribution company.

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