Delivering for Best-in-Class Wholesaler-Distributors

"Customer stratification has greatly enhanced our understanding of our customers. We now know which customers maximize our value proposition. Linking customer stratification to our supplier and inventory systems empowers our team to quickly distill the variables affecting risk and reward so they can make better and more profitable business decisions."

—Frank Flynn, President, Sager Electronics

F. Barry Lawrence, Pradip Krishnadevarajan, Senthil Gunasekaran

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Customer stratification is a critical business process.

Best-in-class distributors categorize customers based on various factors, but customer stratification has long been an unexplored area for most distribution companies. Not anymore. At last, that gap is filled by this first-of-its-kind research study, Customer Stratification: Best Practices for Boosting Profitability.

Specifically for wholesaler-distributors, this pioneering study offers you 20 practical action steps that your company can implement today and over time as a result of the best practice research conducted with 68 real wholesaler-distributors across multiple lines of trade.

This cutting-edge study focuses on the four key dimensions:

  • Buying Power
  • Customer Loyalty
  • Profitability
  • Cost-to-Serve.

Rather than focus on sales force communication, this research focuses on customer relationships and the value customers provide to their wholesaler-distributors. That value is achieved through:

  • increased revenue—the value to the customer must be addressed
  • decreased expenses—complex service offerings and how the customer accesses them are key factors
  • optimal allocation of assets—driven by customer and supplier expectations.

Most customer stratification applications focus on a single dimension, such as sales volume or gross margin. But this doesn’t guarantee a profitable or practical result. This study presents the customer stratification framework, a distributor-specific cost-to-serve model, a step-by-step implementation approach, and a series of real-world case studies. The customer stratification framework not only distinguishes customers from each other, but also provides a blueprint for conducting future business. The book concludes with a plan-of-action roadmap, which provides an action plan and suggestions for implementing a customer stratification framework at your company.

This book is a collaboration of the NAW Institute and Texas A&M, two leaders in wholesale distribution education and training.

What Distributors Are Saying

“The customer stratification model has allowed our company to continue to stay ahead of our competition and excel in profitability and customer service.”

—Tim Miller, CEO, Security Contractor Services, Inc.

“Customer Stratification” has the power to enable us to transform our company from being product-driven to customer-driven. It has helped us understand our customers in greater detail, enabling us to optimize our selling resources, which will result in an improved ROI.”

—Don Schalk, Former President and COO, C.H. Briggs Company

About the Authors

Pradip Krishnadevarajan

Pradip is the Co-founder of ActVantage. He enables distributors with business transformation and helps them stay relevant in the eyes of the customer while positioning for the future.  He is recognized as an industry thought leader with 15-plus years of experience assisting hundreds of companies. He is a co-author of seven inspiring books that are consistently among the NAW Institute's Top 10 Best Sellers. He holds a Doctorate in Business Analytics.

Senthil Gunasekaran

Senthil is the Co-founder of ActVantage. With 18 years of experience assisting hundreds of B2B firms, he helps distributors create, capture and innovate value by aligning people, process, technology and metrics. He also delivers executive education and speaks at industry forums. As a thought leader, he is an author of seven best-selling books on generating, managing and sustaining profitable growth, and holds a doctorate degree from Texas A&M.