Delivering for Best-in-Class Wholesaler-Distributors
January 18, 2018  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow
The Key Word for 2018 Is Community

What’s in a word? This is an essential question that often surfaces in discussions about Shakespeare and the modern contributions of his long-ago work. It is also a phrase that may have new meaning for distributors as they think about transitioning their business from long-standing traditions to competing through the use of digital tools and business innovation, fending off disruption and offering new value for customers, suppliers and employees. In my ongoing work and conversations with distributor leaders, I have found a certain word to frequently surface in discussions about change and evolution, and it’s usually more by accident than intention. That word is community. In this post, I share three scenarios where a single word may help distributors envision multiple paths to a successful future.

Community Is the New Local

Manufacturers used to think of distributors as providing reach and support at the local level, driven by the belief that manufacturers could not match a distributor’s local relationships, inventory availability and cost structure. But in the digital age, the concept of providing local services seems outdated, quaint or just not required. Distributors have largely ceded this linguistic battlefield and not offered a coherent new justification for their capabilities at the local level.

Distributors may find new ways to justify their business and even seize advantage by redefining what it means to be local, and the key is to think in terms of community. Distributors are businesses embedded in the local community and founded on a long and deep history of personal relationships. Distributors hire and train local people; they provide jobs that support families. Distributors enable economic development by supporting businesses that are recruited to open new facilities and operations in the local community.

All of this adds up to a strategy of doing things locally that can only be done locally. Three ideas immediately spring to mind:

  • Build awareness through your Chamber of Commerce.
  • Participate in economic development initiatives.
  • Offer work/study programs to local colleges.

All of these ideas will build your brand and strengthen the credibility of your local presence with suppliers.

Marketing Is Mercenary; Community Is Collaborative

In a marketing context, growing a business and building share is all about segmenting, targeting and positioning. You differentiate yourself from your competitors. You identify your priority customers and sell them things. All of this is true, and truth-be-told, manufacturers have had stronger marketing competencies than distributors. Digital tools are changing this reality, because they enable new customer experiences and collect data from the front end of a distributor’s business. As distributor leaders turn their attention to using digital tools and business innovation, investing in marketing capabilities becomes a no brainer.

But distributors can go further. As they become leading marketers in their own right, there is an opportunity to skip ahead to new marketing methods and perhaps write new rules of marketing. New approaches start by focusing more on communities and less on segments. Segmentation is about targeting. Communities are about collaboration.

This is a fundamental shift. Community-driven strategies are about working with customers (and suppliers!) to let them articulate their needs, plans, strategies, worries and visions. Armed with this knowledge that is freely offered by your partners, you can look for ways to create mutual value, not just through the products you can sell, but by harnessing all of the capabilities your business can offer.

A marketing shift to communities is, in part, a new mindset. But it can also lead to concreate actions and results. Some distributors may organize customer lists by communities such as local businesses, engineers, buyers, users, innovators and so on. They can then consider the solutions, services and profitability of each community. For the top communities, a community manager position may be created to conduct outreach and direct marketing and sales activities. When community competencies are fully developed, distributors may reach out to suppliers and upgrade partnerships to reflect the distributors’ acknowledged strength in supporting and growing communities.

Community Strategies Harness Millennial Creativity

Understanding and engaging Millennials in a distributor’s business may be all about exploring their ambitions and preferences around communities. In part, this is about where Millennials choose to live and what they value in community. But it’s more than that. There is a growing sense that many business people—including Millennials, but also preceding and following generations—want to do business by doing good. This is trend that is sometimes known as conscious capitalism. For distributors, engaging Millennials in the workplace may be all about showing them how they can make a contribution to the community where they choose to live, by the work they do at a distributor or the volunteerism that is enabled by their distributor leaders.

In his Chairman’s Address at the NAW 2017 Executive Summit, Richard W. Schwartz, Chairman of the Board at Winsupply Inc., made the case that distributors can harness the energy and ideas of Millennials while teaching them about the positive social contributions of capitalism and how to create and operate profitable businesses. A renewed focus on the role of a distributor in creating and supporting communities, starting with the discussion in this blog post, is an excellent way to push Rick Schwartz’s ideas forward.

Another community concept that may be helpful is to recognize that a distributor’s employees, customers and suppliers are a community, in a very classic sense. Business is voluntary and your partners in the value chain come together to do business for motivations that are both extrinsic and intrinsic.

Extrinsic motivations go to the business goals that each party must pursue as a condition of being an employee. Intrinsic motivations reflect more personal values, attitudes and mindsets. By examining both the extrinsic and intrinsic motivations of your best and most active employees, customers and suppliers, you may find new ways to define and differentiate your business. This may sound a bit high minded, but it is just the sort of task that you might assign to a creative and curious team of Millennials, thereby engaging them in your business success and offering new and creative ways for them to contribute.

Please Share Your Ideas and Experiences

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 and to be armed with foresight about the direction of your market and a vision for leveraging digital tools. I hope you’ll read it.

I welcome your ideas and experiences on any aspect of this post and the role of community in your vision and foresight for your markets and value chain. Your input will help me continually direct and manage the contributions I can deliver as a Fellow for the NAW Institute for Distribution Excellence. Please reach out at any time to mark.dancer@channelvation.com.

 

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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Channel Innovation to drive awareness, advocacy and excellence for channel innovation, and to enable an exchange of ideas between channel leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve channel excellence across a wide range of industries in developed and emerging markets.
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