How well is your website working for you?
The answer depends on your goals. Are you trying to drive new sales, improve margins or offer your customer the ability to learn more before they buy? These are all important goals, given that B2B buyers spend just 17% of the purchase journey with sales reps, according to Gartner. Gartner research also indicates a shift of customer preferences from in-person sales interactions to digital channels.
This means that your website has the potential to enhance your customers’ experience and grow wallet share. It can also help you improve margins because it has a relatively lower cost to serve and frees your sales reps to focus on higher-value opportunities.
But this only works if you’re not frustrating your customers with bad pricing in the process.
When I’m talking about pricing in this article, I’m referring to standard stock products that you can sell via your website or branch network, not large custom project quotes that require technical expertise and negotiation by your sales team.
Here are some common problems and solutions for distributor website pricing:
1. Pricing is inconsistent.
The biggest issue is inconsistency across your channels. Your regular customers want to see the same pricing they get everywhere else so they aren’t forced to jump from channel to channel to find the right price.
If your website’s pricing is too high, your customers won’t use it. If it’s too low, then they’ll buy at the lower price and then demand the same price from your branch sales rep, eroding margins and adding friction. In most cases, we see that distributors often make the pricing on the website higher, with no account-specific functionality. That means those customers can’t self-serve; they always have to call a CSR or sales rep to adjust the pricing before they can place an order. Some distributors may set lower prices online than they offer offline in the hopes of pulling in new customers. It’s important to think about the broader ramifications of that move to avoid frustrating your sales team because long-time customers find they are being charged more at their branch.
Lastly, evaluate compliance with contractual customer pricing or supplier minimum advertised pricing (MAP), to make sure online prices honor other agreements.
2. Sales reps are frustrated.
Sales reps often are already hesitant about promoting distributor websites to their customers. They are responsible for the relationship with their clients and won’t do anything that could jeopardize it, including sending them to a website with pricing that doesn’t match the branch.
In part, that’s because they don’t want to lose control of the relationship; they worry the website makes them less important. But website pricing problems play a big role. They fear that the pricing isn’t going to be accurate.
It’s not surprising they get frustrated. Does your website allow registered customers to log on and buy at the same system price they get when calling the branch? If so, is your system price set at a marketable level to win day-to-day orders?
Suppose a customer logs on to your website and sees that the pricing isn’t what they typically pay. In that case, the fallout hits your sales reps because they have to research the issue, correct it and spend time mending the relationship. If this happens, they’re not going to encourage their customers to use the website going forward, which will cost you profitable sales.
3. Sales goals are misaligned.
If you haven’t aligned your strategy and sales goals for branch and online channels, chances are they are not in sync. And that’s costing you. Are you missing out on incremental online sales, are your reps lowering branch prices to meet the website, which just cannibalizes margin? Or, worst of all, are customers choosing another distributor where this isn’t a problem?
This could be the result of your overall strategy or simply that your web manager’s goal is to attract new customers to grow online sales.
It’s amazing how quickly customers point out even small price differences between your website price and what they are quoted at the branch. These cases may seem minor, but they unintentionally create distrust with your existing customers. When this happens, we often see that other channels will reduce prices for a product across the board to satisfy that customer. Avoid confusion and complaints by aligning sales goals to ensure that your website is complementing your other sales channels, not challenging them.
The Big Opportunity
In his list of top reasons an ecommerce site might fail, Ian Heller of Distribution Strategy Group tied many directly to pricing: such as inconsistent pricing, no access to account-specific pricing and adding a note to items to “call for price.”
Customers are less patient than they once were; they want the Amazon experience for online purchases and most distributors are still a long way from meeting that expectation. For traditional distributors, this means continuing to invest in improving your customer’s omnichannel experience.
It’s about understanding the tradeoffs, aligning goals, investing in technology, creating a team process and coordinating with branches to offer a seamless customer experience.
Pricing should be on a distributor’s digital transformation roadmap – together with warehouse management, ERP, CRM and other tech tools needed to succeed in the future.
In doing so, your website will complement your services and enhance the abilities of your sales reps and support your other sales channels. If you can get your pricing consistent, reduce frustration for sales reps and customers and align sales goals between channels, you’ll be a more valuable distributor partner for your customers and suppliers.
You’re not alone with this challenge, so the question is what will you do so that your web pricing works for you?
I’d love to hear your take and about your experiences. Reach out to me for a conversation at scott@pricingfordistributors.com.
Scott Sinning is a former Vice President of Pricing Strategy at Graybar with 30+ years of experience in wholesale distribution. He founded Pricing for Distributors to help others gain the clarity, confidence and capabilities needed to improve their pricing. He has a practical approach that starts with assessing his client’s needs and creating an action plan to capture quick wins and sustained margin improvements. You can reach him at scott@pricingfordistributors.com or visit www.pricingfordistributors.com for more information.