As we discussed in How to Know if You Have a Strong Value Proposition, many distributors aren’t successfully positioning themselves against competitors like Amazon, Ferguson and Grainger, placing a too large an emphasis in messaging around product selection, availability and speed of delivery – things that are difficult to compete on in today’s world.
To set themselves apart, distributors need a strong value proposition. It’s not just about pretty words on a website. A strong value proposition can drive real bottom-line results for your distribution business through:
Targeting the right customers
When you understand which customers you’re best at serving – and what those customers value – you can align your organization around that. You can then target more of the same types of customers, resulting in market-share growth. You will also serve your existing customers better for an increase in wallet share. And, of course, when you give your customers what they love, they’ll stick around longer.
For example, a distributor we’ve worked with sells many of the same products that others do, including abrasives, safety products and hand tools. But their value proposition is their exceptional service with customized solutions, and they charge for it. This service proposition is engrained into their salespeople and anyone else that interacts with the customer from Day 1. As a result, they do not pursue customers that only care about the lowest price.
Understanding which products and services to offer
If you talk about product selection but your customers only care about how quickly you get their order to the jobsite, you’ll be wasting your breath. Similarly, many dsitributors tout the value of their own value-added services. Yet, few actually know the value of these services to the customers.
It’s important to understand which products and services your customers value – and which they don’t. Don’t be all things to all people. This doesn’t mean that you must change or remove any products and services, but you may want to add additional products and services or adapt your offering based on your customers’ feedback. Customers will tell you which products and services are most important to them.
But note that it will vary by role and customer segment. For example, a purchasing agent may value easy-reorder capabilities while an engineer may value your technical support. Targeting the right persona with the right message matters. When you determine what matters most, talk about it. Shift your messaging to what your customers care about.
The bottom line
A clear value proposition should drive everything in a distributor’s business. It affects how you communicate with customers, select customers and align your services around what they value. All of these have a direct impact on sales and profitability.
Contact us to learn about how Distribution Strategy Group can help you identify and communicate the right value proposition.
Jonathan Bein, Ph.D. is Managing Partner at Distribution Strategy Group. He’s
developed customer-facing analytics approaches for customer segmentation,
customer lifecycle management, positioning and messaging, pricing and channel strategy for distributors that want to align their sales and marketing resources with how their customers want to shop and buy. If you’re ready to drive real ROI, reach out to Jonathan today at
jbein@distributionstrategy.com.