Why a Clear Value Proposition is More Important Than Ever for Distributors Today

Today’s landscape is marked by:

• The lingering effects of the Great Recession, which imposed a frugal mindset on buyers accentuated by an increase in their control of the shopping and buying process.
• A reduced emphasis on relationships, in part due to the increased focus on digital channels. This is also due to a change in how younger generations view relationships.
• Global competition across channels. Competitors with a global reach and economies of scale will edge out small and mid-market distributors that try to compete on the same attributes.

That’s why value is more important than ever for mid-market distributors. It’s the only way they can compete.

Given the presence of global players and digital disrupters with extensive multichannel reach and marketing capabilities, mid-market distributors have to think differently. These features will not differentiate their businesses.

The good news is that there is plenty of opportunity to differentiate on customer intimacy in a way that is difficult for the global player to deliver. Distributors need to stop focusing on a value proposition that centers on what those larger competitors can deliver much more successfully: product selection and availability, and speed of delivery. They will merely be spinning their wheels.

A value proposition tells customers who the company is and why they should do business with them. It is built on what a company does that differentiates it from its competitors. It’s not just about what they do well, but on what’s important to the customers and the market, and what competitors claim about their offering.

A clear and compelling value proposition has a direct and positive effect on a distributor’s bottom line through:

• Targeting the right customers
• Selling the right products and services
• Assigning the right resources
• Systematically sharpening your offering

Take care not to fall victim to the Lake Wobegon effect, in which all or nearly all of a group claim to be above average. It’s a real and pervasive human tendency to overestimate achievements and capabilities in relation to others. We’ve seen this in our surveys of distributors, where most believe they are above average on most features compared with the competition. Mathematically, that’s impossible.

It’s essential to get beyond the subjectivity of the Lake Wobegon Syndrome (where “all the women are strong, all the men are good looking, and all the children are above average”) when developing and implementing a value proposition; this requires qualitative and quantitative market research to best understand the voice of the customer over time.

Learn more about building and communicating a strong value proposition.