Between a rise in globalization and an increased focus on ecommerce, traditional marketing techniques are no longer enough to set distributors apart. In 2022 and beyond, businesses must be willing to shake things up and implement creative strategies to draw in new customers and increase wallet share among existing accounts.
Below, Ian Heller and I discuss five distributor marketing mistakes and how to avoid common pitfalls. The top five marketing mishaps include:
- Relying on an undifferentiated value proposition
- A failure to own customer lifetime value among marketing departments
- Lack of communication frequency
- Using one-size-fits-all marketing strategies
- Measuring digital success by shopping-cart purchases
Jonathan Bein: Our No. 1 marketing mistake is undifferentiated messaging and positioning. We’ve looked at how distributors position themselves across hundreds of sites and have seen the messaging they use. One thing we’ve seen is that there’s a lot of similarity from one distributor to the next in their messaging and positioning. Similarity means undifferentiated.
There’s a study we’ve done multiple times over the years asking distributors how they best describe themselves, and there are four attributes they routinely use. The first is product selection or assortment. The second is product availability. The third is the speed of delivery, and the fourth is customer service. Eighty to 90% of distributors are positioning on at least one if not all of these attributes. That is the definition of undifferentiated positioning.
One of the top things we see in taglines is when the tagline or slogan is about you, the distributor, and not the customer.
Ian Heller: The best taglines are about the customer. A classic example is Nike, whose tagline is “Just Do It.” They’re not talking about Nike just doing it; they’re saying you should just do it. They’re speaking to the customer.
Bein: We also see other things in taglines, like “In business since 1946.” Tell us about those.
Heller: It’s just not differentiated. I mean, if it made any difference, then customers would want to buy from the company that’s been around the longest. They would say, “That supplier has been in business since 1990, but that one has been in business since 1980. That second one must be better than the first one.” People don’t think that way. It’s not a bad thing to have been around for a long time, but if you put it in your slogan, you’re advertising something that is not a decision-making factor for the customer. It’s not about the customer – it’s about you.
Bein: At the end of the day, you want to really understand what you do best that customers care about and will pay for. Ideally, that’s something not claimed by your competitor. So those are three things – what’s important, what you do well and what’s unclaimed. From that, you can start to build messaging, including the tagline, which can be more emotional. This is a big opportunity. Distributors, by and large, have ignored doing a good job of positioning and messaging.
Heller: If you go through this work and can’t come up with something, you probably need to refine your strategy, so you have something that’s differentiated about your value. Okay, now No. 2 is a marketing’s failure to own customer lifetime value.
Customer lifetime value is the profit you get from a customer over their lifetime engagement with you. When we talk about this, we’re talking about a variety of metrics like:
- How many customers are you acquiring each year?
- What is your average order value?
- What is your order frequency by customer?
These are all things that contribute to customer lifetime value.
So customer lifetime value is really important, and frankly, it’s what marketers affect directly. The marketing department’s responsibility is to make your company a great marketing company. They directly impact customer behaviors, how many accounts you acquire, how good you are at retaining them and how frequently they buy. In most organizations, nobody owns those metrics.
Bein: If you ask C-Level employees in a distributor, “What is your retention and defection rate?” most can’t answer that.
Heller: Right. And even if they do know, they don’t have a goal for how they’ll perform the following year. No one is in charge of making that happen. So marketing has a real number it can own and use to change customer behavior. From that, you can derive your budget and hold the marketing department accountable. Over five years, it has a compounding effect.
Bein: No. 3 is lack of communication frequency. We started to understand the value of communication frequency back in the direct marketing/print marketing days. We learned that when you have a small number of customer touches, you’re going to get a small return. But, if you have a large number of relevant customer touches, you’re going to get a large return.
There are several reasons distributors have difficulty understanding the importance of communicating relevant content on a frequent basis. The first is that you often assume your customers know what you sell. But even if you are a smaller distributor, you probably have thousands, if not several tens of thousands of SKUs, so you don’t even know all of what you carry, not to mention your customers. They may know that you sell abrasives but don’t know you sell adhesives. So part of communication frequency is expanding their mental map of what you sell.
Heller: When customers need a product, they envision it in their mind and think about where they’ve seen it for sale. That’s why catalogs and websites that are well-merchandised have such a big effect on driving customer purchases. I call it the golden rule of distributor marketing. The more frequently you communicate relevant offers to target customers, the more frequently they’ll buy from you.
Bein: I think another piece of this is that many distributor marketers assume that customers are like private citizens. As a private citizen, I don’t like junk emails or getting phone calls on my landline. Marketers project that onto B2B customers. But, we’ve done numerous end-customer surveys where distributors find out that their customers want to hear from them more often. They want to hear about relevant offers. So, this projection of a private citizen persona onto B2B customers results in a very timid approach to marketing.
Heller: No. 4 in our list of biggest mistakes distributor marketers make is using one-size-fits-all marketing strategies. You have different segments in your audience, and you wouldn’t want to send a manufacturing-product promotion to a construction company. Similarly, personas often vary from person to person in an organization. For example, a plant manager and job site superintendent often have different needs and may even be in conflict with their purchasing counterpart in the same company. Although they don’t have common needs, we often send them the same things.
Relevance makes a big difference in frequency tolerance. If you are sending relevant offers, people are willing to hear from you more often than if you’re sending them things that are irrelevant. If you have an existing customer, you know what they’ve bought in the past. You have data to work with and can send them something related to what they’ve bought before.
Bein: If you are blasting your entire customer base, then you are falling into the trap of one size fits all. You’ll find that if you frequently send smaller, more relevant blasts to four or five customer segments with three or four personas, you are already way ahead. If you’ve been collecting customer data, you have the information to go beyond one size fits all.
If you’re able to measure an operating margin or profit at the customer level, you’re going to start seeing some pretty stark differences in the sectors of your customer base. Another perspective is looking at your customers by size. You’re going to market differently to your top 10% of your customers than the bottom 10%.
Heller: The No. 5 marketing mistake is measuring digital success by your shopping cart. We see this all the time. We ask distributors how they are doing with their digital commerce, and they say, “Oh, it’s been a big failure. We spent $2 million pulling together our data and building our website capabilities. We rolled it out, and we’ve only sold $300,000 in the last two years.”
This ignores the vast majority of business buyers who can’t buy through your shopping cart because they have other purchasing systems they have to interact with. Even if they wanted to put items in the cart and check out, they can’t. So, distributors build these sites like retailers and think they will draw people to the website and convert them there. But, it’s never going to work that way because if you’re a business buyer, you’ve got to fill out a purchase requisition or complete a P.O. or get authorization. Then that order will get emailed or phoned in because someone wants to ask for a better price. They’re not going to go back to the shopping cart and fill it out because that doesn’t fit their purchasing process.
If you look at the shopping cart as the measure of your success from your website, you’re doomed. You’re never going to invest more in digital because you’re not seeing it come to your shopping cart. You may be getting benefits from your website, and people may be shopping on there all day, but they’re not going to place the order through there, so you can’t use it as a measurement of success.
Bein: It’s like an assist in basketball. You can focus on scoring points, or you can focus on helping others score points. A good ecommerce site should do both. Scoring points is the revenue going through the shopping cart. An assist is when someone shops, meaning they find items and do research on your website, then go and buy from another mechanism. They go into a branch or call a customer service rep to buy. That would be an assist.
Heller: There are all kinds of ways you can add value to the customer and make it easier for them to do their jobs. If you elect not to do that because you are not capturing the benefit of your site, then you’re going to fall farther and farther behind on digital.
If customers want to buy on your site, you have to be good at it, and it’s easier than ever to do because there’s so much software available. So, we’re not saying that you shouldn’t try to sell on your website; we’re saying that it’s not the main benefit for most distributors. If you’re not capturing the value that your website creates in terms of getting prospects, you’re building the wrong site.