Similar to reps competing to have the highest sales, companies compete among each other in their respective industries for the largest market share. Prior to working for LevelEleven, I worked for an industrial supply distributor, serving manufacturing, contractor and construction markets. I learned that competing for market share in this industry is especially challenging.
Industrial supply distributors have a wide range of competitors, from small businesses with detailed knowledge of their local market to large national companies with strong purchasing power (passing the best possible price on to customers). Since each of these companies sells the same hand tools, personal protective equipment (PPE), power tools and abrasives, among many other categories – differentiation of the customer experience and service is crucial to their survival.
Building a Better Mousetrap
Industrial supply distributors can distinguish themselves with certain strengths. Here are three of the key strengths:
- A wide range and depth of products in stock. This ain’t easy because there are literally millions of different industrial products, and it requires a hefty investment in inventory for a fraction of them and their distribution centers to store this inventory.
- Specialized knowledge of customer applications. It is one thing to stock a product, but it is another to understand how the clients are building their finished goods or constructing a building to make an educated product suggestion.
- Service. Customers have a lot of choices. Was the customer service rep friendly? Did they take down all of the right parts over the phone? Were all of the products requested in one box and at the right location when promised? A few answers can make the decision easy.
Internal Challenges Created from Differentiating
That’s not to say such strengths come easily. In fact, taking them on can bring sales leaders face to face with these questions:
- If an industrial distributor has millions of products, how is a rep supposed to focus on any one of them? Furthermore, maybe a distributor is getting 20-30% margin on a power drill, but are the reps pitching 60% margin repair services?
- If a rep is new to the industrial supply business and can sell anything, why not just focus on price and forget learning about the customer’s application?
- How do you keep a service organization motivated when they receive hundreds of inbound calls from clients in a hurry, they handle dozens of billing disputes and product returns and there is no direct financial incentive for them to be friendlier?
Overcoming Those Obstacles
There are a few things to consider when it comes to those internal challenges.First of all, consider competition. As an example, to get their reps focused on a key product line, Stanley Black and Decker’s Industrial Automotive Repair group hosted a regional team based competition around a new tool line. Reps accumulated points for their region when they:
- Created opportunities related to the new products
- Gave demos of this new line to to end users and distributors
They saw 271 new opportunities created and got the reps in the habit of pitching these new products.
Second, differentiating on price is not a sustainable strategy, and most business leaders will tell you it is a terrible idea. Knowing your customer’s application and the product that can best help them to get the job done right, safely and on time adds value. From my experiences, end users will come to rely on distributors that make valuable product suggestions and will pay a little extra for this advice.
With salesforce.com, for instance, tools like work.com enable industrial supply companies a way to reward reps with badges, set goals for completing training modules and gaining mastery of a product/tool and keep reps away from slashing margins to get the order.
And finally, driving engagement in a service organization not only reduces employee turnover – it can increase First Call Resolution (FCR) calls and qualified lead creation and decrease Average Handle Time (AHT). Consider tools like gamification to help. Check out our CTO’s post on the Salesforce Blog for using gamification to improve service, here.