The world of distribution has proud roots. But making historical assumptions on the journey of transforming sales models can result in costly pitfalls, especially in a post-pandemic world. The market is changing too quickly.
Now more than ever is the time for leaders to evaluate selling costs. Distributors must ask the following questions:
Remember, academic research runs about five to 10 years behind what you are currently doing. The pandemic has incited five years of digital transformation in a matter of months, only widening the gap between the leaders who have been innovating and those who haven’t.
Ultimately, earning a higher financial return than your competitors comes down to two things: price advantage or cost advantage or both. While the distribution market rarely has control of setting prices, the landscape is wide open for building a strong competitive advantage by reducing selling costs without sacrificing service. Here are four strategic levers to build a stronger foundation to withstand market shifts:
Customers are never going to confess their problems to a website, just as field sales reps should not spend valuable hours tracking orders and writing quotes. That’s why it’s important for distributors to break down existing sales jobs into their component pieces and determine if the right people are doing the right activities. Role specialization ensures that the most specialized professionals only work on high-value tasks.
Digitizing Artisan Processes
Gone are the days of transcribing customer orders from a fax or a phone call. With so many automated tools available, sales labor costs can be greatly reduced by investing in inexpensive digital solutions. Digital sales tools are also more responsive, consistent and reliable.
Separating Market-Making from Market-Serving
Market-serving activities protect revenue streams with customers by managing a frictionless customer service experience. These involve a predictable flow of less-specialized tasks like managing returns or providing information. This allows distributors to pull these activities out and group them together with less costly resources like an outbound telemarketing group, digital customer service tools, or even creating a hybrid inside/outside team of salespeople.
Market-making activities require specialization to effectively displace competitors or increase distributors’ share of customers’ wallets. Keeping market-making activities separate frees up more expensive workers like field sales reps to initiate, build and expand relationships with customers.
A Clear Value Proposition
In the past, salespeople have been the value proposition, relying on the “sell myself first” angle. But analyzing the gap between what distributors think they’re selling and what customers are actually buying reveals opportunities to pull customers into a stronger relationship with their distributor, not just their salesperson.