Progressive Distributor - Do you hear what I hear?

Do you hear what I hear?

by Richard Vurva

If nearly three-quarters of your customers told you how to garner more of their business, would you listen? Then, listen up.

The new Trends in Distribution study conducted by the Thomas A. Read Center for Distribution Research and Education at Texas A&M University shows that 74 percent of end-user customers say distributors that provide documented cost savings can earn a greater share of their business.

Think about it. When 74 percent of your customers tell you the secret to greater sales success, only a fool would refuse to listen.

The study, sponsored by the Industrial Supply Manufacturers Association and the Industrial Distribution Association, shows that customers of all sizes are interested in cost-savings documentation. It is especially important, however, for large customers, whose annual maintenance, repair and operations (MRO) purchases are more than $1 million. Eighty-one percent of large end-users say a distributor’s ability to provide documented cost savings would enable the distributor to earn a larger share of their business.

“This is a wake-up call to the industry,” says Gary Buffington, I.D.A. executive vice president. “If customers say they’re willing to use cost-savings documentation as a criterion for deciding who they will do business with, as distributors we’d better be ready to provide what the end-user customer needs.”

The study also discovered that product knowledge and lower cost are the primary factors driving end-user buying behavior. Since lower cost is identified as being more relevant than lower price, there is an opportunity for distributors to demonstrate their value-add as a means to lower overall costs for the end-user, the report shows.

Brian Reynolds, a co-principal investigator of the study, says distributors should jump on the opportunity to develop a plan to start documenting cost savings.

“If distributors can demonstrate that they can provide the end-user with the lowest total cost of ownership through the distributor’s value-add capability, they should be able to capture a greater share of the available business,” he says. “Consider the opportunities for significant sales growth if a distributor was among the first to offer its customer a documented process to reduce their costs.”

The customer has spoken. Are you listening?