Progressive Distributor

A bold move

How to significantly grow your market share

by Neil Gillespie

If you want something you’ve never had, you’ve got to do something you’ve never done. I like those words. They express the opposite of common insanity, which expects different results from the same behavior. Or maybe they’re related to its close cousin, incremental behavior. Incremental behavior is the kind that says, “Just go out there and sell harder!” (Translation: Let’s do more of what doesn’t work so well!)

Let’s get serious. If you want to grow (take) market share in an industry where the products are mostly in the mature phase of the product life cycle, you are in a game where the differentiators are:

The quality and market acceptance of your lines
The quality of your people
The quality and breadth of your services.

What I really mean by quality is relative to competition. A sports team can have clever plays (strategy), but if it doesn’t have players capable of executing the plays better than the competition, it can’t implement the strategy, no matter how clever. So, if you want to change your performance on the field, make changes in the lineup.

Many distributors complain that they can’t get the product lines they need because they don’t have enough of the right people. Or, they can’t improve their services because they can’t get the right people. Or, they can’t get the right people because they don’t have the right lines. It’s always something. So they end up chasing their tails round and round.

How do you break out of this tail-chasing exercise? You need to make a bold move.

A bold move is a significant improvement in one of the three differentiators. It gives you the power to bring improvements to the others. Like a V-formation, one of them has to take the point for the others to follow.

Can’t get the right lines? What if you added a very influential salesperson or two that the manufacturer respected? What if you opened two branches that covered the market better, offering more convenience to customers, and greater market access to vendors? What if you made both of these moves? Think you’d get noticed? It’s all about respect, and only bold moves get enough of it to convince the key potential relationships (suppliers, employees) to come aboard with your plan.

Plan? Why do you need a plan? You can’t convince a potential key relationship to come aboard without a good plan that comes across convincingly. The plan starts with candor about where you stand in the market, which leads to a clear vision of where you want to go and how you will get there. In order to attract the right people or lines, or to motivate your people to develop better service performance, you need to have a vision and a compelling reason to change. That vision starts with where you are now relative to competition.

Do you know where you stand in your league?
It’s a great strategic planning advantage to play in a sports league because the standings are published every day in the paper and on ESPN and CNN. You know exactly what you have to do to catch the leader. You can even read about their leading scorers and what they get paid.

You don’t have that luxury in your business. You have to build an analysis of market share and competitive resources yourself.

One simple way to analyze your place in the market is to determine your “just showing up” (JSU) market share. JSU share is determined by computing your share of locations in the territory. If you have one location out of 20 competitors, you should get 5 percent market share for “just showing up” at customers and potential customers, all other things being equal. If your share is better, you probably have better or more plentiful resources devoted to the market. Of course, to take more share in the market, you can show up more at each prospect, be more focused, be more convincing or have more to offer.

So, a more robust, higher-caliber sales force selling better lines and better services can make things “more than equal.”

Let’s say you think that describes you. However, upon examining the market share numbers, you may be shocked at how low your share is, even if you’re leading.

What should you do? You need a bold move to get to where you really want to be.

In order to get your organization to make the bold move, you need to prove to yourself and your organization that you aren’t as big as you think you are in the market, and that things aren’t as good as they could be. Whether you’re back in the pack or far in front, you need to know where you are, why you’re there and how to get, keep or increase the lead. That’s where customer research comes in. That requires the guts to listen to how good or bad you really are.

Do you know what customers think of you? What they’ll need in 2001?
The role of customer research is to determine the quality of your lines and services relative to competition right now, and uncover what customers will expect in the future.

Just as the competitive analysis shows where you stand, customer research can show why you stand there and what you need to do to improve your standing.

I have found two research techniques to be particularly useful for distributors.

1) Customer perception surveys
Many distributors perform occasional customer satisfaction research. It measures customer satisfaction with a range of service attributes. These studies typically show:

• a score for the importance of the service attribute to the customers; and

• a score for how satisfied customers are with the company’s performance.

In contrast, a customer perception survey accomplishes these two things and more. It measures customer satisfaction (I call it perception, because that’s all it is) with you vs. your competitors.

Distributors are usually surprised at how the number of competitor mentions correlates with their competitive market share ranking. The bottom line is that you see exactly which attributes are the most important to customers and how you stack up against competition.

This technique is enhanced if you organize a panel of non-competing distributors in the same lines of trade where you can benchmark your strengths and weaknesses against theirs to discuss best practices for improvement. You might also discover areas of common need for joint best practice development.

2) Customer panels and councils
Customer panels are live sessions where a facilitator gets customers to talk about their work processes, what they really need from suppliers and why. Through direct experience with the customer, employees at these sessions frequently get brainstorms for solutions during the meetings.

A good facilitator will also make sure to spend some time on what customers think their companies will expect from them in the future, and hence what they will expect from suppliers in the future. This allows the distributor to get ahead or stay ahead of the competition by changing the game.

The key to a good customer panel or council is a good panel of participants, and a talented facilitator who can draw people out and probe what customers say.

So now you know. But now what?
The customer perception research and customer panels tell you what you need to improve, and also what you need to emphasize in your service platform. There are three important points here:

• Relate the quality attributes that need improvement to work processes in your company and fix them to yield the desired performance.

• You might have to hire or appoint a quality process manager who can work with process teams.

• You might have to install new technologies and logistical resources.

These items are related to improving your customer service operations. However, in terms of relationships — the stuff of which bold moves are made — you may find that your salespeople are viewed as mediocre, or your lines are not as good as a competitor’s potential show-stoppers.

The springboard for bold moves
At this point, you have enough to write a basic strategic plan, which looks something like this:

1) Who you serve.

2) Where you stand in the market.

3) Where you want to be (sales and share) by year, by segment for each of the next three years minimum.

4) What product lineup you offer (specific lines and line changes, too). Include rationale for changes.

5) What you will do for customers (specific performance commitments on service attributes).

6) Key technologies and logistical resources required to drive new performance levels.

7) Organizational structure, personnel additions and deletions.

8) Communications plan (internal and external).

9) Sales plan for key accounts.

10) The budget for all of this.

This is a vision of where you want to go and how. The strategy of what you will do is in steps 1-5. After that, it’s all about how.

Spend some time with your plan. It will take work. Involve your whole management team.

Have patience, but do not tolerate skipping key steps, especially competitive and customer research. It is essential that you do these two well.

A plan is a bold move only when you get a key potential player (employee or supplier) to believe in it enough to come aboard. You only get the really good ones when you have a good plan. When you finish your plan, you’ll have the confidence to make the bold move.

So go ahead. Do something you’ve never done before. Make a plan and make a bold move.

Neil Gillespie is principal of Infinity Strategic Consulting, a Pittsburgh-based strategy consulting firm. Reach Neil at (412) 490-6950 or by e-mail at ngillespie@infinitygrp.com.