143. Compete On Speed Within Profitable Customer Niches

We generally want needs taken care of sooner. But, not always. Distributors’ response times for customer needs can vary with each target customer niche.   

Steps for Response-Time Insights:

  1. Do net-profitability rankings by: “customer”, “customer niches”, and “modes of distribution” (warehouse, counter/wholetail, indirect and direct)
  2. Find your most profitable spots…
  3. …Defend and extend them by visiting the 5+ best, most progressive customers within these profit-spots to find next-level service (metrics) needs.
  4. How? Ask questions about their buying process and how you might co-create easier, faster, more productive process improvements.   

Distributor Profit-Spot Cases:

NICHE #1:

A sub-set of industrial buyers who ordered drop-shipped goods for internal installation.   

New Needs: They wanted half-day response-times for “price and expected delivery date” to get paper off their desks, and a website summary-report of all outstanding orders.  But, for the summary report to work, a buyer must award all special orders to the innovating distributor.

Distributor Changes: Rethink staffing for a new hotline to always meet the half-day metric. If suppliers had no exact shipping date, they were asked for earliest, likeliest, and latest dates. Buyers would then typically put in – “latest date” – for scheduling installation work.

Results: Niche sales tripled, profits up 10-X.

NICHE #2:

A subset of contractors that had full-time estimators who quoted jobs requiring special-order goods.

Need: Get bids to prospective customers 50-80% faster than competitors.

Assumption: Some impatient customers will award the job without waiting for other bids.

Changes: Hotwired the supply chain process from estimators to suppliers and back to reduce elapsed time by 80%.

Results: Subset sales up 400%, profits even more.

NICHE #3:

A subset of contractors desired 6pm cut-off for placing orders for next-day delivery. (This channel typically used UPS for shipping. Order cut-off times (typically noon to 2pm) preceded UPS’ pick-up times.)  Distributor changed job shifts, etc. to make it happen.

Results: Initially, sales doubled, profits up 5X in first full year. Then, national growth ensued using the 6PM-service-capability insight edge.  

WHO #4: Most active counter-sales customers.

Need: Call in an order to pick up in as soon as 15 minutes. Then, get an elapsed pickup time of 5 minutes or less.

Changes: Re-staff for peak times of the day. Install an express lane for those who ordered in advance.

Results: Target customer business doubled, pricing/terms firmed, profits soared.  

KEY QUESTION: Do you have the net-profit analytics to identify best profit-spots for which to reinvent service value?

Come and meet me at MDM’s Pricing and Profitability Summit, in Denver, on April 15-17. I’ll make it easier for you: use coupon WayPoint2020 to get 100$ upon registration. See you there. https://pnp.mdm.com/

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