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