B2B distribution is changing fast. Key parts of your sales funnel have changed drastically and will continue to change in the digital age.
There are 4 stages in most B2B sales funnels:
- Awareness (top)
- Discovery (middle)
- Evaluation (middle)
- Decision/Purchase (bottom)
The funnel stages haven’t changed, but the role of the B2B distributor in the sales funnel is being changed. It wasn’t that long ago that customers depended on their distributor for the majority of their information on new products and in-depth technical advice.
They depended on the distributor to help them in the awareness and discovery phases. They used tools like catalogs, trade shows and distributor sales reps to keep them aware and to provide new products and opportunities to discover. Then along came Mr. Google and retailers like Amazon; customers started to move those phases of the sales funnel to self-service. As the online experience has improved, many customers now even do the evaluation and make the decision to buy online without talking to a salesperson.
Most large customers in your channel still have to depend on you for processes that haven’t been digitized. Plus, with your depth and breadth of inventory, much of the project and value-added service business has to come through you or another traditional B2B distributor.
The moats around your distribution castle, including your key value-added services, defend your business. I strongly recommend you keep a focus on digging deeper and wider moats. But in the end, that’s playing defense. It still makes growing at above-market levels difficult. What Amazon and others are attacking effectively is your small- to medium-sized customer base. They are doing this by providing the ability for customers to discover and evaluate their products online.
These small and medium customers don’t do enough business for you to hire an expensive salesperson to call on them. In the past these smaller customers were often forced to contact you, because you were one of the few sources that could provide the sales support and access to the products. That is changing rapidly as more of the sales process can be completed without ever talking to a salesperson.
So how do you take back control of the top of your sales funnel?
It starts with knowledge and analytics. Focus on getting answers to a few key questions first:
- Do you know and track your key customer metrics? For example, average order size, lines per order, frequency of purchase by account.
- If you do track, does your sales team do anything with this data?
- Is your active customer base growing or declining?
- What is your share by customer level and type for your business?
- Are you analyzing and tracking how customers grow or decline?
- Do you have analytics programs that show your growth potential by account?
If you answered with a lot of "yes" responses, I’ll wager you have a B2B Distribution business that is growing faster than your competitors, and you can grow top line sales at acceptable margin rates.
If you answered with a lot of "no" responses, I’ll wager you are growing at or below the market, and you probably have margin pressures. You may be effectively fighting that by taking cost out and managing your SG&A expertly, but profitable growth above market levels without acquisitions is probably difficult.
There's a book full of ways to take back control of the top of your sales funnel, but it starts with analytics and tracking key customer metrics. There are a lot of strong B2B distributors who invest in analytics and track their key customer metrics. One of these leaders is featured on an MDM podcast. Just go to our Disrupting Distribution Podcast and listen to how a laser focus on key customer metrics and analytics has helped them grow.
Once you understand the data, you will find ways to communicate with all types of customers to win. Then you will be able to design programs that help you get back in the discover and evaluate phase for more customers.
As always, we value your feedback. Feel free to comment below or contact me at john@mdm.com
