Customer-Centric Strategies: How to Prepare Internal and External Partners for Your New Approach to Growth
By J Schneider, VP, Strategy
The vast majority of manufacturing companies sell their products through distributors. So it makes sense that manufacturers tend to structure their growth strategies around B2B objectives, with distributors (rather than end customers) receiving the lion’s share of attention. Going beyond the typical manufacturing marketing tactics, it is critical to look at how your firm defines its activities in creating stronger relationships with their end-users and capturing new market share. In today’s highly competitive environment it’s crucial to nurture your distributor relationships. These days, however, more and more manufacturing companies are recognizing the benefits of pursuing a customer-centric strategy to their business model including their external marketing, product development, and sales engagement.
After all, when you work within a distribution sales model, the distributor always has the final conversation with your buyers — and the distributor’s loyalty to your company will never be absolute. Because you aren’t there to guide that final purchase conversation, your goal is for your customers to come to the table already primed to buy your product which ideally, they assisted in the developing by providing direct feedback to your engineering teams. By funneling more energy toward your end customers, you stand to powerfully drive up brand loyalty and, by extension, sales.
A shift toward customer-centricity seems like a no-brainer. Where the vast majority of manufacturers struggle is understanding what a customer-centric strategy means. To simplify the primary objective of moving to a customer-centric based strategy, manufactures should develop products, content, how-to videos, packaging and systems, etc. which are designed specifically for the end-user of the products and ultimately create a direct relationship with them independent of where they ultimately decide to purchase. As a result, you’ll need to navigate this transition carefully to avoid alienating your distributor network. And you’ll also need to make sure your organization is structurally ready to support an increase in B2C engagement.
Avoiding Channel Conflict in the Transition to Customer-Centric Strategy
Pursuing the end customer without offending your distributors is a delicate balance that requires clear communication. Your distributors may view your end customers as their customers, and they may initially have a negative reaction to your decision to directly engage with them. Because of that, you may be tempted to simply switch gears without addressing this shift with your distributors.
Of course, that would be a mistake.
Remember: From product-focused incentives to rebates, your distributors are accustomed to receiving a certain level of attention and support from your firm. And unless your marketing budget expands considerably, a shift toward a customer-centric strategy will likely mean reducing your available marketing spend on distributors in the form of rebates or product incentives. Your distributors will almost certainly eventually notice a change in your behavior whether you tell them about it or not so making sure you are well prepared with a solid plan will go a long way in ensuring your distribution network continues to focus on your products vs. your competitors.
The last thing you want is for your distributors to feel slighted — or worse, suspect that you’re trying to cut them out altogether.
You need to be up-front with your distributors about your new customer-centric strategy and attempt to bring them in alignment with it. This will require some finessing on your part. Let your distributors know that you will be shifting toward a more customer-centric approach, but put it in a context which helps them see it as an opportunity rather than a loss. Reassure your distributors that you will continue to invest in them. Make good on that promise as you have in the past. Explain that customer-centricity is an opportunity to reach a new and expanded customer base with high demand products— many of whom will ultimately make their purchases from your distributors. Help them understand that your ultimate goal is to expand your mutual market share together.
Have empathy for your distributors during these conversations. Keep in mind that your distributors want to be seen as experts. After all, their ability to advise customers and answer specific questions about the products they carry is a big part of their value proposition. The more successful you are in driving up brand loyalty, the less your dedicated customer base will view distributors as a necessity in making purchase decisions. And once a consumer has settled on a purchase decision, he or she will start hunting for the best overall value, whether that’s with a distributor or an online retailer. You should be prepared to speak openly with your distributors about the possibility of channel conflict and let them know that you are committed to helping them succeed in capturing and retaining business and that your strategy is designed to create a new set of loyal customers who will purchase through the existing distribution channel.
Having these conversations will ultimately strengthen your distributor network. Those distributors that understand the benefits of your strategy and embrace it are more likely to be good long-term partners, anyway.
External and Internal Planning for a Customer-Centric Strategy
Once you’ve established your strategic goals for customer-centric marketing, you’ll need to formulate external and internal plans to support those goals.
You’ve probably already started working on your external plan, which looks at your goals for growth through the lens of the customer. What do your customers value? How does your solution benefit the work they do? What are they looking to receive by engaging with your company? What do they want to know or learn from you directly? The answers to these questions, in addition to your strategic objectives, will result in a traditional marketing plan detailing the initiatives and activities you plan to pursue, from product development, social media and advertising to direct engagement events and customer service.
Putting together an external plan is obvious, but you may not have considered an internal plan. In this context, an internal plan deals with how your organization will structurally support the shift toward increased customer-facing interactions. As B2B companies, many manufacturers are designed and structured to engage with distributors, not end customers.
The first thing you’ll need to do is consider your firm’s “organizational readiness” with respect to executing your new strategic growth goals. Do the functional groups in your organization understand what a shift to more customer-centricity means? Are they able to view the internal changes to their areas of responsibility? For example, your existing call center may be staffed and trained to take calls from distributors only. Distributors tend to ask questions about product availability, stocking, accounts receivable and the like. Customers, meanwhile, have a completely different set of concerns and questions about things like product features, use cases and how your product differs from that of the competition. From an internal standpoint, then, a shift toward customer-centricity may mean expanding your call center hours, hiring a larger staff and making adjustments in how these staff are trained. In addition, is your product management, sales or even management properly trained and in a position to support this new approach.
Making the shift toward a customer-centric strategy will demand a lot of your organization, both in terms of your distributor relationships and how you operate. However, the new opportunities that come with this model are worth reaching for. Do it right, and you stand to greatly enhance your firm’s future growth and profit.