Steps to take to protect business during the coronavirus pandemic
by Jonathan Bein, Ph.D., Real Results Marketing
Distributors are facing unprecedented uncertainty due to the impacts of the global COVID-19 outbreak.
While many safety and janitorial supplies wholesalers are seeing some of their biggest months ever, most distributors aren’t sure what’s coming in the next couple days, much less the next few months.
Despite this, marketers in distribution companies can and should take steps now to protect their core business and strengthen their armor as we make our way through this global health crisis and probable economic downturn.
Microsegment your customer base for sweet spots
One way to sharpen your value proposition is to drill down and look for sweet spots among your current segments. Rather than saying “We sell to healthcare providers,” you might get more specific and say “Our focus is long-term care facilities with X amount of beds.” Granted, sweet spots change. What was hot yesterday may not be hot today. Drill down to smaller segments to see where there may be hidden opportunity.
Senior executives often miss the mark on this is because they have a sampling bias: typically, they only interact with the biggest and best accounts. They tend to see the tip of the iceberg of the customer base, or only the top 10% of the customers. There’s so much more going on, with lots of potential in mid-size accounts. Leverage a proactive inside sales force to go after business in these accounts, which may have been too small for field sales to focus on.
Identify and protect your best customers
To focus your actions and priorities, start by taking immediate action to protect your most profitable customers. Your best customers aren’t necessarily those with the best gross margins or the highest revenue. Look at the customers who are generating the most operating profit.
If you cannot directly measure cost to serve, look at a combination of gross margin percentage and gross profit dollars per order. Customers with high gross profit dollars per order are typically more profitable.
Use downtime to improve your customer database
If your salespeople have a bit of downtime right now, ask them to take information out of their Rolodexes and Outlook emails and put it into the main customer database where it can be organized for charting a path forward. (And if you don’t have a CRM, start with one or a handful of seats on Salesforce, Dynamics 365 or another platform.) This is something of a “rainy day” task — and one that should be practiced periodically anyway. A slowdown in sales cadence is a great time to get caught up so that you’re well-positioned when the market picks back up.
Once you have the initial customer database, expand it by getting additional contacts and detailed data for existing accounts from a source like Dun & Bradstreet or ZoomInfo. Take it a step further by looking at the sweet spots that you identified from microsegmenting your customer base and use those to identify new high-value, target accounts.
The combination of your initial database, getting more contacts from existing accounts, and getting contacts from prospects can typically double or triple the size of your database.
Sharpen your value focus and value proposition
A good market tends to mask a company’s lack of focus when it comes to providing value. When the going gets tough, you need to sharpen your value by eliminating gaps in your customer service. And you must go to even greater lengths to understand and communicate value to your customers. And know that what is important today — during a crisis or downturn — may be very different than what was important a few weeks ago.
Understand the importance of value-added services, and make sure that the added value is communicated clearly to customers – even free or “bundled” services. One example would be to show a charge for a service on your invoice and below it show the credit for that same dollar amount. It’s a simple way of emphasizing the value you’re offering in black and white.
Avoid giving into price pressure
One common response in an uncertain economic climate is to immediately succumb to price pressure. The trouble is, it’s hard to bring those prices back up later when things improve. You might find yourself stuck in a low-price rut.
Instead, companies can maintain their prices but add in greater value and more service for the same price. Think of it as throwing in a baker’s dozen for the price of a dozen. The baker’s dozen effect is: “I’m charging you for a dozen, but I’m throwing in one extra for free.” Optically it appears that the price is where it was, but it makes a big difference for the customer.
See if you have wiggle room with value rather than immediately adjusting price.
Create outbound marketing programs
A disruption is also a good time to make a case for outbound marketing automation. Of course, it’s never the right time to send out spammy emails with flimsy sales pitches. Approach the opportunity with clarity and humility, even if it’s simply to acknowledge what’s going on, and share some information to help customers navigate this crisis.
Whether you use an email marketing tool such Constant Contact or MailChimp or a marketing automation system such as Act-On or Marketo, you can refine your communications by looking at response rates, such as opens, clicks and purchases (if appropriate). Incorporate A/B testing on offers, and include and measure calls to action. Our research has found that your customers want to hear from you, and as long as you’re sending them something of value, they don’t mind more email.
“Social distancing” means less face to face contact, but not less communication. We’re all human and a little bit of outreach can go a long way.
Jonathan Bein, Ph.D. has worked with many distributors to make their marketing a profit center. He has developed and applied analytic approaches for customer segmentation, customer lifecycle management, positioning and messaging, pricing, and channel strategy for distributors.
Visit www.realresultsmarketing.com.
INDUSTRIAL SUPPLY MAGAZINE
The March/April issue of Industrial Supply magazine features an in-depth cover story about Joyce Lansdale and Vallen. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and David Kahle, as well as interviews with numerous product and distribution industry experts.
