How 2 distributors created a digital tools strategy

Digital tools offer distributors the potential to improve productivity and sales, offer a better value proposition for customers, and strengthen relationships with suppliers, but success isn’t possible without a smart strategy and some trial and error.

That was the conclusion of Mark Dancer and two industry experts on Wednesday at the NAW 2015 Executive Summit. Those experts -- Ellen Holladay of Motion Industries and Brian Nichol of Performance Food Group -- offered their experiences in planning, testing, deploying and refining digital tools to drive e-commerce sales at their respective companies.

Digital tools, in this context, include the Web/e-commerce, social media, CRM, marketing automation and more. Dancer surveyed wholesaler-distributors on a number of questions, including:

  • Overall experience with specific digital tools, in terms of “experienced user,” “implementer or shopper,” and “person with understanding of features and benefits.”
  • Leading priorities for improving business results, in terms of distributors and manufacturers.
  • The leading benefits of digital tools for wholesaler-distributors.
  • The barriers to such use.

Awareness of such tools didn’t seem to be a problem within the industry, nor did some sort of anti-technology attitude. Rather, Dancer focused on distributors who know they need to be deploying digital tools but might not sure how to deploy, which tools to prioritize, or how to devise an effective strategy.

Benefits and barriers

Customer experience was a highly valued benefit of digital tools among wholesaler-distributors, alongside process -- the “how” of the matter -- and platform. But these benefits are not always enough to overcome the most common barriers to digital tools -- or most change: culture, funding, organizational knowledge and skills, and sufficient time and knowledge.

Dancer showed how distributors already have some experience with digital tools and are aware of many of the benefits and challenges. So, then, how do companies devise strategies that take this knowledge into account?

How do PFG and Motion Industries use digital tools effectively?

Two distinct perspectives were found in Holladay and Nichol. Holladay is at Motion Industries, which is owned by Genuine Parts Co. but is a $4.5 billion business unto itself, with 5.6 million SKUs and $600 million in annual digital sales. Nichol is at Performance Food Group, a large food distributors that must take care of more than 150,000 products, an equal number of customer sites, and $5.5 million of sales every day through its digital platform.

Each executive had specific advice for their company and industry, but common to both strategies was the idea of starting small, being focused, training your people correctly so that they can serve the customer, and the importance of testing and feedback.

Knowing what the customer wants

At PFG, the digital tools strategy is about integrating value, services and capabilities. It starts with finding customer needs and desired value-added traits, and then protoyping, Nichol said. Such tests show how much your company doesn’t know, he said, as PFG learned when initial prototypes didn’t work. In response, PFG added useability testing. Knowing the customer isn't just a nice thing to do -- “stickiness” is key in this competitive industry, Nichol said.

Motion Industries, meanwhile, is in a highly technical industry, with millions of SKUs, and is grappling with the talent shortage affecting much of the supply chain. Motion’s employees must be knowledegable, trained and prepared to provide the proper, safe service for suppliers, who themselves can be affected by significant turnover. Motion’s industry remains one about relationships, Holladay said, and today’s disrupted, increasingly competitive environment means being better than any players, not just traditional rivals. The company has found success with direct, business-to-consumer sales, but B2B is still outsells by a 10-to-1 margin.

Try something; smaller and simpler is probably better

Of vital importance, Holladay said, is being willing to try something, even if the ROI is not obvious. Starting small and disciplined isn’t bad, either. Nichol referred to the need for a “laser focus,” particularly on something like a mobile effort, which can quickly become expensive.

Bells and whistles are a common distraction. Nichol discussed how his company added a “where’s my truck?” option but chose not to make it a push notification. Customers can still get this info, but they will do so on their prerogative. Limitations imposed by customers also matter; Ellen detailed how some mobile and app-based options sound good, but employees on the plant floor are often limited in technology access and use.

Make it easy

Both companies want to know where their customers are coming from but are cognizant that a pain point for customers in all sorts of fields is ease of use.

PFG worried about a cumbersome registration experience that would require significant cost and time to manage -- something as simple as password retrieval and management, for example. To simplify, the company allows users to offer their customer number (found on invoices) and the amount of that most recent invoice. That registers/logs them in and allows for auto-management.

Motion uses search engine optimization on a select swatch of products to try and drive business. This results in many new customers. Not all of them want to register, so Motion provides easy, no registration buying, with additional features for those who do sign up.

And both companies dealt with the common problem of which platforms and technologies to adopt. Both use HTML5 to create an easier presentation across platforms while making individual decisions on mobile versus apps.

Overall, while Motion and PFG deal with different products and approach customers slightly differently, their strategy for using digital tools starts with the following:

  • What are the priorities of the business?
  • What are the marketplace factors?
  • What do customers and suppliers need and how can distributors meet them where they are?

James daSilva is a senior editor at SmartBrief and manages SmartBlog on Leadership. He edits SmartBrief’s newsletters on leadership and entrepreneurship, among others. Before joining SmartBrief, he was copy desk chief at a daily newspaper in New York. You can find him on Twitter discussing leadership and management issues @SBLeaders

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