Markovsky On Adding Value:
History has a way of repeating itself, for better or worse!
Many people believe that distribution channel preferences are cyclical and that we can maximize our performance by anticipating the next phase of the cycle. In the post-World War II industrialized world, demand was fueled by tremendous population and income growth. Successful business operations often meant little more than stocking the shelves and opening the doors. The wider your offering, the more you were likely to sell. In a way, this was the re-birth of the old hardware or general store. Don't get hung up on the word "store" though. We could just as easily be talking about a business-to-business route delivery operation. We had cycled back to the 1800s mentality of general stores, because of wide demand for almost any product. Manufacturers embraced it, because they had multiple, no cost or low cost distribution points manned by entrepreneurs.
Technological advancements and the birth of hardcore customer service subsequently forced most businesses to specialize, leading to plumbing wholesalers, for example. So, that was the next movement in the cycle and it was successful for a number of years.
The age of communication and globalization has more recently driven the next cyclical movement, back to more of an integrated supplier environment. But, this time there's an interesting little twist. Instant communication has shrunken the world and given buyers access to a vast community of sellers. This has led to a buy-direct mentality, making most products commodities. Hence, the integrated (large-scale, wide offering) distributor. However, this time around, customers are still seeking specialized assistance. And, while they may not necessarily be willing to pay more for it, they will sway their buying decisions toward suppliers that offer it. Success today often means an integrated offering, with access to all of the conveniences and assistance of a specialist.
Think about that in terms of your business. If you fear that you "can't get there from here!" - you're not alone. But, take heart! There are some things that you can do to move in the right direction, right now! More on that next month.
Best PracticesHere are this month's Best Practices. Readers are encouraged to send in their own proven practices, so we can share them with others.
5. Rationalize your offering.
It's often quite amazing how product and service offerings can "creep" over time. A well-intended variation from your standard offering, that was the correct action today, can become the new standard tomorrow. And that's perfectly fine, as long as you recognize it as that, which is often not the case. It also often happens that a new product is added to your arsenal without removal of the old one. That can lead to proliferation and a situation where you're actually competing with yourself!
Rationalize your offering. Make sure that everything you offer makes the best financial sense for you and represents the best objective selection for your customer. Apply the "less is better" mentality, but make sure you maintain the integrated selection your customers demand.
Take a look at your competition, acting as a devil's advocate. Make sure the reasons that you would buy from your company are real and saleable. Have your staff sell you your own products in a role-play situation. Resist, with all of the best reasons you can come up with. Is your offering a reason to buy from you? Is it easily understood? Does it overlap itself? Would you really buy from your company, if you were an outsider? Why?
6. Question tradition!
Ask questions of yourself and your staff constantly. Questions are the best way of attaining and keeping a clear picture of how your business is being run. And, the boss asking questions keeps everyone on their toes!
Look out for questions that are answered by anything containing the phrase "we've always done it that way." Tradition can often be a crutch that excuses employees from taking a more difficult way or finding a better way of operating. Tradition never reflects the changes required by a changing market environment.