Missed Opportunities in Industrial Distribution Are Hurting Manufacturing Revenue Growth

Ed Marsh | Dec 6, 2017

Buyers are like water

They're flowing relentlessly, eroding traditional industrial sales terrain, and looking for the path of least resistance.

And that's a hard reality in very traditional industrial sales channel circles. Accustomed to controlling access to products, support and even information, many industrial channel partners are experiencing angst as industry changes.

Industrial Distribution's 70th Annual Survey of Distributor Operations (available here in part 1, part 2 & part 3) surveyed distributors of various sizes in a variety of industries regarding topics including demographics, challenges, financials, best practices, technology, employment and value of distributor.

There are some interesting results:

  • biggest concerns were price competition, distributor competition, manufacturer selling direct (competition), and finding qualified people
  • 91% buy online, but only 63% consider it a priority for themselves to sell online
  • barely half (53%) use CRM while a small minority (20%) use any sales force automation (learn how, when & why to buy CRM & marketing automation here)
  • while 81% say they've redesigned websites within the last "several years", fully 19% can't recall when they last did
  • barely half (51%) even update their site monthly
  • the three most important tactics for business growth came in at new product lines (52.5%), marketing (falling to 52%) and improve/redesign website (41%)
  • they select manufacturer suppliers based on quality, delivery and price - yet insist that their customers select them based on relationships, product availability and delivery time
  • 63% plan to add sales people (none plan to add marketing)

So let's digest this....

They sell differently than they buy

They almost all buy online but many fewer sell online.

They cite price competition as their biggest concern, and buy on price, but claim it's "becoming less of a priority for their customers."

Their growth investment pitter patter doesn't match the chitter chatter

Their business growth strategies including increasing marketing and improving websites, but they plan for no staffing to support that.

Operate like a mediocre business....get mediocre people

They want to add sales people, and have a hard time hiring and retaining top talent, yet barely invest in tools to help sales people be optimally efficient.

UPS Industrial Buying Dynamics

industrial buyer expectationsUPS' research provides some more texture - surveying buyers for their perspective (here and here.) It finds:

  • in 2 years percentage of buyers who have purchased direct from manufacturers leapt 27% (from 64 to 81%)
  • mobile applications and ease of e-platform experience are driving millennial buyers
  • OEM & MRO requirements have most urgent delivery expectations
  • 75% of buyers emphasize ecommerce yet only 40% of sellers indicate it's a priority
  • 80% of buyers will shift to a vendor with a better website UX
  • more buyers expect consumer type experiences in their B2B transactions
  • post sales service is the highest priority consideration among millennials

Opportunity is wide open

Buyers aren't making decisions based on where they think they fit against a traditional landscape of industrial sales channel. Instead they're going where they get the best insights and experience.

But sellers still think it's their line-cards and donut/coffee runs....the "relationships."

That means that the opportunity is wide open for manufacturer, distributor or rep to seize. Great sales people armed with great technology; effective, easy-to-use and informative websites; and insights before and after the sale are key. Any company can deliver that based on culture, strategy, management and investment. 

So channel can keep fretting about manufacturer direct competition or encroaching, competitive distributors. Instead they should be solving for buyer issues - the one's buyers want fixed, not the ones the distributors traditionally pride themselves on solving.

Want to learn more?

Whether you're a manufacturer trying to figure out how to grow consistently or an industrial distributor hoping to stop the bleeding and build a resilient model, you've got to tackle this head-on.

role of sales channel in manufacturing revenue growthI can help.

You'll find video & transcript discussions of relevant topics on my video blog.

The disconnect between how companies sell and how buyers want to buy.

The wide open sales channel opportunity.

Want to think bigger about your strategy in general? Download this guide which provides a roadmap of questions for managers and directors.

strategy guide for manufacturers