Just Because Your Company is Small Doesn’t Mean Your Customers Expect Less

Last week I was explaining to a potential member of our Industrial Channel Research program how we will compare their quantitative ratings to the ratings of the other industrial manufacturers in the program.   About halfway through the conversation, the head of marketing for the potential member company said, “We’re a small company… you can’t compare us to much larger companies.  They have much larger resources to bring to the table.  It’s apples and oranges.”

I had to stop for a minute to ask myself if the comparison was indeed valid.

Whenever I think about the concept of big vs. small companies, I often think of large retailers like Best Buy compared to independent stores.  Let’s say I’m a consumer who needs to buy a new microwave oven because mine stopped working.  Through a little research, I find that Best Buy has one that meets my requirements and the store is open until 9PM.  The independent appliance store down the street has a microwave oven that’s virtually identical to the one at Best Buy, but is 20% more expensive and the store closes at 6 p.m…. meaning I have to race out of work to buy it.

Which one do I buy?

I purchase it from Best Buy… same product, but cheaper and easier.  As a consumer what I DON’T do is think “It’s not fair to make a comparison of these two stores because one has tremendous buying power and scale to stay open while the other one doesn’t.”  Of course I make a comparison… and the answer is obvious.

This is largely why Best Buy grew very rapidly over the last couple decades and independent appliance stores are now virtually obsolete.  Now if the smaller store had something unique and different I couldn’t get at Best Buy, that’s another story; but that’s not what we’re talking about.

The industrial products space is no different.  If you’re a small company that sells something very similar to what bigger companies sell, expect the marketplace to make direct comparisons.  Can’t afford the same field coverage, supply chain capabilities or on-line technical capabilities as the larger players?  Expect customers to hold that against you when they make buying decisions.  Do not expect them to say “Well, they’re smaller, so we’ll let that slide.”

This doesn’t mean smaller companies can’t compete.  Far from it.  It just means that the smaller company’s critical differentiator (e.g., price, specialized product, superior service) has to outweigh the negatives associated with the company’s lack of scale for enough customers to keep the company viable.

But make no mistake about it… customers won’t give you a pass because you’re small.  They’re making an apples-to-apples comparison.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Building Your Brand, Customer feedback, Industrial Manufacturers

A Poor Customer Experience can be an Opportunity to Make a Good Impression

Last year I decided to get more serious about exercise.  As any wise middle-aged man does, I chose to focus on an aerobic activity where I’d move very fast in traffic with limited ability to stop:  In-line skating.

I got onto Amazon and bought a new pair of relatively expensive Rollerblade brand skates.  They were a little stiff at first, but I figured I needed to break them in.  After a few weeks they still hurt so I emailed the company , I got an immediate response that one of their product managers would contact me personally.  I received a call from a young man at Rollerblade who told me my issues were unacceptable, asked me a bit about my skating habits and then sent me a more expensive pair of skates he thought would better meet my needs (which they did) and didn’t ask for the old ones back.

Was that smart on his part?  They clearly lost money on my purchase…  but they now have a loyalist for life.  I’ve told the story to many people, bought their skates for my kids and posted the story on Facebook.  I’m about as big an advocate as they come.

Compare that to an experience I had with a car I purchased 18 months ago.  It wasn’t a luxury brand, but it was a nice four-door sedan in the $30-40k range.  With 8,000 miles on the car the transmission failed.  I took it to the dealer where it was fixed under warranty.  I wrote the manufacturer a note to tell them how surprised I was that this car would have such a problem in such a short period of time.  The response I received back was essentially “The dealer fixed it; what else do you want us to do?”  It almost felt like they were saying this is a common experience with their products and should be expected.

The manufacturer’s reaction left me concerned about the purchase I had made and convinced me that I wouldn’t buy this brand again.  All it would have taken was someone to call to tell me how disappointed and surprised they were that this could happen to one of their cars and maybe send me a branded T-shirt or something trivial as a thank you for putting up with such an unlikely occurrence with their car… anything to convince me that the problem was an anomaly and they cared about me as a customer.

No company is perfect and that includes manufacturers in the industrial products space.  Problems will always occur.  When they do, companies have a choice to make:  Turn it into an opportunity to build customer loyalty or do the bare minimum to leave a bad impression.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Building Your Brand, Customer Service, Industrial Manufacturers ,

ICR – Making Surveys Less Intrusive

A good portion of our Industrial Channel Research (ICR) program relies upon surveying the distributors and customers of our member industrial manufacturers.

We know surveys can be time consuming and tedious, but people complete them because they know their feedback helps manufacturers improve the value they provide.

At ICR, we’re doing our best to make the process less painful for survey respondents by conducting multi-supplier surveys. This allows us to be more purposeful in which manufacturers and which questions we include on a survey. Today you might receive separate surveys from a dozen manufacturers each year… if they join ICR, you’re likely to get one survey per year with fewer questions about each.

So, if you’re receiving a lot of surveys from a large number of industrial manufacturers, ask them to consider consolidating their survey approach through ICR.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Channel Partner Feedback, Consolidating Surveys, Distributor Feedback, Distributor Management Best Practices, Industrial Manufacturers , ,

Unsolicited Feedback can be Great, but it has Limitations

I was recently talking to a manufacturer’s CEO about the prospect of his company becoming a member in our Industrial Channel Research (ICR) program. He strongly embraced the idea of getting feedback from the marketplace; but said that his end users, channel partners and employees aren’t shy about coming to him with feedback already whenever they have something to say. So he already knows a lot.

I think that’s great and he should listen to this unsolicited feedback, but he needs to consider that it’s limited because it doesn’t provide perspective and balance.

Accepting unsolicited feedback comes with two downsides:

  • First, it’s not comprehensive. The topics in unsolicited feedback are chosen by the people providing you feedback, not you, so the feedback is often isolated to one or two topics. It may indeed be an improvement opportunity, but you certainly have others. How important is this one? Remember, you can do anything you want, but you can’t do everything you want. You must prioritize. Getting a solid understanding of where your most high-value opportunities are requires thinking through all the aspects of the value you provide to any one group to get an assessment of which ones should be priorities.
  • Second, you don’t know if it’s representative. When you only hear from a handful of people, you don’t know if it’s a common sentiment or just noise. If you want representative feedback, you need a much larger sample size… at least thirty people on a single topic.

The best way to foster comprehensive, representative feedback is to solicit feedback proactively from a large population against a comprehensive value proposition framework… and that’s what ICR is all about.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Channel Partner Feedback, Customer feedback, Distributor Feedback, Indirect Channel Performance Benchmarking, Industrial Manufacturers , ,

Getting Customer Feedback You Can Actually Use

Getting customer feedback is easy these days… find an online survey tool, create a survey, send it to your contacts or a rented list of contacts and compile the results.

Honest Feedback and Perspective through 3rd party distributor survey

Getting useful customer feedback with minimal effort, on the other hand, is not that simple. Creating a properly designed survey requires a great deal of thought into how the questions are asked and how the responses are evaluated. It also requires effort to solicit quality responses.

Most importantly, it requires perspective. Industrial Channel Research is focused on providing perspective for our members to make feedback useful. A cornerstone of our program is the comparisons to other manufacturers fighting for the same mindshare. After we conduct surveys for our members, we share their results with them in the context of how other industrial manufacturers fared on the same topics.  We find it’s often less important how your company rated in isolation than how its rating compared to similar companies fighting for the same mindshare.  Perspective.

We also don’t simply hand big reports to our members and wish them luck.  We help our members understand what the feedback means and help them turn it into action.  Perspective.

If you’d like to learn about becoming an ICR member, please drop us a note at communications@icr-survey.com or call 630.503.6093.

Channel Partner Feedback, Customer feedback, Distributor Feedback, Industrial Manufacturers , ,

Manufacturer Marketing Programs – An Excuse to Show-Up

Manufacturer Marketing Program StrategyAs I mentioned last week, the manufacturer members of our Industrial Channel Research program just completed a large-scale survey of their channel partners’ sales people. In this recent survey those channel partner sales people were asked to evaluate their supplying manufacturers on about 20 different criteria.

The lowest average rating received across the board was for “marketing programs are effective and frequent enough.” On a scale of 1 to 5 (with 5 being the best), our manufacturers averaged a 3.1, barely above ambivalent.  What does this tell us about the state of current manufacturer marketing programs in general and how can you use this information to improve your sales figures?

At first blush, it’s easy for manufacturers to dismiss this feedback by saying “I’m looking to create value for end users, not be the special of the day.” Fair enough, but having been on many ride-alongs with channel partner sales people I can tell you this: A good marketing program gives a channel partner representative an excuse to show up to sell.

Think about it…  would you rather have your channel representatives show up at an end user’s door saying “Hey, I was just stopping by to see if you needed anything.” Or would you rather have them saying “I have something really interesting from manufacturer XYZ that I believe you’ll find valuable?”

Which approach has a better chance of opening the door to a lengthy conversation and leading to the sale of your product?

How do you create such a program? That’s a big topic, but mash up an interesting end-user solution, some channel partner sales person education, good collateral, maybe a sales and an end-user incentive and you will create a results-driven marketing program.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Channel Partner Feedback, Distributor Feedback, Industrial Manufacturers , ,

Differentiation: It Needs to be a Priority

Differentiation in the Industrial Manufacturing IndustryWe have just completed a successful Industrial Manufacturers Channel Partner Sales Survey for 20 of our Industrial Channel Research (ICR) members.

I’ve spent the last few days evaluating feedback we received from sales people of their channel partner distributors. As expected, our members rated well in some areas and have improvement opportunities in others which is good… ICR is all about continuous improvement.

One topic we added in the  survey for the first time was differentiation. We asked respondents to evaluate their suppliers on this statement: “This brand offers something unique and different I can’t get from other manufacturers”. Our learning was that almost every ICR member rated low on this statement.

Differentiation in the industrial space is really hard. I get it. A lot of industrial problems have been solved already and it’s difficult to make anything more than incremental improvements. The problem is that it matters!

It matters because it differentiates you from the competition.  It gives you something to say that no one else can and you don’t sound like a “me-too” company that winds up competing on price alone. It matters because customers will find you instead of you having to find them. It matters because customers can overlook some of your organization’s flaws because you have something special.

It’s not critical to be highly differentiated for every product or service you offer; but having a few unique, exciting solutions will do wonders for your brand. Think of the Corvette for Chevrolet or the Playstation for Sony. Both give their brands a sense of excitement and innovation that extends to non-differentiated portions of their product lines.

So, start an innovation process. Make it part of your organization’s product / service management culture. Start asking questions like “What problems are our customers facing for which none of our competitors have good solutions and how are we uniquely positioned to solve them?” If you don’t know how, read a book or hire a consultant.  But, one way or another, find a way to let the marketplace know there’s something special about your company. It will be hard, but everything worthwhile is.

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Channel Partner Feedback, Distributor Feedback, Indirect Channel Performance Benchmarking, Industrial Manufacturers ,

Distributor Advisory Councils need not be expensive to be effective

One of our new survey participants received feedback from its distributors (through one of our surveys) that they don’t provide adequate mechanisms for distributors to provide input.  I suggested that he put a Distributor Advisory Council (DAC) in place.  A manufacturer’s DAC is small group of distributors that serves three purposes:

  • Provides feedback to the manufacturer about the sentiments of all distributors
  • Communicates messages from the manufacturer to distributors not on the DAC.
  • Provides market insights to the manufacturer given its closer proximity to the marketplace.

When I brought up the idea of instituting a Distributor Advisory Council (DAC) to the president of the manufacturer, he responded that he liked the idea in concept, but felt that his small company couldn’t afford one.  It’s actually not the first time I’ve heard this… many leaders in small industrial companies came from larger companies and saw first-hand how those companies spend on their DACs.  But an effective DAC doesn’t require get-aways to exotic locales with golf and lavish dinners… it just needs to be mutually beneficial.  Actually, there are three ingredients for an effective DAC for an industrial manufacturer:

  1. Six to ten interested distributor participants who can represent both their companies and the different segments of distributors they represent
  2. Assignments of how each participant will represent specific non-participants
  3. A clear charter for what the DAC’s role is.  Examples could include:
    1. Input on product lifecycle
    2. Feedback on marketing communications
    3. Representing concerns of non-member participants to the manufacturer\
    4. Succession plan for participants (i.e., how long the term is)
    5. An effective operating model that respects participants’ time commitments.  For example, established meetings (maybe over web/phone) and associated agendas
    6. Some display of thanks to participants for giving their time (e.g., dinners, free product)

A DAC can be implemented in a variety of ways.  Some very successful DACs have been implemented by asking for less than a day’s worth of each participant’s time over a year and no travel.   The key is to design it well up-front.

Channel Partner Feedback, Distributor Feedback, Distributor Management Best Practices, Indirect Channel Best Practices

To Private Label or not to Private Label… That is the Question!

“One of my distributors asked us to manufacturer product under their private label brand.  Should we do it?”

At some point, many industrial manufacturers will be faced with this decision.  And, unfortunately, there is no one-size-fits all answer.  It depends on the situation.  Private label can improve asset utilization for manufacturers (e.g., keeping plants busier) and create additional revenue without incurring customer support costs (i.e., the owner of the brand provides support).  But producing product for someone else comes with risk, primarily that you erode the brand equity you have worked so hard to create.

So how do you decide?

If you are purely a low-cost producer of commodity products, private label may be an excellent way to increase utilization of your asset base at acceptable margins.  If you are purely an innovator of high-end product, private labeling is likely to be a disaster for you.

The unfortunate reality is that many manufacturing companies play both ends of the performance spectrum and are, therefore, forced to make a private label judgment call.  If, like most, your company spans that spectrum, you can entertain private label deals by following four rules:

  1. Never let your best product have any brand name on it except for yours.
  2. Don’t enter into arrangements in which it is obvious to customers that the private label product is really made by your company. This scenario can devalue your brand, especially if it is sold at a better value under the private label.
  3. Innovate continually.  You can entertain private labeling what was your best product a few years ago, as long as you have something better now that only has your brand name on it.
  4. Enter into private label deals that also build your own brand.  For example, you might agree to provide private label product in the commodity space in exchange for the distributor showcasing your high-end branded product at the expense of your high-end competitors.

If you can’t follow these rules, you should not private label.

If your high-performance industrial products company has a significant amount of excess production capacity, a private label deal that doesn’t meet the above rules can be a tempting way to better utilize your assets.  Don’t be tempted.  Find another use for the assets. Better yet, sell them off and invest the proceeds in innovation.  That’s a better recipe for long-term prosperity.

Bart Schwartz, President / ICR / 630.503.6093 / bschwartz@icr-survey.com

Industrial Manufacturers, Supplier improvement

Poor contact management could be giving your competitors a leg-up

One of the most interesting responses I hear from industrial manufacturers when I approach them about participating in Industrial Channel Research is that they’d really like to participate in the program to get comparative feedback about their company; but they don’t have good contact information for the leaders and sales people at their distributors… so they wouldn’t know whose feedback to solicit.

Said another way… “We’re in a small, competitive industry where we’re highly reliant upon distributors to sell our products; but we really don’t know who the people most responsible for the sale of our products are.”

Anyone else see a problem here?

If you don’t know who the people interacting with your end-users are, how do you convince them to continue to invest in your brand?  How do you educate them about products?  How do they find out about promotions?  How do you convince them to recommend your product over a competitor’s product at that moment of truth when a buying decision is being made?

You don’t… and that’s a problem.

So before you make that next investment in marketing collateral or promotions, consider making an investment in creating a centralized data repository and supporting processes to collect and manage contact information for people at your distributors who should really matter to your business:  Leaders and sales people.

Your competitors know who they are.. and they’re building relationships that will pay dividends.

* * *

Bart Schwartz is President of Industrial Channel Research, a company focused on helping industrial manufacturers understand customer needs and perceptions. He can be reached at bschwartz@icr-survey.com.

Channel Partner Feedback, Distributor Feedback, Distributor Management Best Practices, Industrial Manufacturers, Supplier improvement