With product differentiation being limited between distributors, preserving customers from shifting into the hands of competitors can be tough. As former distributors ourselves, we understand the challenges of customer churn in the industry. We know that with limited product differentiation between distributors, it can be difficult to prevent customers from switching to competitors who offer better pricing or services. We also know that by the time many distributors realize they’re being undercut, it’s often too late. With the constant fluctuations in costs and the emergence of ecommerce, even the most loyal customers may seek more competitive options. It’s important to have a proactive approach to pricing and customer satisfaction in order to stay ahead of the competition and retain your customers.
Are you ready for the good news? Here it is: keeping your customers happy doesn’t have to cost you. Competitive pricing doesn’t mean lowering your prices across the board, or even in specific product groups.
Today’s competitive pricing is:
- Strategic, keeping margins high where they can be
- Based on data from customers and the broader market
- More flexibility to make quick changes to your pricing strategy
Most importantly, competitive pricing should keep your customers on board.
Staying Competitive
Did you know that finding a new customer costs about 5 times more than retaining an existing customer?
That means that churn costs a lot more than the lost revenue. With that in mind, how do you keep your customers happy without losing margin? One great place to start is by learning what your customer’s expectations are. Thanks to convenience from ecommerce, customers require greater demand from distributors, and distributors thus far have been slow to adapt. Fortunately, these new expectations are generally straightforward and intuitive, if a bit new for the world of distribution.
Customer Expectations and How to Meet Them
- Standardize your prices across channels
- Though this should have always been part of distributor pricing strategy, customers now expect to see the same prices no matter who they ask in your organization. The days of different salespeople, branches, and online offering different prices are well behind us, and consistency is the name of the new game. Pricing is a new team sport.
- Introduce eCommerce
- eCommerce has historically been an obstacle as different customer prices have blocked the possibility of building an online store in the past. Not any longer!
- Using a combination of segmentation and pricing tools, distributors are building customized online stores for A, B, C, and D customers. That way, every tier of customer can create profiles and purchase products without losing pricing consistency.
- Tell your customers how to get better prices
- Once you establish your customer grades (A, B, C, and D), be honest with your customers and tell them how they can get better prices. While they don’t need to know everything about your pricing strategy, a little bit of information improves your customer relationship while encouraging them to buy more from you. It’s a win-win!
- Ditch your spreadsheets
- Managing pricing can be a tedious process, but utilizing a software platform can alleviate the burden. By optimizing pricing with software, what once took hours can now be accomplished in minutes.
Making Big Changes
In the world of distribution, meeting customer expectations can seem like an impossible challenge. Ecommerce projects, in particular, may appear to be a never-ending time sink, leaving sales reps feeling left out of the loop. The truth is, meeting customer expectations, keeping your team happy, and boosting profits are all achievable with the right partners and technology. At the heart of it all is the understanding that pricing is a team sport. Creating a culture of teamwork within the workplace is essential to success. By leveraging specialized software and working collaboratively, sales reps and pricing teams can work together to develop pricing strategies that benefit both the customer and the company. By adopting this approach, not only can profits be optimized, but it can also enhance team morale, leading to a more efficient and united workplace.
epaCUBE was built BY distributors FOR distributors. For over 20 years, we’ve been building solutions to give distributors access to the technology, tools, and support they need to best compete. To see more of our recommendations, check out The Distributor’s Guide to 2023 here!