Single-source suppliers can offer brand loyalty wins for distributors
By: Chris Baby
Everybody wants to talk about price. It can be the sticking point in the negotiations process between suppliers and distributors, although price may not matter as much as you think. Ultimately, workers are looking for a solution that adds value to their work, ensures their safety, enhances their productivity and allows them to do activities they couldn’t otherwise do.
In fact, over 90% of American manufacturers say their customers care four times more about product quality than they do about low pricing. In safety, as in anything technical in nature, brands matter to the end user. Brands can symbolize intrinsic traits such as innovation, trust and leadership that the B2B consumer can connect with on an emotional level, and the impact of an emotional appeal can be much more meaningful than a rational message. The Corporate Executive Board (CEB) partnered with Google in a report that discovered that B2B brands which connect with their buyers on an emotional level earn twice the impact over marketers still trying to sell business on functional value. Despite our best attempts to make decisions based on logic, we are human and influenced by our emotions.
Multinational distributors have long understood the power of branding and differentiated themselves in skill and scale to champion their message with their customers. Due to a lack of resources, small to medium-sized distributors have often faced traditional barriers in managing a cohesive brand image. Single-source suppliers can not only be leveraged by independent distributors for functional benefits such as product innovation and business outcomes, but also emotional benefits such as brand loyalty. Independent distributors who work with single-source suppliers have a competitive edge when it comes to meeting customer expectations for product quality and value-added services that can set them apart as a brand.
Charting the rise of sticky supplier and distributor partnerships
Over the past decade, some distributors and suppliers have struck up increasingly close partnerships with one another. These types of partnerships will only strengthen, because as trust is built between suppliers, distributors and the end user, a much more powerful and meaningful way of delivering innovative products and solutions to the worker begins to take root.
Inefficient workflow processes often sink time and resource costs for distributors, and managing supplier relationships is one area that dramatically improves once distributors use a single supplier for numerous products and services. Overall, there is a decreased effort on the distributor’s part to manage the relationships once trust develops and grows between the two parties. As a single supplier that is in charge of a family of brands is recognizable to the end user, distributors can spend less time managing multiple supplier performance and streamline their overall supplier relationships.
There is a perceived risk that can occur in putting all your eggs in one basket, so to speak, and this risk can occur if the manufacturer and the distributor have a falling out. But in reality, in many industry markets, the risk is minimal to begin with. Safety is a prime example of that. An industrial distributor may only carry a very small proportion of their overall portfolio in safety products (less than 10%), but having up to fifty or more suppliers representing that volume from a supplier efficiency perspective can be very counterproductive. A single-source supplier can easily simplify a very time-consuming and complicated part of the business that is required but is not necessarily driving overall revenue growth. The single-source supplier model is a unique animal that’s bringing a new solution and opportunity to not only distributors but also end users.
The brand experience of the future: customer-centric innovation
As distributors spend less time and effort managing supplier relationships and tracking supplier performance, it naturally follows that that there is more time for improved information exchange. The overall cost to the end user is ultimately decreased, creating more emphasis on educating the end user to be more effective in their work and on the organization’s productivity overall. This leads to innovation and design collaboration that further inform the brand experience.
Due to the unique and advantageous position one-source suppliers are in, they can be valuable partners for distributors because of the sticky relationships they form with the end user. Workers tend to view the manufacturer as the product expert and the distributor as a trusted intermediary. A distributor may carry upwards of 100,000 products in their portfolio, and for them to be product experts in each category is simply not feasible. Single-source suppliers have the opportunity to play into the dynamics of how a worker interacts with a branded product, being the trust point as a product educator to the end user, and distributors can benefit from this.
The recent debut of the iPhone X is a prime example in the age-old debate between low pricing, product quality and branding. Why would anybody spend an unprecedented thousand dollars on a mobile phone? For one, we love the experience of belonging to the Apple ecosystem and we cannot resist the interconnectivity that it brings to our lives. A premium product such as the iPhone X can also strengthen customer loyalty among those who are purchasing or upgrading to the model. When we look at safety apparel or PPE for people who work in hazardous environments, the end user is similarly looking for a solution that adds value to their daily life.
There is a growing need on the part of distributors and end users for a human element in their suppliers; single-source suppliers, differentiated by their intimate relationships and unique understanding of what end users are looking for, are moving towards a brand experience that’s flexible and accountable to the customer. Single-source suppliers, by driving loyalty around the product brands, are bringing more than products to the proverbial table: solutions that educate the users and drive down overall costs.
For distributors, leveraging this next level of brand engagement will serve them well in becoming the source of innovative solutions for workers everywhere.
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