In Part 1 of this two-part post, we introduce a fast-yet-powerful way to segment an independent distribution channel for purposes of creating value and a higher share of their recommendations.
Like many weeks, we spent time this week with a company that sells technical equipment through independent distribution channels. Our b-to-b clients in this category range from manufacturers of heavy equipment products selling through small, local service companies to specialty pharmaceutical companies who rely on doctor recommendations.
These marketers often struggle to understand how the concept of needs-based segmentation can be applied to improve their success with distributors. This post summarizes a quick and easy, yet highly effective segmentation concept– along with some value proposition ideas – that will help you win a greater share of sales from your channel.
A Business Classic That Defines Three Powerful B-to-B Segments
Years ago, Michael Treacy and Fred Wiersema wrote a book entitled “The Discipline of Market Leaders.” They described three unique disciplines associated with market leading companies. We’ve helped our clients use these concepts to describe three needs-based, business-to-business segments. Often we apply these segments when helping clients create distribution channel strategies.
Segment 1: Operational Efficiency Seekers
Distributors in this segment make money by finding ways to take cost out of a process – they would readily identify with Wal-Mart, the ultimate example of an operationally efficient company. They value working with manufacturers that help them increase volume, reduce costs and generally increase their speed of doing business.
Value Proposition Ideas for Operational Efficiency Seeking Distributors
Creating simple, straightforward product offerings for this type of distributor to sell is a great first step. Using your expertise to help them increase the operational efficiencies in their distribution business is always popular. You could also figure out ways to reduce the burden on them when something goes wrong with your product.
All of the value proposition ideas above will help you provide value beyond simply lowering your prices, which this particular segment will focus on exclusively if you don’t differentiate your offer.
Next week: Our post will cover the two other business-to-business needs-based segments