STAFDA 2010 Session Preview: Bill McCleave on differentiating your distribution firm

Internationally-known distribution expert Dr. Bill McCleave discussed how you can set your firm apart from competitors in a crowded marketplace.
Dr. Bill McCleave, president, W.R. McCleave & Associates

Dr. Bill McCleave will present “Differentiating Your Distribution Company — A Winning Strategy,” from 1:00 to 2:30 p.m. and again from 3:00 to 4:30 p.m.
on Sunday, Nov. 7.

If you serve the construction industry, the last two years have probably not brought a lot of good news. For some firms, the construction industry climate was just too harsh and they exited the business. If you are reading this, the good news is that you are still
standing and that you likely believe in the future of the industry and your business.

During the last two years, most distribution firms have had the opportunity to reevaluate their overall business structure and have made changes in how they operate on a daily basis. The need to reevaluate and to change is not new, but the pace seems to be forever increasing.

Some managers become quite bewildered as they look at all the moving pieces in their business as change occurs and wonder how they can create a useful strategy from the chaos change can create.

In 2003, Tom Gale and I wrote “Standout from the Competition,” which was published by NAW/DREF. The book offered a thinking and action template for firms who wanted
or needed to be vastly different than their rivals in a
competitive market environment.

The template was derived from extensive industry research and from interviews with some of the industry’s best thinkers. The template and the firms that used it have been tested throughout the last decade with surprisingly good results. Some of the firms interviewed have significantly outperformed their rivals and are moving forward.

As firms move forward in this new decade, they do so in a different and perhaps more challenging market environment. Since the need to stand out from their competition — or differentiate — has never been greater, it might be appropriate to review the template and put it to use for tomorrow’s environment.

As we interviewed dozens of individuals, four differentiation “test questions” continued to emerge from our discussions. These were: 

  • Do you have a “Big Idea” for differentiating your company and yourself in the current & future marketplace?
  • Do you deliver a well-developed and consistent message focused on real customer needs?
  • Have you chosen critical activities that must be performed to meet customer expectations and have you set performance improvement goals?
  • Do you have an effective system for validating your “value contribution” to customers?

The “big idea” continues to evolve for firms who are tuned in to their marketplaces. As markets move and customer requirements change, the foundation values
of distributor firms may remain the same but there are necessary changes to stay relevant to customers.

For example, the big idea of time and place utility is constantly challenged by technology and logistic innovations. Many distributors continue to stress “service” as their central big idea but the whole concept of “service” has taken on a new look with the emergence of e-business techniques.

To successfully position themselves for the future, all distribution firms must re-determine their value proposition and constantly test its relevancy to the customers they plan to serve. They must ask (and answer) what they can do to be both unique and valuable to their customers.

The very best value propositions – “big ideas” – fail if they are not successfully crafted into messages that customers receive, understand and buy into. The crafting and expert delivery of the value message are essential components of the pitch for prosperous firms going forward. In tight marketplaces, firms with the right value message pitch and powerful, professional sales engines will create more opportunity than traditional rivals who stick to stale slogans and “doughnut hauling” sales forces.

Well-formulated “big ideas” and promises coupled with a great sales force are crucial entrees to the future but they do not ensure success without fulfillment of these promises or performance. As functional “middlemen,” distributors are in business to perform activities on behalf of their customers and suppliers. In performing these activities, distributors fulfill the promises contained in their messages and often delivered by their sales forces. Performance is evaluated by their customers throughout several and sometimes changing metrics. These include: cost, convenience, quality, speed, flexibility and others.

The best distributors promise to perform only what they can do — and live up to the promise. They employ the latest technology, operating systems and great talent to stand out from rivals who are stuck with old techniques that may be slower, cost more and deliver lower quality.

World class performance of promises to deliver real value can keep you positioned as a market winner, but performance is sometimes not enough. Rivals who want to seize market share will often develop and roll out huge marketing campaigns that promise more than is being delivered by incumbent distribution firms. Without an adequate defense plan, your business can be at risk.

The best plan is one of proof-solid and continuing documentation delivered to the customer on a consistent basis — that your firm is performing exactly what you promised to do and that you are bringing measurable financial benefit to the customer. Rivals cannot prove what they have not done — you can!

This may not sound like rocket science. It isn’t. It is the common sense of over 20 years of research on firms and individuals just like you. The difference you can make is not in rocket science, it is how you choose to win in a changing marketplace.

Have you positioned your firm with the right big idea supported by significant selling messages, world class performance and proof of your value? The marketplace will let you know! CS

Dr. William McCleave is an internationally known speaker, trainer and consultant in industrial distribution. He has written numerous industry articles and serves on several corporate boards. Dr. Bill is also restoring a 1910 2-cylinder REO. Reach him at