Exclusive: Overcoming product registration pitfalls
Using customer data management and analytics to increase revenue.
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For hardware or contractor supply stores that sell outdoor power equipment, power tools or generators as examples, there is a wide degree of understanding of the importance of collecting and analyzing product registrations.
Who owns the responsibility of collection? Some manufacturers feel it is their obligation to ensure the highest registration rates, and places this metric far up the agenda as an important metric to measure (more on this later). However, how they execute the task can vary wide and far from company to company.
Some rely on the distributor to take ownership in working with its dealer/retailer network to collect the information. Others skip the distributor and accept information from the dealer direct. Others allow the end-user buyer to register, usually on the manufacturer’s web site. Sometimes it is a combination of all three.
In summary, there is no universal industry standard. As such, the collection rates can vary greatly from dealer to dealer, across territory to territory, and from manufacturer to manufacturer.
Let’s examine the applications of using product registrations beyond just the customary product warranty. This is where companies can trip up in further pitfalls.
1. Dirty data: Because there is no industry standard on data collection and process, the quality of the data can often be “dirty,” which is defined as unreliable and inaccurate once the registration information is collected and analyzed. The root cause of this squares mostly on humans entering information. Like the old adage states, “99% of dirty data is not because of computers, but because of human error.” This isn’t new news, and it’s an epidemic across the industry.
2. One product registration does not equal one customer: Often companies like to take product registrations and analyze it in a variety of ways. For example, some like to see which product models are selling at which dealer, which is fine for product retail sales analysis. Others use total number of products sold in a location to conduct market penetration without considering the customer in the equation. Market penetration is not the same as market share, and most manufacturers confuse the two.
As an example, one customer can buy four products, but often companies using a transaction-centric view count him/her as four unique customers. This transaction-centric view, not a customer-centric view, can overestimate market penetration rates significantly claiming high saturation in a geo-location. Or they miss the point that the person who bought four products is a high-value customer, not that he/she is 4 unique, low-value customers. Another example is underestimating the fleet ownership of a PRO/Industrial user of a particular brand, signaling loyalty or commitment.
3. Unit sales increase could also mean increased customer churn: Evaluating the trajectory of product unit sales is great for inventory management, just-in-time product replenishment, and predicting booking sales, among other classic “sell-in” tactics. But what about the dealer’s customer? Just because more units are being sold doesn’t equate to repeat customer sales (e.g. selling more product to the same customer). Hidden inside could be customer churn issues. Here is an illustration to make the point: Year over year, same store sales for Dealer A increases units sold by 100.
Historically, the average sales cycle of next product purchase from existing customer is 180 days. In theory, within any 365-day selling season, 50% of the 100 units should be to that dealer’s customer base that have bought at least one product in prior sales cycle. However, if the 75% of units sold is to new customers (people who have never bought before at that dealer), then there could be a customer churn of 25%.
Don’t believe it. Then track that customer to any surrounding dealer within reasonable drive time distance and determine if they bought from some other dealer within the past year. They didn’t? Then on average, they most likely didn’t buy your brand, they bought a competitor, or now out of category.
The reverse is true, whereas a dealer may think they are gaining net, new customers for each 100 units sold, but are selling more and more product to the same customer base. This doesn’t demonstrate deeper market reach or penetration. Just selling more to the same. Not a bad thing. It just doesn’t mean they are filling up their pipeline of new customers.
4. You can’t plot products on a map, you can only plot locations: A product does not have a latitude and longitude; locations do, and people attributed to the location is a more accurate view. We hear all the time how territory managers like to take product registration information and plot it on a geo-map to understand the regional reach of a dealer, or try to justify to an existing dealer it is acceptable to open up a new dealership using this basic, but flawed approach.
As stipulated above, knowing if it is one high value customer with multiple repeat purchases will show a very different outcome on a map then treating each product unit purchased by a unique buyer as unique. To do this precisely, the process to hygiene, normalize, and transform thousands, or even millions of product registrations into customer profiles can be a very heavy lift for any one person doing it manually, and the risk for error increases dramatically.
If you are serious about properly applying sales and marketing resources to help increase your revenue, proper customer data management and analytics helps you understand a closer version of the truth of your market, your customer value, purchase behavior, dealer performance, and identifying new growth opportunity. It can only be done correctly if the product registration data is managed, processed, and applied correctly using far more advanced techniques than Excel spreadsheets and MapQuest reports. CS
Jeff Winsper is the president of Black Ink Technologies, which helps the manufacturing industry sell more, faster and smarter. The SaaS platform provides more visibility across the entire supply chain—from the manufacturing plant to distributors, territory managers, dealers and the local marketplace. Black Ink combined the best of CRM, business intelligence, geo-mapping, data management, industry-specific data, and pre-built library of statistical models in one easy to use, and affordable platform. This helps accelerate customer acquisition and customer relationship management—and that helps the OEM, their distributors and the dealer grow.
Connect with him @jeffwinsper, jwinsper@blackinkroi.com and on LinkedIn.
CONTRACTOR SUPPLY MAGAZINE
The October/November 2024 of Contractor Supply magazine is here!
Our cover story, A Rewarding Passion - Dale Hahs II, third-generation of Denver's AIS Industrial & Construction Supply, is STAFDA's incoming 2025 president.
A Special STAFDA section featuring a welcome address, an agenda, session previewss by presenters and much more. Also in this issue are our Industry Updates on: Lifting, Moving and Material Handling; Lasers, Levels and Measurement; Hand Tools; Cordless Power Tools; Drill Bits and Cutting Tools; and Toolboxes, Bags and Belts.
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