I recently visited a branch office of a large, national building materials distributor to validate a trend that several of our customers told me about. I joined a long queue of customers who were staring at their phones occasionally looking up to see a single counter employee who was assisting the person at the front of the line while his counterpart was helping another customer on an extended phone call.
Sound familiar? Frustrating to say the least. If this low level of customer service is not addressed, those customers may begin shopping elsewhere for building materials. Increasingly these contractors are checking inventory levels, getting price quotes, and placing orders online to avoid waiting in line at a branch.
It’s no secret that building contractors are busier than ever fueled by an increased demand and a decrease in the number of skilled laborers. Those contractors need to be extremely efficient in their daily tasks to keep pace with the demand.
So why is the above-mentioned branch counter scenario occurring with increased frequency? Well, for starters, look at the multiple job tasks that counter personnel must juggle.
These responsibilities are reasonable under normal circumstances, but current conditions are anything but normal and are likely to be the “new normal” going forward. This situation is aggravated further by distributors having difficulty in attracting and retaining qualified branch counter personnel.
A senior executive at a leading North American building products distributor put it plainly. “The labor issue keeps me up at night,” he said. “We’ve paid millions in raises just to keep our people from accepting other jobs.”
And the stakes have never been higher. Progressive distributors are reducing their branch footprint and driving customers to buy online.
Reducing the cost to serve and responding to competitive threats from online only distributors are the reason for this shift.
More traditional distributors believe that existing account relationships will effectively stem the threat from these online companies. The little-known flaw in this position is that 80% of a typical distributor’s revenue comes from only 10% of their customer base – which is where they have relationships. The remaining 90% of their customer base are increasingly vulnerable to pursuing alternative options, especially if they're frustrated with the level of service they are receiving today.
According to McKinsey & Company, improved customer service is in the top three factors in stemming competitive threats and driving higher volume for distributors.
MMC’S VIRTUAL BRANCH solution is assisting distributors to manage the above issues by:
Providing 24/7 customer assistance via our omnichannel contact center, staffed with bilingual agents
Managing inbound inquiries, relieving the burden on branch personnel
Implementing a “cross-sell” approach that increases the average order size by 40%
Deploying outbound omnichannel marketing campaigns and digital advertising post-call
Proactively managing house accounts
Encouraging and assisting customers with placing orders online
According to McKinsey & Company in their “The Coming Shakeout In Industrial Distribution” report: "Powerful trends that have disrupted industries around the world are now affecting industrial distributors. A few distributors are moving quickly to create more value by building scale, making dramatic advances in commercial and operational excellence, and digitizing to create the seamless, omnichannel experiences that customers now demand. But we expect slower-moving distributors to struggle—and some to go the way of Blockbuster and Borders."
It will be interesting to see if traditional distributors pivot to take advantage of developing trends or if they cling to their “business as usual” approach.
What will YOU do?