Know Thy Customer

Jan/san distributors view every customer interaction as an opportunity to make a sale, improve retention, build loyalty and strengthen their brand. After all, customers drive profitability.

As of late, distributors have accelerated their emphasis on building relationships with customers. As intense competition continues to grow in a struggling economy, distributors are searching for ways to stand out in the eyes of end users. Thus, distributors are seeking software strategies such as customer relationship management (CRM) that allow them to nurture client relationships to the fullest extent.

Today’s CRM software offers distributors a 180-degrees view of their customers. A way to record and track every single customer interaction, CRM provides distributors with favorable information about each specific customer or prospect. Whether it be a minute conversation via the telephone asking about a particular product’s price two weeks ago, or a $1,000 purchase order that occurred three months ago, this collection of data is then used by distributors to sell to and service customers across multiple channels, mark their buying habits, and devise marketing plans. As a result, distributors who have implemented the software say they are gaining true customer insight, along with the ability to act on that insight.

Improved Communication And Service

CRM software helps manage customer contacts, accounts and sales opportunities. It also includes front-end applications that assist in customer interaction, the addition of customer and product information and has the ability to connect to back-end systems, including inventory, financials and Enterprise Resource Planning (ERP).

Because of its diversity, distributors say CRM creates uniformity in all communications with customers, whether it be by telephone, fax, e-mail or the Internet. Most importantly, the data collection devices within the system allow for standardized information and let distributors’ salespeople or representatives communicate both knowledgeably and efficiently with customers, says Marcie Palmer, marketing coordinator for Nichols, a Muskegon, Mich.-based jan/san distributor, who has been using CRM software for the last four years.

“We are able to be a lot better at communication with our clients by using the system,” she says. “It has become a very effective tool for us — especially from a marketing standpoint. Just increasing our communication to our client base and the impact we’ve been able to attain through the CRM system has just been incredible. It has been a lifeline for us.”

Through its CRM system, Nichols has the ability to communicate company news or product updates to its customers via weekly e-newsletters. It also allows the company to send out instant e-mail alerts when necessary. For example, Nichols had to inform its customers of a change in delivery service during this past holiday season. So, the company found that it was best and more cost-effective to send the message via e-mail through its CRM system, rather than phoning each customer individually.

“We were able to quickly and easily communicate through our CRM system to our clients to let them know that they would need to place their orders earlier than they normally have to accommodate delivery schedules,” says Palmer. “It really allows for us to communicate directly and in a very timely manner.”

The company’s account managers also utilize the software to assist with sales forecasting.

“It allows us to have a better idea about sales projections and what our opportunities are coming down the pike,”says Palmer.

CRM systems also have the ability to pinpoint the most profitable areas of a distributor’s business, says Jeannie Murphy, president of Murphy Sanitary Supply, Tulsa, Okla.

“In order to do a lot of strategic planning in our business we need to look at the areas where we’re profitable,” says Murphy. “It’s so easy to see where we’re making the money, where the margins are slim and who’s not paying. It also gives you reports in a nice neat fashion where you’re not having to second-guess and say so and so seems to be slow.”

Up-to-date sales reports also are available to distributors with a click of a mouse.

“You can literally generate a report that will show and rank your customers depending on what product category you want to see,” says Murphy. “I can with ease sit with one of my account managers and pull up everything they’re working on, all of their projects, and see if they’re getting a good margin for their product. Those are things I had no control over before. I was just guessing.”

CRM also helps improve operations by freeing up distributors’ sales personnel to bring in and generate new business. What used to take a considerable amount of time rummaging through file cabinets for past invoices or peering over spreadsheets for purchasing histories, is now streamlined through the distributor’s computer system.

In fact, Murphy says her employees are able to answer its customers’ questions quickly and accurately with detailed sales and payment history, order and invoice information, all organized on a single computer screen. Distributors can also track customers’ due-to-buy items and tailor pricing based on sales history and previous profit margins.

In addition, CRM gives distributors the availability to attach PDFs, e-mails and word processing documents to customer orders, contacts and quotes.

“Our customers can get order information forms in either hard copy or in an e-mail format,” says Murphy. “Everything can be either e-mailed or faxed with ease. When doing a quote for somebody, we used to have to print it out, put a cover letter on it and fax it to the customer. Now, not only does it fax the order or the quote, it will e-mail it. And, it keeps their e-mail address and fax number in the system so you don’t have to look it up again.”

Besides benefiting their own company’s bottom line, CRM software is also beneficial to distributors’ customers. Most distributors provide training assistance to their customers as a value-added service. Nichols, who conducts monthly seminars on cleaning processes and procedures for its customers, is able to track its customers’ employee training history.

“We’re using the training module of the CRM system to help us track registration, so that when we do business reviews with our clients, it allows us to provide them with a report of their associates and what kind of training they received through our training program,” says Palmer. “So if they say, ‘what training did Suzie Smith attend?’ We can provide the information that says she did floor-care training, carpet care and went through these seminars.”

Internal Benefits

Distributors also use CRM software to improve office and inter-branch communication with shared calendars, group events and joint tasks. CRM software allows a distributor’s associates to notify colleagues of tasks or certain events to keep everyone on the same page. They then can link orders, invoices and contacts and open them from their desktop. It can also be beneficial for scheduling purposes.

“Our account managers and our internal team are using it for scheduling,” says Palmer. “Calendars and such can be done through our CRM. We’ve found that it has allowed us to be more organized and better time managers. We can schedule appointments for other associates in the company.”

So, from a sales perspective, if the company has a lead that comes in, any employee can schedule a call back for the appropriate account manager and the system will then send him an e-mail that informs him of the new lead with their contact information.

“The account manager can then go into that contact and see anything that we’ve typed in and any other specific details such as what their interest is,” says Palmer.

Another advantage is that the system grants access to multiple users in a distributor’s company, so if a customer calls for a particular person but he or she isn’t available, another person can pull up the customer’s account and know exactly what their needs or purchasing history is.

“It allows us internally to have a better understanding about how the communication has been and where we’re at with certain things with certain clients or prospects,” says Palmer. “It has definitely been a great internal tool as far as keeping us up to date and documenting that information.”

The Buy In

With a weak economy, many distributors say spending money on technology is the furthest thing from their minds. Many distributors are hesitant to spend anywhere from $30,000 up to $100,000 on a piece of software they aren’t sure is going to complement their business structure.

However, distributors who are using CRM software say those companies that aren’t utilizing the technology are potentially at a disadvantage.

“Those that are using it and are maximizing it, are gaining the advantage,” says Palmer.

Over time, CRM will be essential for survival in an ever-squeezed market, distributors suggest. Maintaining a firm relationship with existing customers is what will keep them coming back for more. And mining repeat customers is the most effective sales strategy businesses can employ, distributors say.

However, distributors caution those who view CRM as merely a tool to sell more product. No software will be beneficial unless there is a continued relationship and good customer service. Whether companies in the current day choose to adopt the process or not, distributors who currently use it say it wouldn’t hurt.