Distributors: Be A Costco, Not An Amazon

 

The most common question I hear from distributors is, “How do I get more clients?” But the more important question is, “How do I keep my clients?” Studies confirm that it’s expensive to procure new clients. It is much more affordable and profitable to build loyalty within your existing customer base—and to benefit from the referrals as well. 

In the book The Intuitive Customer by Colin Shaw and Ryan Hamilton, the authors state, “Customer loyalty is the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which includes the product or services.” 

I know. It’s a mouthful. So, let’s break it down. Imagine your distributorship is a wall. The long-term success of your distributorship depends upon you building this wall big and strong. The wall becomes stronger with every block that is cemented in. This wall represents your company in your clients’ minds. When they buy from you the first time, there is no wall of loyalty because no blocks have been put in place. The client is at the “try and see/high hopes” stage with your company. However, as you build confidence with your client through your words, actions and orders, the client starts trusting in you. Blocks are laid and cemented into your wall in your client’s mind. The more you deliver predictable, positive results, the more the client trusts you, and the more you build a wall of preference and trust with your client.

Why is this wall of preference so important? Because your clients are busy. Your best clients are busy ones. They have other roles in their company—they don’t just buy promotional products. If they can find and keep a solid partner, they can relax a little. They can rely on you for predictable, positive experiences. They love having a strong wall—the stronger the better. It represents one less thing for them to worry about.

Here’s where the comparison between Amazon and Costco comes in. Amazon is a wide-open trading platform in which the buyer must beware. Although I may have had many positive experiences, as have millions of others, those experiences do not stack on top of each other to build a wall of preference in my mind. Even though my experiences with Amazon have made me happy many times, the company has not earned my trust. Why? Because I realize that Amazon isn’t invested in me. I’m not their client. Their clients are the sellers of the products—and those sellers are nearly anyone. Many of their sellers are in other countries and don’t even speak my language. While Amazon allows users to rate the products I buy on the site, it does not rate them. That process is not core to their business model. While I will continue to buy through Amazon, especially with no-brainer repeat orders (notice I don’t say buy from them), I, the buyer, will always beware.

You may or may not be a fan of the discount warehouse Costco, but my experience (along with millions of others) has been a good one. I buy familiar products in bulk at great prices. After 20 years of having me as a customer, Costco has successfully built a wall of preference and trust in my mind. Why? Because I am their client and they work hard to maintain their reputation. They offer new and exciting products, and they have an evolving inventory that encourages shoppers to try something new. They even provide samples of new products in the store. Because of these efforts, I trust them as a quality vendor. I understand (probably like many of our customers do) that Costco doesn’t make most of the items that they sell. But they make great choices on the companies they partner with. They also introduce a variety of new vendors but keep them on a short leash pending complaints or quality issues. 

As a matter of fact, my trust level with Costco is so high that if I spot a new item and see value in it, I no longer need to see if another source has it cheaper. If Costco has it and I want it, I’m buying it. Period.

You may argue that their easy return policy negates this logic. Nope. Both Amazon and Costco offer free returns, (most companies do these days), but people don’t buy things expecting them to fail. They don’t want to be disappointed. And when you are selling to your customers, they have even less tolerance for returns.

Be predictable and quality oriented, and deliver a positive experience. Pick your partners well. Invest in your customers. Do what you say you’re going to do. Build a strong wall of preference in your customers’ minds. Be a Costco. 

James Roren (J.R.), Sr. is a veteran promotional products distributor and founder of PromoOwners. com, a consulting firm dedicated to helping distributors build their businesses. His advice is built upon his experience as an entrepreneur who built a $5 million distributorship and sold it. 602-405-1011; JR@PromoOwners.com.

filed under PPB Magazine | Viewpoint | June 2018 }
Comments (1)
Jim Franklyn
June 5, 2018
Like it or not, part of the Hybrid Distributor model will include on demand transactions, acquisition of customers, and ultimately the evaluation of those clients to see who is worth keeping. Most relevant online providers have thousands upon thousands of customers they do not have time to follow up with, nor are they willing to invest in additional Hybrid strategies to be more consultative. There are a few, but, not too many. The art of hunting is all but disappeared, which is why boomers will always have work....
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