Just last October, distributors were consumed with the hustle and bustle of trying to get their company’s websites up, provide ordering capability for customers and weed through the myriad e-commerce options that were being pitched from every direction.

Now, only a year later, that tune has changed. Rather than exploring e-business options, George Colombo’s ISSA 2001 seminar attempted to show distributors how to incorporate technology — not just the Internet — into their business models in the 21st century.

The focus? Customer relationship management (CRM), and why it’s so applicable — and important — to a distributor’s business.

“Within the last year, the business media has changed its view of technology 180 degrees,” Colombo observed. No longer is there a relentless push to get online. The current approach is one of caution and preparedness. The mad rush ended as abruptly as it began.

Colombo’s presentation began by exploring the reasons the dot-com business model is flawed. But that’s not to say that the Internet’s effect won’t be “profound and change your business,” he added.

The Internet’s role will be more understated than in the dot-com business model. Colombo used the analogy of the telephone.

“Most businesses are not telemarketing businesses,” he said. “However, everybody uses the telephone in some way to further their business interests.”

This is why, Colombo contended, the “transactional” business model is doomed to fail. He used a quote from David Aaker and Robert Jacobsen published in a March edition of the “Wall Street Journal” to illustrate his point:

“With customer acquisition costs high, a strategy that relies on attracting new customers, often via expensive promotions, rarely makes financial sense. A solid business can only be created by holding existing customers and increasing their attachment and usage.”

Distributor businesses have an advantage over the transactional business model because they have “back-end” capabilities — the ability to deliver, offer customer service, and create relationships with their customers.

“Completing one or more transactions is not the same as capturing a customer,” Colombo reasoned.
Business can be increased in three ways, according to Colombo:

• Get more customers;

• Get existing customers to buy more;

• Get existing customers to buy more often.

Attempting to grow a business by finding new customers is the most difficult — and most common — way distributors try to expand.

“Usually, [distributors] spend too much time thinking of how to put people in the top of the funnel. But there are huge, untapped possibilities with your customers.” Customer relationship management tools are one way to exploit the information a business has already accumulated about its customer base.

CRM Software
Varying from simplistic to complex applications, CRM software offers numerous capabilities depending on what a company is willing and able to invest. Still, even the most rudimentary programs can provide users with insight into their customers’ habits, preferences, histories, and much more.

The most valuable thing a distributor has is the information they’ve accumulated about their customers, Colombo believes. “This hugely increases the value of your business. The biggest asset your business has is the list of customers you have — the people who buy products and services from you,” he added. The more organized, accessible and understandable the information is, the better. CRM is one way to accomplish that.

“This is the foundational technology for what you want to do in management — using information about the people with whom you do business.” The software allows distributors to accumulate, analyze and otherwise use important information about customers.

Allowing employees instant access to customer histories allows them to respond immediately — in an informed manner — to the customer’s request, concern or complaint. Customers are reassured when everyone they talk to in an organization appears to be reading from the same page. Reassurance fosters increased loyalty which in turn makes for long-term customers.

Colombo used ACT 2000 as an example of a basic customer relationship management system. CRM, he contends, is the backbone of a distributor business that ties everything together and allows sales, customer service, and everyone else that comes in contact with the account, access to the information they need.

Some basic CRM fields could include any of the following: name, spouse’s name, telephone number, cell phone number, pager number, address, and the most recent contact and what was done at that time — even childrens’ names. Other menus could take you to recent orders, dates and times, and other details of ordering history, preferences, etc.

“It allows you to slice and dice [information] and later analyze your customers,” Colombo said. For instance, a distributor could sort his or her records and easily define geographical markets. He or she could then devise a marketing plan accordingly.

Fringe Benefits
The things that bother customers most are the little things — the simple mistakes, Colombo contended. Proper use of customer relationship management tools will prevent things from falling through the cracks.

Distributors can determine who their best customers are, and award them for their business and loyalty. They will likely want to place more emphasis on serving those customers. To do this, distributors must have the means to track what that customer wants, needs and does.

CRM software can do other, simpler things, like aid businesses in sending out form letters. “Your customers value insincere attention more than they value sincere neglect,” he quipped.

E-mail marketing also becomes easier. But, Colombo warned, don’t send unwelcome e-mail or information that wouldn’t be of interest to a specific customer.

Marketing becomes easier when markets are easily segmented with CRM capabilities. Whether by region, product, quantity, etc., distributors can define markets and focus attentions accordingly.

Internet Tie-In
Thorough CRM data record-keeping can help distributors as they look to further their Internet offerings as well. The data can help distributors create personalized websites for each customer, incorporating their buying habits, but also taking the sale a step further by instituting cross-selling and up-selling strategies.

Plan for every point of sale, Colombo said. “The key here is consistently cross-selling add-on and complementary products.”

But Colombo cautions distributors to be careful to keep websites user-friendly. He advises having a relative who isn’t necessarily computer savvy try to order from the site. It’s a good gauge of whether others will be able to use it easily. Distributors should also institute safeguards and tripwires to ensure customers can navigate and use the site without problems.

Affiliations are also an option as distributors venture down the e-business path. “There are businesses in your community who are selling non-competitive goods and services to your customers,” he said. “Think about affiliating with these businesses.”

Finally, to help websites carry their weight in a business, distributors should be sure to capture as much customer information as possible.

“Get contact information from everyone,” Colombo advised. “Motivate them to leave information about themselves. It’s hard to find qualified prospects. Don’t let them slip through your hands once they’re there.

“It’s so easy to do this,” he added. “There’s no reason not to do it.”

Prevent Cyber-Terrorist Attacks

In light of the FBI’s news release warning of possible additional terrorist attacks within the United States, RedSiren has opened free direct access to its CyberSecurity Advisory Team. This follows the FBI’s Terrorist Threat Advisory, which recommends that critical infrastructures operate at a heightened state of alert. It also urges businesses to implement appropriate physical and cyber-security measures.

To help answer any questions your business may have about protecting your corporate-critical information from theft or attack, RedSiren has established its site to answer questions. Big or small, it is important for businesses to prepare a strategic security program that includes an effective crisis response plan.

Importing and Exporting Law

For distributors who are planning on expanding their business overseas, or for those who are already involved in international commerce and want to make sure they are in regulatory compliance, U.S. Customs has improved its website to explain the small-business side of international markets.

The site provides an overview of importing and exporting issues related to the U.S. Customs Service with links about duty rates, HTS, rulings, forms and publications.