The multistep distribution sales process has its fair share of pros and cons, and within the building products market is no exception. Having distributors and their dealers who focus primarily on sales, allows manufacturers to do what they do best - product innovations, engineering and marketing expertise. However, adding a sales step - or two - between manufacturers and builders or contractors can also create a breakdown in product and market understanding. And with limited visibility comes limited sales.
Though manufacturers and their distribution and dealer partners have a mutually beneficial relationship, their goals aren't perfectly aligned. For example, dealers often carry competing brands within a category, and when left unattended by a salesperson the purchase decision comes down to cost or the customer’s existing preference. When this happens, how can a manufacturer ensure that its product will be the one being sold or recommended? Ultimately, this decision rests with the dealer and will usually be made based on economic factors, including which products are the most profitable for them. Yes, short-term promotions such as rebates may draw attention to a specific brand, but without longer-term communication, the benefits are typically short-lived.
Manufacturers can combat this conflict of interest by putting important information in the hands of the end users of the products, maintaining a top-of-mind status and positioning themselves for success. The consulting company CEB finds that 70% of decision making happens before a customer ever speaks to a sales rep. Given this reality, direct marketing to end users through multichannel marketing can help inform purchasers about specific products’ features and benefits, helping to drive the direction of conversation to your product lines.
To market directly to end users, however, manufacturers must be able to identify their customers. This is not often the reality in the world of multistep distribution, where the manufacturer has one or two purchase locations between themselves and builder or contractors making the decision on what to install. A lack of understanding of the end user and no established relationship with that decision maker can severely limit a manufacturer's ability to drive sales and puts the entire sales process solely in the hands of the channel.
To overcome this barrier, a vital component of a manufacturer's successful marketing plan must be a master database of their customers that is tied to purchase history or preferences. This allows tailored marketing approaches based on purchase history, volume, and even potential future revenue per customer. Once data is in a usable format, marketing can be tailored to leverage that information using multiple delivery channels such as email, direct mail, online engagement, voice calls and more. These channels are low cost and high impact and can increase the reach and frequency of brand messaging to make sure that end customers are consistently hearing about your company, keeping it top of mind.
It's important to understand this direct multichannel marketing to the end user is not a threat, but is an incredible pull-through support offering to the distributors and dealers in the channel- and can very effective in cross-selling or up-selling products that a dealer may not ordinarily push. Smaller complementary product lines are usually not on the top of the sales priority list, as they are often a lower cost or lower ROI, but for a manufacturer, they can provide an incredibly important boost to the top line and facilitate hitting a bottom line percentage. Similarly, multichannel can be the perfect source for introducing new products - a notoriously difficult undertaking through multistep distribution. Sales associates want to focus on the tried and true, as it provides a quicker, more certain return. New product launches often fall flat because of a lack of communication to the end customer, but with multichannel reach, a new product can launch much more flawlessly with assured message consistency.
Distributors and dealers no doubt play an invaluable role in the sales process for the building product industry, but they cannot be the entire sales and marketing effort behind a brand. Manufacturers need to take control of their marketing to maximize profit and to establish loyalty in the market. Ultimately, most brands don't know who their real customers are, and if end users aren't in a clear line of sight, then important sales opportunities such as new product launches, loyalty programs, and even cross sell and up sell will be minimized or lost completely. With true understanding of end customers and the use powerful multichannel marketing tactics, top and bottom line revenue can be dramatically increased. That’s why visibility is the first step to success in sales and marketing in the building products industry.