For manufacturing distributors, investing in your organization’s customer service function is critical for profitability. Taking care of customers shouldn’t take a back seat to selling to them.
Distributors benefit from excellent customer service because it drives higher profit margins through value-added solutions, builds long-term customer loyalty that prevents churn, and provides a powerful competitive edge in crowded markets where products can seem like commodities.
Key Takeaways
- Customer service drives margin, not just satisfaction. Service-related margins can run up to 10 times higher than those of initial product sales, with top distributors earning half their revenue from services.
- Great service builds loyalty and referrals. A smooth, delay-free experience keeps customers happy, increases customer loyalty, and improves your chances for referral business.
- Service is the new differentiator. As products become commoditized, customer service training becomes key to standing out and winning against lower-priced competitors.
Being customer-centric has always been a pillar of success. But in today’s overcrowded marketplace, it’s more critical than ever.
Benefits of Excellent Customer Service
Great service and support can take a load off your salespeople, who frequently end up fielding unanswered support calls.
Savvy distributors are providing their service department with consultative selling skills training so they can understand the customer’s pain points better, and they use this information to maximize the value derived from purchased products and services.
1. Achieve Higher Margins
Leveraging value-added services provides tremendous profit opportunities for distributors. This function of your business shouldn’t be viewed as an afterthought but as an opportunity to increase sales.
According to research, margins generated by service-related activities can be as much as 10 times higher than those of initial product sales.
In recent years, there has been a change in the role of the service organization. No longer is service just about delivering support. More and more it’s about truly understanding your customer’s pain points and using this information to maximize the value derived from purchased products and services.
Some leading distributors are already generating half of their revenue from the service business, thanks to the disproportionately high profit margins of services compared to new-product sales.
And as we all know, it’s much cheaper to service and retain current customers than to acquire new customers.
2. Increase Customer Satisfaction and Customer Loyalty
A positive customer experience before, during, and after the sale increases customer loyalty to your company and improves your chances for referral business.
Part of a customer-centric focus is understanding what customers are unable or unwilling to do themselves—and providing that service for them.
Best-in-class distributors are continuously raising the visibility and stature of service within their organizations. As a result, they’re able to align themselves as solution partners with customers. This leads to increased customer satisfaction along with the development of more strategic, long-term relationships.
3. Differentiate From the Competition
As a distributor, you know that commoditization of your products has never been more of a threat. When you can’t easily differentiate the features of your product, it’s necessary to go above and beyond with the customer service you provide.
Your buyers have always relied on word of mouth when choosing a distributor. Now that they can also research your company on ChatGPT and read reviews online, the strength of your service and support is an even more important selling point for buyers choosing a company to partner with.
Your products are often complex. That complexity puts timely support, maintenance, and repair in high demand, and it will only increase as your products become more specialized.
Prioritizing your organization’s ability to provide service after the sale is critical for building a strong brand and gaining a competitive advantage in your industry.
In a Crowded Market, Stand Out With Excellent Customer Service
An intentional customer service strategy can help your organization stand out in a crowded sales environment, keep your current customers satisfied, and open new revenue streams many distributors have neglected.
With the right plan in place, service can easily become your competitive advantage. To be truly effective with this function, you must have a well-established sales culture across your entire organization.
Your service and support team must have strong consultative selling skills and the ability to build value in order to maintain and improve your repeat-purchasing and cross-selling rates. It’s also highly beneficial to have a common sales language established, which allows the customer service staff to work in tandem with the frontline sales team.
The IMPACT Selling® system is a six-step, buyer-focused sales process that allows salespeople to differentiate from the competition, sell value, and command premium prices.
Give your team the customer service skills training needed to win customers, increase renewals, and keep them coming back with IMPACT for Customer Service training from The Brooks Group.
FAQs About Customer Service for Manufacturing Distributors
Q. Why does customer service matter so much for distributors specifically?
Because it’s much cheaper to service and retain current customers than to acquire new ones. In a crowded, increasingly commoditized market, service has become one of the few remaining ways to stand out.
Q. What skills do service teams need to deliver this kind of value?
Strong consultative selling skills and the ability to build value are essential for maintaining and improving repeat-purchase and cross-selling rates. Having a common sales language also allows customer service staff to work in tandem with the frontline sales team.
Q. How can a distributor start turning service into a competitive advantage?
By treating it as a revenue driver rather than a cost center. Raise the visibility and stature of service within the organization so it aligns as a true solution partner to customers, backed by an intentional, organization-wide sales culture and consultative approach.
