Optimizing Distributor Data: Enhancing Customer Insights and Judgment (Full Transcript)

Speaker 1: So let's talk about how distributors can simplify their data and apply better judgment. Let's start with customer information. What do distributors really need to know about customers?

Speaker 2: This is the word judgment and that reminds me of one of my favorite people which is Colin Powell. I'm paraphrasing but he said something like there are more people out there with good data than there are people with good judgment. And maybe he was thinking of the espionage community when he said that. He certainly wasn't thinking of wholesale distributors. But I do think that there are a lot of distributors out there who have lots of good data. And I think anybody who is using a decent transaction processing system has got all the data they need. It's really a question of do they know how to get it and how to use it. What are they going to learn from it applying that good judgment hopefully that they have. I think in terms of customers, distributors need to understand which customers and customer segments which is of course a group of customers with similar characteristics, which ones are profitable and which ones aren't. And if they have enough data, not too much, but they have to have enough data about those customers so they can use their judgment to understand why some of the customers are profitable and some of the customer segments and why some of the customers in groups of customers are not profitable. That's customer information. But I think when you take transactions they are sort of the building blocks of the whole data area. You take the transactions and you group them together and then you get customers because customer data is just a group of transactions for that customer for example. You put them together for a sales territory or a branch, then you can pose the same questions which ones are profitable, which ones aren't, why or why not. So that's I think customers are a great place to start.

Speaker 1: Becky Peltz Well, you've also said that data can be used to more easily work with those customer groups and determine which part of your company should tackle or should target each type of customer. Could you talk a little bit more about the role of data in that?

Speaker 2: David Morgan Well, I'm thinking again of customer segmentation and many times people think of customers in segments in terms of SIC codes or some other marketing type code such as what industry is this customer in. I think one of the fallacies unfortunately of SIC codes or NICIS codes is that they relate to a label that's put on the customer like an automobile manufacturer in the SIC codes is indicated as primary metals. But an automobile manufacturer is a lot of things. They're a manufacturer of transportation equipment. They're also in the electrical business and they're in the painting business. They're in all these different businesses. So I think the SIC code often is misleading or it's just not that useful to also a distributor. So if we talk about segmenting customers, what I'm thinking of is how do we take our customers for a branch or for a company and group them by let's say what's important to them. Which products are really important to them? How do they buy? What is the purchasing process they use? How do they like to deal with our company? What are the customer's goals? What are they trying to accomplish in their business? And the goals of a nursing home naturally are different than the goals of a hospital. And the goals of a hospital are different than those of a factory. But those goals and the way they work have a lot to do with how they like to do business with their suppliers. And most distributors have the idea is they want to get as much business from their customers as they can. So again, I would start grouping the customers using the data that I have about the customers to see as I suggested what's important to them. It's also a question of where are they and how big are they and some other characteristics about them that our data can tell us.