Issue link: https://www.e-digitaleditions.com/i/964617
January/February 2018 39 use products in a way that solves technical problems and enables new products. For example, Krayden helps manufacturers of cooking ranges and ovens reengineer designs to take advantage of new anaerobic adhesives to improve performance in extreme temperatures and mechanical stress, which extends equipment life. As a value-added service, it also offers point- of-use packaging in custom quantities that match a customer's production volumes with product shelf lives, ensuring that excess product does not expire before it can be used. For Krayden, relevance is about solving customer problems with products that require technical assistance. So, if a customer issue is solvable with an off-the-shelf solution, that product isn't right for the distributor. Instead, Krayden looks for products that can offer solutions for each customer's unique needs. To achieve this, its business model is carefully crafted around the suppliers it carries—Dow Corning, Henkel (Loctite), 3M, Alpha, HumiSeal and Huntsman. Focusing on these six premium brands allows for deep expertise around specific customer needs. It also means that Krayden can build committed and productive relationships with its chosen manufacturers. All of this adds up to a unique reputation with customers, one that is different from broadline distributors and one that cannot be easily disrupted by online marketplaces like Amazon. Strategies like Krayden's have the potential to create self-reinforcing and profitable customer partnerships. Differentiated technical expertise and a track record of solving problems can strengthen customer loyalty, increase win rates and support margins. Costs associated with random demand generation are replaced with focused business development efforts. Chosen suppliers are more likely to offer incentives and programs tailored to technical selling and close collaboration. Higher-than-competitive margins are reinvested in differentiated capabilities. None of this is easy. It's about designing a new business model around supplier partnerships, customer solutions, differentiated capabilities and carefully managed financials. Capabilities Make Partnerships Real Staying relevant is an ongoing investment in capabilities that strengthen partnerships and drive desired business results. It's about being able to answer the eternal question, "What have you done for me lately?" Krayden focuses innovation and investment in three essential capabilities: Information technology–"We actively look for software that we can easily connect to our databases, with the goal of improving customer and supplier service levels," says Krayden's President Wayne Wagner. "Speed is critical. With the right hires and management involvement, we make technology decisions in 30 to 90 days. In the past, we would take a year or longer to decide on an IT investment." I have heard similar experiences from other distributors—big decisions around ERP, e-commerce platforms and CRM are about keeping pace with competitors. Winning is about adding technology that continually improves customer experiences. Digital Marketing–"We need to build our brand and the benefits of our premium brand/technical expertise model," Wagner explains. "We've divided our marketing team around traditional and digital roles to make sure we execute as we explore new approaches." Digital marketing contributions are becoming more and more important and, like many distributors, Krayden looks to outside hires to add new expertise to improve and leverage product content, videos and configurators, e-enabled salespeople and more. Ultimately, success is about having the opportunity to answer customer questions when and where they choose to ask them, online and in person. Analytics–Krayden uses data to prove value for customers and suppliers and has learned that backing up promises with data is about building a new culture. Examples include data on buying trends, cross-selling opportunities, market segmentation and feedback on incremental business growth. Everyone, at all levels and all positions, must be comfortable with data and use it to reinforce their unique business model and differentiated value. Analytics lead to trust as data identifies root causes of problems, demonstrates follow-through on commitments and measures created value. Across my work with distributors, critical examples have included using data to quantify results of a sales call, calculate share and opportunity in target accounts, overcome factory shortages or quality issues, and demonstrate follow-up on marketing campaigns and leads. Every important question is answered better with data. Execution Requires a New Business Culture As distributor leaders work to adopt digital tools and innovate their business model, a learning process occurs. Early on, decisions and funding for technology and people investments are a major hurdle. Later, it becomes clear that resistance to organizational change is a barrier to execution. Effective business leaders proactively define the new business culture—that is the behaviors and values that are required for change—to ensure that changes take root. Krayden's experience matches this reality with important The closer the collaboration and the higher the commitments, the more data is required to cement the partnership.