Industrial Success Depends on Trust and Respect

by | Feb 15, 2023 | Growth

Customer trust and respect are key to long-term growth

Ways for Industrial OEMs to Differentiate in the Marketplace

When business conditions lead to a decrease in orders, offering prospects more value for their money is important. However, it is almost impossible to create differentiated products and services.

Here are three paths that do not cut it:

  • Genuine innovation will temporarily gain market share for the original equipment manufacturer (OEM), but that position will have a limited lifetime.
  • What about differentiating through customer experience (CX)? Realistically, CX can only serve as a tiebreaker between multiple products to help buyers achieve their desired business outcomes.
  • Finally, we can always differentiate by price. However, that strategy is a race to the bottom and will not result in long-term business success.

I know this sounds discouraging, but creating and retaining a competitive advantage is possible.

Industrial products and services are complex. Using complex products results in numerous business outcomes. Some outcomes are not tangible but emotional (like peace of mind). Therefore, deciding which product is right for the prospect often depends on qualitative, not quantitative, analyses. And the more your prospects and customers trust you, the more they will listen as you and your team guide them through the buying and maintaining processes.

This is why your company and your customer-facing team must have earned the trust and respect of your prospects.

What Is Trust?

In its simplest form, trust is the belief that people hold that another person, or group of people, is honest and reliable. When you say you will do something, the listener believes you will do it. And when you say you will not do something, they think you will not do it.

The Edelman Trust Barometer, which reports on Global trust, said this in its 2023 report: “Business is seen as competent and ethical: Business has increased its ethics score for the third straight year, rising 20 points since 2020. It is the only institution viewed as both competent and ethical.”

You might think this is good news for you and your Business. Gallup, the polling organization, recently conducted a poll asking Americans to “please rate people in each of these professions based on their honesty and ethics.”

The six professions with the lowest rating, sorted from lowest to highest, are:

  1. Telemarketers (the lowest of all)
  2. Members of Congress
  3. Car salespeople
  4. Business executives
  5. Advertising practitioners
  6. Journalists

I was surprised that business executives ranked so low (fourth from the bottom). Earning a reputation of honesty and ethics, which describes “trust,” has not been accessible to individuals in our current business and cultural environment.

Trust and Dealers

The OEM’s relationship with its dealers is critical in our current industrial business model. In most cases, the dealer is the face of the Business. They sell, service, rent, finance, remanufacture, train, and generally support the equipment buyers and end users.

They speak for the OEM. They collect customer insights and share them with the OEM. They help plan the product roadmaps and prioritize its features and benefits. If they get it wrong, the OEM is out on a limb that is being cut from the tree trunk. And there are no do-overs.

Unfortunately, in many cases, the OEMs and dealers are not aligned on the relationship goals and what everyone must do to achieve these goals. This results in a weak relationship.

Some symptoms of a weak relationship:

  • The dealer refuses to provide a periodic sales forecast.
  • The dealer “owns” the customer exclusively.
  • Neither party is interested in implementing e-commerce for spare parts.
  • The dealer has several principals, including your direct competitors
  • When OEM technical people have to visit the dealership, the dealer is always digging for information, and the techs feel like they are in the middle of a fight between Mom and Pop.
  • Some data is shared in both directions, but the OEM and dealer believe they are receiving little information while sending a large amount of information.

The root cause of most of these symptoms is a mutual lack of trust.

The outcome of a poor relationship is that both the OEM and the dealer feel trapped. They are both making some money, enough to maintain the relationship, yet they think there is a large, untapped potential just waiting to be uncovered. And they are probably right.

How to Develop the Mutual Trust Needed to Grow Both Businesses

OEM and dealership leaders are generally seasoned executives who know how to handle tricky situations. Thus, there is no reason to reiterate all the steps you already know about conflict resolution. However, I will describe some unique preparation required for the initial “get well” meeting.

Both parties should prepare a descriptive paper on what they would like the relationship to look like in the long term. They should focus on the WIIFM (what’s in it for me) and articulate what they can do to ensure its success.

For example, a dealer’s most significant need may be a steady stream of high-customer-value new products or a regular release of upgrades for existing products. Making this statement is the minimum the dealer must do to begin making progress.

However, to make serious progress, the dealer may say: “To help you achieve this objective, we can talk about products and upgrades with our key customers, document what we hear, and send you a monthly summary of the suggestions we heard.” The dealer can volunteer to make it more give and take: “We can also schedule periodic meetings with your keeper of the product roadmaps and our service and sales manager, and at times, bring in our salespeople who are killing sales of any specific product.”

Meanwhile, an OEM’s big issue may be their perception that dealers’ salespeople frequently call product managers and ask “basic” questions about new products and their value propositions. Once this topic is raised, without accusing the dealer’s salespeople of laziness, either party might say, “I just heard of a new app called BAM! It is designed to simplify content management and publishing for marketing teams and ensure all sales reps have the right content at their fingertips, even offline.”

A third possible issue is that each Business has the information it wants to keep confidential. This may be financial data or information identifying specific customers. Once the dealer and the OEM agree that increasing the amount of data shared would be mutually beneficial and openly identify the types of data they want to protect, both groups can get their IT representatives together to figure out how to automatically share only the mutually agreed-upon information and when the sharing will happen.

Four Concluding Thoughts

  • Dealers may have relationships with a few OEMs at most, while OEMs have relationships with hundreds of dealers.
  • OEMs desire one set of rules for all their dealers, including some areas suitable for customization.
  • The United Nations has 193 member states, each with unique customers and business practices. Dealers should consider this number when negotiating their working agreement with each OEM.
  • Remember — the objective is to create and retain profitable customers in each dealer’s territory.

Good Luck and Good Selling

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About Middlesex Consulting

Middlesex Consulting helps our B2B product manufacturing clients grow their service revenue and profitability by applying the methodologies and techniques associated with Customer Value Creation and Customer Experience professions to assist its clients in designing and commercializing new services and the associated business transformations. Contact Sam here.