Question

Topic: Research/Metrics

Dbase Mktg / Ltv /... In Manufacturer To Wholsaler

Posted by Anonymous on11/9/2006 at 10:42 AM ET 250 Points
This afternoon, I decided to dig a little bit into the world of database marketing, lifetime value, and related metrics, ... and I came to the conclusion that his could be a pretty neat project to start in the company I work for. However, I have no clue about if it is indeed a good idea for us! Most examples I've been able to find deal with sales to consumer, or to quite frequent buying customers (BtoB).

but we are a manufacturer that sells boats to an established and quite fixed network of Distributors (national level) in some countries or Dealers (sub-national level) in other countries.

Therefore, the notion of 'repurchase' seems a little bit out of tune since these Distributors, and to some extent the Dealers, will of course order again from us. The Distributors because we usually represent a large chunk of their business, and they can't change supplier so easily. The dealers because boat purchases represent a high level of investment for them, and not many of them can afford to be multi-branded.

Now, this is only one case in which I'm wondering how effectively we could make it work for us, and I guess that what I'd like is to be reassured before I embark in the project (and buy and read a 400 page book on the subject!)

Thanks in advance,

Xavier
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RESPONSES

  • Posted byPaul Linnellon11/9/2006 at 4:05 PM Accepted
    Hi Xavier,

    I’d like to address the “lifetime value” part of your question, as I believe that this is an extremely relevant metric to your business. You explain that your network of Distributors and Dealers is “established and quite fixed” and that they can’t change suppliers very easily.

    By the same token, I expect that attracting new business from other established distributors and dealers is hard since it would be difficult for them to change from their existing suppliers very easily too.

    This is precisely what makes the “lifetime value” of your distributors and dealers so relevant. Consider the cost to your company of acquiring a new distributor - compared to the relative ease you currently experience obtaining repeat orders from your existing dealers. This is the cost you would incur to replace the business from a distributor if you lose one. It is also likely that orders from a new distributor would take several years to build-up to the volume of sales you currently enjoy through your established network.

    Establishing a simple “Lifetime Value” metric for each of your existing distributors and dealers would also help emphasise the importance of a robust customer retention strategy for your company. One where your marketing investments might help you build on existing customer relationships. For example, strategies that provide value to distributor networks that make their businesses more successful, will in turn improve the manufacturer’s bottom-line and keep them loyal. Such a customer retention strategy should also look carefully at the way you currently do business with your network to ensure that your products, associated services and sales processes make it easy to do business with you. “Lifetime value” itself won’t tell you what you have to do – but it will help point to where you should start.

    Anyway, I hope this helps a little.

    Best regards

    Paul
  • Posted bydarcy.moenon11/9/2006 at 7:40 PM Accepted
    Another interesting exercise would be to look over the fluxuations of your dealer's orders through the years. What would cause sales to rise or fall?

    Are certain dealers trending up? Why?

    Dealers who are trending down, and again, why?

    Cost of dealer acquisition is a good one. Once you know how much a new dealer is worth, you know how much you can invest in finding new ones.

    Darcy Moen
    Customer Loyalty Network.
  • Posted byFrank Hurtteon11/15/2006 at 1:31 PM Member
    data base mining for a distributor network works... it involves selling all your products.. not just the winners..

    if you want to talk about it, reach me via my website
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