The last few years have seen a flurry of new Argentum clients in the distribution space. Distributor differentiation is especially challenging since distributors typically carry the same products at the same prices as their competitors. As a result, these distributors have been some of my most interesting clients to position.
One of these clients, Aldon, a 104 year-old distributor and manufacturer of rail safety equipment, recently pointed me to the UPS Industrial Buying Dynamics study. Conducted bi-annually, the 2019 study included a bonus deep dive into everyone’s favorite topic, the influence of millennials.
A few key differences between Millennials, Gen X’ers and Boomers stand out:
1. How They Research Vendors
- All three groups rely primarily on 1) online search engines and 2) company websites.
- They differ on the third tool they use. In contrast to Boomers and Gen X’ers who rely on company sales reps, Millennials do additional research on social media.
- Implication: Distributors and manufacturers should be thoughtfully upping their social media game.
- Recommended First Step: Make sure your LinkedIn presence is solid. Save Facebook for HR recruiting efforts and, unless your products are especially photogenic and interesting, Instagram is probably not for you.
2. How They Purchase
- All three groups cite company websites as their primary vehicle for purchase, but Millennials use websites only 18% of the time compared to their older peers who use them about a third of the time.
- Millennials are much more reliant on purchasing via mobile apps and/or through emails to dedicated account reps or customer service.
- Implication: While websites will always be important, you can’t stop there.
- Recommended First Step: It’s probably time to build that mobile app.
It’s important to note, though, that although Millennials are rising in importance, Boomers and Gen X’ers aren’t going anywhere. In fact, Boomers are retiring later than ever before and, thanks to seniority, Boomers and Gen X’ers still have much more independent buying discretion and fewer spending limits than Millennials.
The study also calls out some larger trends:
- Buyers are moving spending away from distributors in favor of buying directly from manufacturers or online marketplaces. This trend has persisted since the first UPS study, conducted in 2015.
- Manufacturers are perceived as delivering higher product quality than distributors.
- To telegraph value to buyers, personal services like training, post-sales support and easy ordering/returns have never been more important.