In wholesale distribution, capturing market share is directly connected to your customer service or fill rate. Since most companies can easily switch suppliers, delivering exceptional service is critical to differentiate from your competition. Here’s how improving your customer service and fill rate can provide a competitive edge.
1. Being in Stock: Obvious and Hidden Advantages
The most immediate benefit of being in stock is higher fill rates and greater sales. However, there are additional, less obvious benefits. For instance, maintaining stock allows you to become the go-to, reliable supplier when clients need it most. This reliability can differentiate you from competitors in a significant way.
2. First Impressions Matter
In an era of instant gratification, your customers gain a first impression of your ability to deliver based on their first few orders. First impressions last a long time and are hard to change. By consistently delivering on time and in full, you can influence new customers’ perceptions, making them more likely to choose you for future orders.
3. Strategic Customer Service to Build Market Share
Customer service is typically driven by the in-stock position of a warehouse. Yet, wholesalers who can prioritize order fulfillment versus FIFO have a greater ability to positively influence new buyers. If your business allows this flexibility, you can use this as leverage over your competitors.
If adjusting your order fulfillment process isn’t an option due to company policy or current systems, then the next best approach to gain market share is to strategically increase your customer service. By building a reputation in the market for being in-stock more often than your competitors, you create positive first impressions, thereby gaining and keeping market share.
4. Entering New Markets
When entering a new market, you should strive to exceed your standard service goals over the first six to twelve months. Set your service goal a percentage point higher or more than normal to create a strong first impression. Your service goal must be higher than your competitors’ fill rates for this to work. By keeping a higher customer service goal and delivering higher fill rates to your customers for a longer period, you then go beyond that first impression, and you establish a positive reputation in the market.
5. Sustaining a Positive Reputation
Once you establish a reputation for consistently fulfilling customer orders, you can lower your service goals while maintaining market share yet optimizing profitability. You can live on that reputation for many years. However, holidays or critical periods provide the opportunity to reaffirm your positive reputation in the market with tactically higher-than-normal fill rates.
Consider the example of a chicken restaurant chain that has a deliberate policy of sending larger than normal chicken tenders to new restaurants that opened within the last 3 months. By doing so, they are setting a great first impression. Then, they switch back to normal portions, which randomly have larger than average tenders. With their reputation cemented, their customers are less likely to switch to other competitors.
6. Adjusting for Seasonal Challenges
Another reason to increase service goals short-term is to compensate for seasonal variations when certain suppliers tend to ship less reliably. For example, some of our customers increase their service goals by 2 points during holiday periods to maintain their fill rates while competitors struggle to meet demand. This proactive approach helps maintain consistent service, further solidifying your position in the market.
Unlock Success: Control Your Service Goals with HIMPACT
Elevating your service goals might sound challenging without the right tools. HIMPACT Demand Forecasting and Replenishment Optimization consistently helps wholesalers, retailers, grocers, and beer & wine distributors maintain high service levels while reducing inventory. Schedule a meeting today with HIMPACT’s experts to discover how HIMPACT can position you as the preferred vendor for your clients.
