Building Better Customer Moats: How Channel Partner Collaboration Can Increase Loyalty and Share-of-Wallet

In today’s fast-paced and ever-changing business environment, distributors and manufacturers must understand their customers and their needs to create a defensible market position.

To protect your market share and customer base, it is critical for your business to create a system that encourages customers to repeatedly return to your product or services.

Keeping your customers from going to your competitors requires that you build a strong moat around them – a defensible position from which you can defend what you have already built.

How do you boost customer loyalty?

What keeps them coming back?

And how can you leverage channel partner collaboration to do both?

In this article, we’ll dive deeper into what you can do to increase customer loyalty, including channel partner collaboration strategies and other methods that will ultimately increase your share-of-wallet.

Creating Moats Around Your Customers

For just a moment, think back to medieval times.

Picture the castles built during this age and the great lengths that kings and rulers would go to protect their kingdom.

Many of these magnificent castles were surrounded by huge areas of water – moats – that kept their enemies from ever coming close to the castle walls.

In this way, a moat was one of the most powerful defensive mechanisms these leaders employed.

Today, distributors and manufacturers can take similar measures to create stronger moats around their customers to increase customer loyalty (with stickiness) and market share.

Your moat is what keeps your competitors from taking your customers. It refers to your competitive advantages, whether that is existing customer loyalty, a unique product or service offering, or a strong brand reputation.

What Are You Defending?

Knowing how to build a strong moat starts with a deep understanding of what you are defending: your customer. Look at your current customers. Do you understand their business, their pains, and how they win or are successful in the market?

Start there.

Then, take that knowledge back to your manufacturing partners as a distributor, and work with them to create new solutions and opportunities that can be leveraged with those end customers who you are now intimately knowledgeable with.

Connect those two dots.

That connection will further expand your moat (making it deeper, bigger, swampier) and make it harder for your competitors to encroach on your space. Most importantly, it will give your current customer a reason to stay within your “castle” – the family and environment you have created.

Putting this into action has to start with the distributor because they have a front row seat to their end customer’s business and their entire operation. With this information, they can create more ideas and solutions for their customers.

Distributors can then partner with their suppliers in deeper and new ways that aggregate more supplier partners across the entire operation.

How to Collaborate with Channel Partners

At Dorn Group, we’ve been advocating the following question in a big way: How can distributors and manufacturers work together in new ways to build bigger and better moats around their customers?

By working together, channel partners can create a more cohesive customer experience. It will also increase customer loyalty and share-of-wallet. These are just a few of the strategies you can put in place as you collaborate with your channel partners:

• Joint marketing and branding efforts: Work together to promote the brand and offer joint promotions and incentives to customers. This creates a sense of trust and commitment.
• Joint solution offerings: Offer combined products and services. This provides customers with a comprehensive solution that meets their needs.
• Joint customer support: Make customer service a team effort. This ensures that customers receive a consistent and high-quality experience, which can foster loyalty.
• Joint training and education: Offer customers the opportunity to learn from both the distributor and the manufacturer. This can increase customer understanding of the products and services they are using. It can also deepen their relationship with the brand.

Partnering Better with Your Suppliers

Another great question we get asked a lot is what it means for distributors to “partner better” with their suppliers.

To illustrate this, let’s take one simple example of innovation. Because you understand your customer’s needs, you can bring your customer data to the table in discussions with suppliers. Collectively, you can then build an innovative solution – preferably one that does not exist or isn’t leveraged in the market today.

This innovation should directly affect the positive attributes of your customers’ business, helping them grow and retain their customers.

When you do this, you provide high value to your partner. You help inspire innovation, meet requirements, identify needs and wants, and address the pains of your end customer. In addition, you can work with your manufacturer to develop solutions and deliver them to the market together.

Partnership Is the Path Forward

Having a better relationship with your suppliers can lead to several benefits for both parties, including:

• Improved communication: a more open and honest exchange of information.
• Increased efficiency: more streamlined processes, faster delivery times, and reduced errors.
• Improved product quality: closer collaboration on product development, which can result in improved product quality.
• Increased profitability: increased sales and profitability for both the distributor and supplier.
• Greater trust and reliability: create a greater level of trust and reliability between the distributor and supplier. This leads to a more stable and long-term partnership.

As you build a better relationship with your suppliers, you will experience mutual benefits. Principally, a stronger and more successful partnership will help you build a defensible moat that will protect your customer base and increase your share-of-wallet.

Thoughts? Questions?

As always, feel free to reach out to talk in greater depth about these and other issues impacting your business.