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Distribution customer service benefits from self-service, survey says

Self-service portals best route to improving distribution customer service, a new study shows.

Any manufacturing professional knows that order fulfillment doesn't end outside the four walls of the warehouse. Distributors -- whether they're a direct branch of a manufacturing organization or a third-party logistics provider (3PL) -- are a critical component of the supply chain. When distributors aren't doing their best, the customer is often the first to notice, so reliability is nonnegotiable. Despite this, many are failing to provide decent customer service, according to a survey by TermSync, a Fitchburg, Wis.-based provider of cloud-based business-to-business (B2B) portals. SearchManufacturingERP site editor Brenda Cole spoke with Mark Wilson, CEO and founder of TermSync, about the survey's findings and what distributors can do to better serve their customers.

How did you conduct this survey? What questions did you ask?

Mark Wilson: Besides your typical demographics questions, we looked at what the distributors are currently offering their customers. We focused on customer experience. Every distributor we work with claims to do a great job of customer support when their customers call in, but we were looking at what tools they were providing customers for more of a self-service model. So, do you provide your customers access to an online portal, and if so, what actions can the customer do? Can they pay an invoice, ask a question, and get supporting documents? Lastly, what metrics do you measure your team by for how well you're addressing the customer's needs?

What was the most interesting or surprising finding from this survey?

Wilson: I think the most interesting part is how few companies are offering customer portals, and we're nearing the end of 2013 and they're selling to small businesses. In this day and age, people -- especially small business owners -- prefer self-service models.

We knew going into this that B2C [business-to-customer] companies are ahead of B2B companies when it comes to offering tools like this, but we thought there would be maybe 60, 70% of the distributors with customers portals, so we were surprised to find that only about 30% actually have them.

I was even more surprised that the most basic functionality -- paying an invoice -- was only offered by about half the companies that have customer portals. From the customer's perspective, if you're not offering that basic functionality, what's the point of a portal in the first place?

When it comes to customer support, are distributors living up to their goals -- and promises?

Wilson: They're definitely falling behind. I think part of it is that the reality of what customer experience is has changed a lot over the past three to five years. I have 100% confidence that they're addressing their customers' needs when [the customers] do reach out to them, but they're missing a huge segment that just never reaches out in the first place.

On the receivables side, we see with a lot of those minor issues -- not major ones, but enough so that the customer might not pay the bill -- the customer will just wait for the distributor to reach out when it's a couple weeks past due. If the distributor has a more self-service option, we've found that the customer is more proactive in getting those issues resolved earlier.

When we talk to distributors, it's not that they're providing bad service for the interactions they have -- it's just that they have blinders on and they're only focusing on the interactions they have from their perspective. They don't realize that they're missing out on the people that don't want to take time out of their day to call into a customer support line.

How quickly are distributors responding to customer needs? Is this above or below average compared to other types of customer-facing industries?

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Wilson: The distributors we have that actually monitor their customer response time find that it averages one business day. We're seeing that for the types of interactions they're having, that's more than adequate. I'm not saying that the portals should replace phone service. For customers that are having huge issues that need to be taken care of right away, they're still going to call in. But for the issues that can involve logging into a portal, it's usually fine to be taken care of in a day or so.

However, very few distributors track that [response time]. The ones that do track it obviously place it as a priority, so they're naturally going to do better. The ones that don't track it don't have any numbers to point at, but anecdotally, their [customer response time] is slipping through the cracks.

In general, do you think distributors are making good use of technology to improve their customer service?

Wilson: There's definitely room for improvement. Outside of our survey -- we pulled some numbers from Forrester and other places -- there seems to be between 70 and 75% of small-business owners that prefer a self-service option, such as a portal.

[Every distributor] we talked to knows that eventually, it's something that they're going to have to do; it's just a matter of putting a priority on that. It affects your customer, and your customer's experience in today's highly competitive environment. What's more important than that?

So to sum it up, what needs to be done to improve distribution customer service?

Wilson: I think whether it's distributors or B2C companies -- everyone looks at Amazon, for instance -- the reason companies do a good job is that they really look at things from their customers' perspectives. Most distributors claim to do that, but really they're only looking at the interactions they have when customers do call in. I think they need to go through the exercise of putting themselves in the shoes of a small-business owner and thinking about when they're inevitably working with multiple vendors, how it really takes a pretty big issue for them to pick up the phone and call, and how much easier it would be if there was a self-service option.

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