Why Wholesalers Should Reassess Their Service Portfolio

A recent research study has been released by the National Association of Wholesaler Distributors.  This study focused on wholesale distribution and how this market has been affected by the onset of a new era of our economy, which is defined by uncertainty and greatly reduced predictability in sales and consumer demand.  The summary of the study and its results, written by Guy Blisset, propose several strategies that wholesale distributors can employ to increase the success of their businesses in an uncertain economy.  One suggestion proposed by the research was for wholesale distributors to reevaluate and, if necessary, restructure their service portfolios. 


Services are generally offered to clients by most wholesalers and distributors, which, if executed properly, can effectively increase the profitability and success of a business by drawing in new clients and keeping current clients satisfied.  Proper execution of services is the key.  Unfortunately, many wholesale distributors commonly fall short in several areas of service provisions.  Some of the largest areas of concern in these regards include the following: unintentionally portraying services inaccurately to clients; services failing to properly meet the needs of clients, especially on the individual level; managing and offering services as a bonus rather than as a main component of the business; failure to understand how to deliver services in a way that is cost effective for the business; and failure to successfully demonstrate the value of services to clients.    


These common pitfalls can largely be attributed to a combination of three main factors.  Firstly, the true cost of providing each service is often incorrectly calculated.  Secondly, the actual value of each service is not realized.  This could mean that the value is either inflated or understated by clients, wholesalers, or both.  Lastly, the revenue brought in by each service is often not within the profit margin envisioned by the service provider.  This is because many wholesale distributors often have a skewed perception of the actual costs and profit margins associated with the delivery of individual services. 


Fortunately for the average wholesale distributor, there are three things that can be done to avoid the aforementioned pitfalls and successfully implement services.  First and foremost, wholesalers must collaborate with their clients to gain a more complete understanding of their needs, which will aid in the understanding of the services that will concomitantly be most valuable for clients and most profitable for the company.  After this task is complete, a consistent service strategy must be constructed and implemented company-wide.  Ensuring consistency in the delivery of services will increase customer satisfaction while simultaneously increasing the ease and accuracy with which these services are delivered.  One more important action wholesale distributors must follow through with is the continuous management of their services portfolio.  This is because client needs and costs associated with the delivery of particular services evolve.  The regular management of service portfolios allows wholesalers to be sure their clients’ needs are met at a price that is both reasonable and profitable.         


If these steps are taken, wholesalers will provide themselves with the opportunity to successfully bring in new clients and maintain a working business relationship that will ensure the happiness and continued business of new and current clients.  More importantly, proper reevaluation of service portfolios will help wholesalers to maintain the majority of influence over the profitability of provided services, which is important because wholesalers, rather than their clients, should be the ones to dictate the profitability of their services.         

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30 Jan 2012

By Jennifer M. Cullin