Smaller suppliers are responsible for driving much of the packaging industry’s innovations; they’re often the first to experiment with and trial niche products. That said, they often find it difficult to make serious inroads in the market. They don’t have an instantly recognisable brand to rely on like an Amcor or Mondi, they often don’t have a national or global presence, and they can’t afford to undercut bigger players on price. There’s a perception that the largest suppliers will remain the largest forever, and that it’s nearly impossible for anyone else to get a look in – but it’s wrong.
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By Paul Black, CEO, sales-i
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Certainly, if yours is a smaller organisation, it’s much harder to generate brand awareness, to extend your company’s reach, and to create an attractive value proposition. With the right strategy, however, it can be done: there will always be a market for customer-centric, value-focused suppliers.
You just need to be smart about it – and keep these three rules firmly in mind.
1. Be different
The idea of competitive differentiation is often difficult to apply to the packaging industry. The virtues of stronger plastic wrapping or more resilient packing peanuts may be obvious to insiders, but to your customers it’s often hard to tell one kind of cardboard box from another.
To differentiate meaningfully, you need to think about changing your company as a whole, rather than focusing only on what it sells. To do this, you need to align with the preferences of your target market: what do they value in a business relationship – and how can you make your organisation more appealing to them?
Consider, for example, that 60% of people say that buying goods from ‘socially responsible’ brands is important to them: they want to feel like their purchasing and consumption decisions aren’t having a negative impact on the earth, and are contributing to the general wellbeing of the environment and society.
So make an effort to be more sustainable: use recycled materials wherever possible, and make your own goods recyclable wherever possible. More than that, encourage your employees to conduct themselves in an eco-friendly fashion: you don’t have to exclusively use solar power, but if you share equipment and stationery and minimise your energy usage, you can earn a ‘green reputation’ and save money at the same time.
You’ll always sell packaging, but if you can sell it more virtuously than your competitors, you’ll pique the interest of your ecologically-minded customers. Company culture can be a serious competitive difference.
2. Develop relationships
Larger competitors can always beat you on price, but they can’t always beat you on value. While you likely can’t afford to undercut them, they can’t afford to spend too much time cultivating individual customer relationships.
This can be a major advantage for any smaller supplier: you can offer unbeatable levels of personalised service. Across all industries, customers have become jaded by transactional business relationships – where they’re often treated as mere numbers to be entered in a company ledger, and given almost no post-sales support.
By defying this expectation, your business has a unique opportunity to build brand loyalty. You can send them an email asking for their opinions on a new product release – making them feel like a trusted confidante and getting them to provide valuable feedback ahead of launch. You can send them the odd value-add such as free delivery to keep the relationship going: enough that they feel like you care, but not so much that it impacts your revenues.
You have a golden opportunity to make your business relationships more personal. Take it!
3. Tech charge
Finally, business technology offers a means of supplying you with actionable information about your customers, deepening your insights about their habits, preferences, and buying patterns. Business intelligence software, for example, can use historic customer purchase data to highlight potential strategic and tactical opportunities that might have otherwise eluded you. If, for example, customers buy moulded pulp in great quantities – but only in summer – you’ll be made aware of this trend, and the system will recommend you pre-empt the seasonal pulp splurge with a special offer.
But it works on a micro level as well. If an individual customer buys both bubble wrap and corrugated fibreboard pads, the software will illuminate this correlation – giving you the chance to provide both items together within a tailor-made discount package.
What’s more, the right technology keeps track of these things over time – so if a customer relationship starts to trail off, you can pre-empt any defections to your competitors, and work to salvage the arrangement before it becomes unsalvageable. Equally, you can reward those customers who demonstrate strong loyalty, and ensure they stay around in the long run.
As a smaller business, you can afford to look at these customers as people. You can reward them for loyalty, and you can incentivise them to stick around: you may not be able to lower your prices without consequence, but you’ve got every opportunity to provide focused, personal, industry-beating service.
If you seize it, you’ll also seize a considerable competitive advantage.