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Winning Customers’ Hearts & Minds

When a business is a sales-driven organization — as distribution undisputedly is — why give anything away for free? That question has plagued the channel for decades: Services such as bar-coding, cable assembly, kitting, and all kinds of customization traditionally are viewed as “free with your purchase of components.”

The problem is, these services don't come for free. Everything a distributor does costs it something in terms of labor, transactions, warehousing, and shipments.

Charging customers for such services didn't go over well when the channel tried it a decade ago. Since then, distributors have tried a variety of methods to “monetize” services or just figure out ways to link that free stuff to a sale. So when {complink 12809|element14} launched The Knode, one of the questions EBN asked was “How is the company going to make money?” Element14 and its parent, Premier Farnell plc, have dedicated a lot of resources to a free service that may or may not result in component sales.

The answer, senior director of global technology Jeff Jussell told EBN in a phone interview, is a “merger between community and commerce.” Distributors, Jussell explains, don't really see a product design until a BOM (bill of material) or an RFQ (request for quote) hits someone's computer screen.

“As a distributor, we don't see a design until it's complete,” he says. “But there is one decision point where the engineer is going to be looking for something — a component, some specific information — and if we can help them make a decision, we can 'capture' that engineer. If we can help those engineers early, by the time they get to the BOM, we can be part of the purchasing decision.”

Knode users can go to a component storefront, price components, and purchase parts with only a few clicks. “Obviously, you'll see our prices next to the solutions, but the big win is our positioning with the engineering community,” Jussell says. “We are playing against everyone else on service and price, but by helping engineers with their design, we can strategically position ourselves to become part of the purchasing decision.”

This merger of community and commerce is happening one way or another on both distributor and supplier sites. These companies all are businesses, and whether they are publicly traded or private, all are responsible to their shareholders — and shareholders' tolerance for free stuff is low. In the coming weeks, EBN will be looking at some of the efforts to capture the “hearts and minds” of the electronics industry customer. Ultimately, of course, the real idea is to capture a portion of the customer's “spend,” and this will be the real measure of success.

4 comments on “Winning Customers’ Hearts & Minds

  1. Anand
    June 25, 2011

    “but by helping engineers with their design, we can strategically position ourselves to become part of the purchasing decision.”

    I totally agree with Jussell's opinion. I am sure “The Knode” will help engineers in design aspects and this will help build relationship between distributor and engineer.

  2. hwong
    June 25, 2011

    Actually the company should involve end user when developing the products. That way they will be making exactly what the end user wants. And having the involvement will make the company sales better

  3. prabhakar_deosthali
    June 26, 2011

    By providing free access to the services the “Knode” partipants will be indrectly advertising their products. By attracting the design engineers to this site, the component companies can save a lot on sending catelogues to individual engineers and also save on the expenses on the application engineers visiting the design houses to sell thier company's components.

  4. Himanshugupta
    June 27, 2011

    @hwong, this might not be easy to collaborate with every engineers but this mode of helping can capture the imagination of the engineers and can help company in product development decisions. They can better capture the trends and needs of the specific markets.

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