Evidence Over Instinct – Why Applied Research Matters in B2B Distribution Strategy

Reginald T. Bear analysing quantitative applied research

In this article, I'll be covering the topic of applied research, using the world of business to business (B2B) distribution as a foundation. The elements I talk about in this series of articles can be applied in many different business contexts, but as B2B distribution is my area of experience, having served in it for 15 years, it made sense for me to use this as a base from which to bridge the gap between academic principles to practical application. These articles have been adapted from the assignments I've submitted as part of my Chartered Manager (CMgr) accreditation with the Chartered Management Institute (CMI) and as such are intended as an introduction to what is a much broader subject area.

Contents

Introduction

Why Applied Research Matters in Distribution

Applied Research in Practice – A Distribution Example

Conclusion – From Instinct to Evidence

Introduction - Applied Research and Why It Matters for Distribution Strategy

It’s fair to say that many leaders in distribution, myself included, have, and still make million-pound decisions based on instinct. While this gut feeling is a big part of the entrepreneurial flair required to launch the business in the first place it shouldn't be relied on in isolation. Nowadays, markets are too dynamic for intuition to be the only driver towards competitive advantage.

In order to stay relevant and profitable, B2B distributors need to test assumptions, and also take time to understand the forces which ultimately shape a customers behaviour in a bid to ensure that decisions are backed by evidence. The process of research, which is designed to solve practical, business related problems is known as Applied Research (Sekaran & Bougie, 2016, p.6).

Not all research is the same. Applied research differs from pure (academic) research because it's designed to solve problems rather than just describe them (Saunders et al., 2016, p.10). While pure research is fundamentally important, it’s not necessarily going to solve the problem YOU have in YOUR business. This article all about applied research and why it matters for distribution strategy.

Final note - Many struggle to see the benefits that academic research brings to solving real world problems. If academics were really that smart, why would they share their secrets? We’ve all seen the personalities discussing the course they provide, which, for the bargain price of £10,000 will teach you how to take your business into the stratosphere (spoiler: many of these gurus get rich by selling their courses, not by implementing the techniques they teach). It's critical to recognise here that practitioners (those involved in the day to day running of a business) are often on the frontline, tackling the issues the business faces. Academics on the other hand have the luxury of being able to 'zoom out' and assess patterns and trends from hundreds of thousands of similar issues. It's also worth remembering that some of the longest serving academic frameworks and theories were born out of academics working with industry, not just from 'armchair thinking'.

Why Applied Research Matters in Distribution

I've definitely been guilty in the past of not taking applied research seriously (mainly because I didn't realise it was a thing!). Stocking a range of heat pumps not embraced by customers, or failing to really dig in to customer feedback about service levels didn't just play havoc with working capital and dent profit margins, it eroded customer trust, at best, and damaged supplier and customer relationships at worst.

In B2B distribution, applied research is not a luxury; it’s a competitive necessity. Structured thinking helps you:

• De-risk commercial decisions.

• Sharpen your service offerings.

• Build stronger, evidence-backed customer relationships.

Just to put it in context, below are some of the most common challenges that I and many other distributors face:

• Which product lines to stock

• How much capital to allocate to stock

• Which support services most influence customer loyalty and retention (e.g., warranty handling, technical training, delivery tracking)

• How to identify the gaps in the market before competitors do

Academically speaking, research provides a systematic way to reduce ambiguity and turn uncertainty into a level of decision making clarity (Easterby-Smith et al., 2021, p.4). That is to say that applied research offers structure to help solve uncertainty.

Quick example, before we really dive in. A distributor is considering whether to expand it's range of widgets. Without solid evidence, the decision may rely on anecdotal feedback from the sales team, as it has done many times before. By taking a step back and conducting a short survey of a number of customers, and then analysing the patterns of customer interest, broken down perhaps by price point and the bells and whistles customers would like to have present with the widget, your business would have solid data to back its decision on which range to stock. There are no guarantees in this world, but an approach like this would mitigate a significant amount of risk.

Now we've illustrated the approach high level, let's really dig in to see how it would play out in the real world

Applied Research in Practice – A Distribution Example

Lets imagine a distributor operating in the adrenaline fuelled world of low carbon heating. This distributor is stuck on whether they should bring a new line of heat pumps in to their product range. The sales literature from the manufacturer says that this is the greatest thing to happen to heat pumps since the vapour compression cycle and the business has an opportunity to be one of the first out of the gate. The sales team love the kit and they are confident that there is little point in even thinking about shelf space as they'll have it sold before it even hits the warehouse. It's a much more efficient piece of kit, however, it comes at a higher price and the stock commitment is significant.

Now, there are two approaches that can be undertaken here.

Approach One - The gut feeling:

Trust the sales team’s feel for the market and go for it. Commit to stock, and hope against hope that the product performs. It's worked before and it'll work again

Approach Two - The research-led approach:

1. Survey a representative group of customers (e.g. installers or merchants) to test real-world demand. Customers feel heard and get the opportunity to shape your strategy

2. Interview a smaller sample to explore any barriers. Training, price point and brand awareness are all potential barriers which could slow the sales train down significantly

3. Analyse historic sales data from any comparable product lines. You might not have sold the exact same unit before, but have you sold anything similar?

4. Triangulate (cross analyse) the findings to identify both risk and opportunity. Has anything popped out from surveys that you weren't aware before?

As I mentioned earlier, there are no guarantees in this world, but approach two moves much closer to a decision based on evidence rather than a gamble. Through the research process, your business has now established:

a.) When push comes to shove, there is a genuine demand

b.) What the drivers or blockers for adoption are

c.) The start of a marketing and stocking strategy (see my articles on strategic marketing and procurement coming soon!)

It's fair to say that the applied research approach can often reveal insights or knowledge that can reshape what you believed your entire strategy was. An example of this might be that through research you learn that there is demand for a higher priced, higher efficiency piece of kit, but there is significant uncertainty from installers around the brand as it's relatively new to the market. This problem may potentially be solved through running comprehensive technical training courses and marketing the rich history of the brand in other markets.

Conclusion – From Instinct to Evidence

Applied research doesn't have to be a monstrous task which outweighs the problem it's looking to solve. Research should be proportionate to it's purpose (Sekaran & Bougie, 2016, p.96), while being rigorous enough that you can trust the findings. It also shouldn't be so onerous that it becomes impossible to implement the results in real time. Ultimately, the goal here is credible, timely insight, not perfection.

There is no getting away from the fact that any research will slow a business decision down.... a little. But, truth be told, any activity which ultimately saves relationships, profits or reputation is time well spent.

In B2B distribution, applied research is not a luxury; it’s a competitive necessity. Structured thinking helps distributors:

• De-risk major commercial decisions.

• Sharpen service offerings.

• Build stronger, evidence-backed customer relationships.

I've used heat pump distribution as an example, but the underlying principles extend across pretty much any business. The businesses that thrive will be those who can confidently say, "the data shows this is what customers want”

“In much of society, research means to investigate something you do not know or understand.” - Neil Armstrong

References

Easterby-Smith, M. et al. (2021) Management and Business Research. 7th edn. London: SAGE Publications.

Saunders, M., Lewis, P. and Thornhill, A. (2016) Research Methods for Business Students. 7th edn. Harlow: Pearson Education.

Sekaran, U. and Bougie, R. (2016) Research Methods for Business. 7th edn. Chichester: Wiley.