How Distributors Will Use Technology to Gain a Competitive Advantage in 2023
What’s on your business plan for 2023? Every distributor we know is looking for a competitive advantage to gain ground against the competition and gain customer favor. Here’s how leading distributors will use technology to succeed in the New Year:
Competitive Advantage 1: They’ll Get Granular in the Fight Against Customer Churn
The typical distributor will lose a significant amount of customers in five years. In the New Year, why not put in place a strategy to change this sordid tale?
Savvy distributors will use their Business Intelligence (BI) solution to identify which customers are buying less, which can signal that they may be a flight risk. When you have this information, you have the power to focus your efforts on understanding why they might be willing to leave, so you can take the necessary steps to win back their business before they exit.
Customers leave for many reasons, but most distributors don’t know why. When you understand the specific reasons, you can make changes to eliminate issues within your control. Data analysis can decrease customer churn by up to 15%!
Get ready to crush it: With BI, you can run a report or query to see important trends – such as which customers are buying more and which are buying less. Once you identify these at-risk accounts, you can dig deeper to determine the root cause of the problem. Make sure your BI solution talks to your existing ERP system to ensure you have up-to-date insights into customer, supplier, and product performance.
Competitive Advantage 2: They’ll Annihilate Dead Stock Before It Happens
To gain a competitive advantage in 2023, it’s vital to maintain optimal inventory levels and pay close attention to inventory turns to avoid getting stuck with inventory that ties up your cash. But unfortunately, distributors are often in a “set it and forget it” mentality with their inventory and buying patterns. This is a big mistake because it can lead to dead stock, putting the brakes on cash flow and eating into profits.
Almost every ERP provides a dead stock report; it’s easy to see what has been sold in the last 12 months. But what if you could “take stock” of stock that’s lagging in inventory turns? These items are where sales are going drastically down and will likely become deadstock.
Get ready to crush it: BI can laser-focus on critical inventory turns and sales performance metrics, giving distributors powerful insights to enable them to avoid a dead stock destiny.
Competitive Advantage 3: They’ll Keep a Close Eye on Expenses
Expenses go straight to the bottom line. This is why awareness of expenses as a percentage of sales is necessary to help distributors stay laser-focused on profitability and one step ahead of their competition.
If a distributor incurs an extra $2,000 in expenses and that distributor is a 2% net profit business, an additional $100,000 worth of sales needs to take place to make up for that one expense. So, if sales grow accordingly, you expect expenses also to rise. But woe to the distributor with a growing expense bill and no precipitous rise in sales to show for it.
Get ready to crush it: Savvy distributors will leverage BI to keep tabs on expenses and the trending of expenses as a percentage of sales. If expenses are running amok, BI can provide insights for further investigation into how to reign them in.
Competitive Advantage 4: They’ll Practice Precision Pricing
Many distributors rely on tools such as Excel spreadsheets and gut feeling about managing their pricing. But these attempts fail in practice, especially considering the sheer number of pricing decisions that must be made for thousands of products and customers in the face of an unprecedented rate of change.
Now more than ever, distributors need to see where margins are eroding and where opportunities exist to boost. Distributors that recognize a focus on pricing is fundamental are gaining a significant competitive advantage. Pricing software increases gross margin by an average of 5%!
Pricing optimization software enables distributors to segment customers by attributes such as buying habits, profitability, and cost-to-serve to discover new opportunities to make price adjustments. This analysis which used to take weeks can now be done in minutes.
Get ready to crush it: Distributors who win won’t have one-size-fits-all pricing; they’ll have data-driven intelligent pricing practices to offer the right price to the right customer at the right time. Knowledge is pricing power; they’ll put in place the ability to run what-if scenarios to predict market share, revenues, and margins at various price points.
Competitive Advantage 5: They’ll Ask the Right Questions to Surface More Sales Opportunities
Distributors will gain a competitive and strategic advantage over their competitors by analyzing data to surface more sales opportunities by asking and answering key questions:
What products can we sell more of?
With which customers and products do we earn better margins?
Which sales reps are underperforming?
Do we have a margin issue that needs fixing?
Are we investing in the right inventory?
Is there an opportunity in a new market?
Get ready to crush it: What distributors need more than ever is a way to find missing dollars and garner an extra point in the margin game. Empowered with BI data analysis and discovery, savvy distributors can craft a specific action plan to realize sales gains and profit improvements.
Competitive Advantage 6: They’ll Gear Up to Succeed with Sales and Marketing
Those distributors commanding a competitive advantage have integrated CRM into the fabric of their organizations. As a result, they realize improved sales velocity (industry stats show effective CRM use increases sales velocity by up to 75%)
By correlating efforts and activities with outcomes, enterprising distributors understand which of those efforts and activities translate into revenue. They don’t have to guess; they know what marketing and sales approaches work so that they can replicate those efforts.
They also use technology to streamline critical processes and improve operational visibility and collaboration. That enables distributors to use their sales and marketing resources best. Aided by technology, distributors will automate their email marketing to improve lead generation by 300%.
Get ready to crush it: CRM technology makes sales and marketing workflows more efficient and makes critical processes faster and easier, so teams can make more calls, send more emails, and ultimately close more deals.
Make 2023 Your Year, Make White Cup Your Partner for Competitive Advantage.
Distributors are facing challenges and intense competition like never before. It’s a whole new world that requires new strategies to unlock new sales opportunities and build relationships based on a deeper understanding of customer needs.
Yesterday’s tools and tactics aren’t going to help you keep up!
White Cup turns a distributor’s sales pains into profit gains. Our CRM, Business Intelligence (BI), and Pricing software make it easier for you to sell more, keep more profit, and beat the competition. With over 20 years of experience, White Cup is trusted by more than 1,000 customers globally.
