2020 Global Benchmark Report has revealed that on a global scale, distribution companies experience an annual revenue loss in the range of 7.25% – 28.47% due to sub-par sales practices and an annual margin loss in the range of 2.89% – 15.70% due to sub-par pricing practices.
The outbreak of the coronavirus has further disrupted the wholesale distribution industry and its entire profit model. On the other hand, the shift to digital channels has changed its perspective on how to wholesale and created unique opportunities for B2B wholesalers and distributors to recapture lost opportunities and revenue if proactive actions are taken.
The recent B2B Future Shopper Report highlights that churn of B2B suppliers is on the rise. 31% of B2B buyers have recurring issues with suppliers’ product ranges, whereas 30% of B2B respondents switched existing suppliers because they did not offer online ordering. A second study reveals that uncompetitive pricing is becoming the top motive for switching suppliers. However, these reasons are nothing more than excuses for inefficient sales and pricing practices that most traditional B2B distributors implement.
Source: Accenture 2019
The best performing wholesale distributors know that growing revenue only through new customer acquisition is the less efficient way to scale. Whereas growing revenue by keeping low churn through up-sells, cross-sells and expanded use - is the most profitable way to scale.
However, having hundreds of thousands of products and thousands of customers makes it difficult to scale in the most profitable way. Most independent sale representatives know their top 10 accounts quite well, including product categories and the product lines they purchase. They have a good understanding of their needs and can easily tailor upsells and cross-sells at the right moment.
The other long tail of accounts, which on average generates 20% of revenues, is left behind. Sales reps do not have the time, the tools or the resources to get to know these customers and the thinking behind their decision-making. The independent sale representatives' inability to recognize their unique needs usually results in lost up-sell and cross-sell opportunities, and an increased churn over time.
On a global scale, distributors experience an annual revenue loss within a range of 2.92% - 13.40% due to missed cross-sell and revenue loss within a range of 4.33% - 15.07% due to customer churn.
Does your company sell from a very broad product catalog? Is your sales team only comfortable selling a handful of product categories? Do any of these questions sound familiar? If so, you may be among the wholesale distributors that experience revenue loss due to sub-par sales practices.
Well, the good news is that B2B e-Commerce systems have taken huge development leaps and common sales processes have matured. A truly omnichannel B2B sales solution lets wholesale distributors keep their finger on the pulse by easily tracking:
- Customers that do not place orders
- Abandoned carts
- Number of customers that ordered in the last 30 days
- Average order size per channel
- Average order size per product category
- Product categories per customer/per segment
- Customer order history
- Independent sales rep performance per channel
- Frequently bought items
Automating that long-tail through technology, and introducing a new ‘self-service’ channel allow wholesale distributors to go after smaller clients in cost-effective ways. Companies with a continuous monitoring capability have a greater understanding of their customers’ activities in real-time, enabling more resilient responses than those relying on guesswork and luck.
Gaining actionable insights and taking control of your B2B sales - across channels can eventually help recapture lost opportunities by stopping B2B buyers from switching suppliers and increase overall business growth.
In our next blog post, we will take a closer look at how to deal with disorganized pricing data and how it impacts your P&L. Stay tuned!
To learn more about Pepperi, contact us today!