Beyond Metrics: 4 Actionable Insights for Growth-Driven Distributors - Modern Distribution Management

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Beyond Metrics: 4 Actionable Insights for Growth-Driven Distributors

Business metrics and AI can be a potent combo. Here’s a closer look at the most important metrics distributors should be measuring today and how they can use AI to recommend the next best actions in each area. 
Female Inventory Manager Shows Digital Tablet Information to a Worker Holding Cardboard Box, They Talk and Do Work. In the Background Stock of Parcels with Products Ready for Shipment.

Make no mistake — metrics matter. 

According to the International Data Corporation, companies that invest heavily in business intelligence were nearly three times more likely to experience strong revenue growth.

While there are certain metrics every distributor should track to achieve growth, simply having a KPI checklist won’t do you much good unless what you’re measuring leads to action

This is where business intelligence and artificial intelligence can be an incredibly powerful combination. Here’s a closer look at the most important metrics distributors should be measuring today and how distributors can use AI to recommend the next best actions in each of these areas. 

What Distribution Metrics Matter Most? 

Revenue metrics 

As the clearest representation of your business’ overall health and growth, revenue growth is the number every executive wants to see. 

Tracking year-over-year revenue gives you a clear, at-a-glance indication of whether you’re on track to meet your growth goals, but you’ll need to drill down deeper to understand what actions will have the most impact on future growth. For instance: 

  • What products had the biggest profit margins? 
  • Which ones had increasing or declining demand?
  • Which customers were most profitable? 
  • What were our costs of goods sold?
  • What are our best upsell opportunities? 

In hyper-competitive markets, having real-time business intelligence dashboards is essential to staying out in front of the pack. When these dashboards are integrated with purchasing and accounts receivable data from your ERP system and sales data from your customer relationship management (CRM) software, your team can take actions that drive the most impact faster.

You’ll not only know whether revenue is trending up or down, but you’ll more easily identify what’s shaping that trajectory and be able to make adjustments in the moment. 

Source: White Cup

Those adjustments might involve quick wins recommended by AI, such as suggesting related products for customers based on their order history. Your sales team can use these recommendations on calls, share them in emails, or even add them to their next quote. 

Sales performance metrics

The sales rep’s traditional role as the primary source of product information has evolved as buyers engage in extensive research before they ever engage with a person. The ease of online ordering also means eCommerce channels are contributing to a greater portion of distributors’ overall sales.

When sales reps do engage with customers, they are taking on a more consultative role — providing additional product information, answering questions, and helping them select the best mix of products based on their existing offerings and customer demand. 

Most companies set quarterly goals for the sales team and individual sales reps, but it’s not always clear how the team is performing throughout the quarter. Well-designed BI dashboards add visibility and help the team stay on track. 

They can help to quickly answer key questions, such as: 

  • Which reps are meeting their sales performance goals? 
  • How much of their time are they spending on sales-related activities, such as email and phone calls, each week? 
  • What percentage of our total sales are coming from our online versus offline channels?

As executives evaluate sales performance, they should also take a closer look at sales forecasting accuracy. 

Nothing kills morale faster than being set up to fail quarter after quarter with unrealistic goals. 

Distributors can use AI for more accurate sales forecasts that account for their own historical data, as well as seasonality and other factors. Custom-developed AI models can even account for variables such as new legislation that could impact sales. 

Customer metrics

​​Most distributors already dedicate a significant portion of their time and attention to existing customers because it’s common knowledge that retaining customers is much more cost-effective than acquiring new ones. Strong customer retention is a leading indication of company stability.

Unfortunately, it isn’t always easy to see which customers are driving the most growth for your company and spot declines in sales before they lead to customer churn. 

Pareto charts make it easy to see top customers and products and focus on the opportunities that will generate the highest returns. 

Source: White Cup

Customer scorecards also provide essential insights that help your team increase engagement and share of wallet for each customer. A customer scorecard is a snapshot of recent activity, sales performance, purchasing behavior, and other key metrics.

These measures help your team understand how to prioritize their next best actions, whether it’s knowing which customer to call first or which products to recommend to them. 

Now that AI is being integrated into BI and CRM solutions, distributors will have clear recommendations that increase order value while improving the customer experience. 

One example is reminding a customer to re-order at specific times, based on their buying history. 

Inventory metrics

Ensuring you have the most in-demand products in stock when your customers need them is a critical part of the distributor’s value proposition. At the same time, excess inventory adds to your company’s costs, dragging down profitability and increasing financial risks.

Without real-time insight into product performance, you’ll always be reacting to shifts in demand, putting your company on the defensive — often when it’s too late to make a difference. When you do have that proactive insight, you can take those steps, such as developing a marketing campaign to sell slow-moving products. 

The ability to see monthly sales and the number of units sold by product group at a glance helps your team ensure a consistent supply to meet and even exceed your customers’ expectations. 

Fill rates and turnover rates give your team deeper insight into how quickly products are moving so you can plan ahead. 

Slow-moving stock is an ever-present reality for distributors even with strong, data-driven purchasing processes. AI can analyze large quantities of purchasing and sales data to uncover deeper insight into which products run the risk of becoming inventory liabilities. Distributors can cross-reference those products against a list of customers who recently purchased them and develop targeted marketing campaigns to help get sluggish stock out the door. 

Maximize Every Move With AI

As digital platforms have made data more accessible in the moment, companies that have mastered the ability to understand data have earned a distinct edge in their respective marketplaces. The emergence of AI elevates those insights into a distributor’s next best actions,  allowing for sustainable growth. 

MDM’s own research shared in its Distribution AI playbook found only about a third of distributors were using AI at all as of mid-2023, and most who are have only discovered a single use case so far. 

At White Cup, we believe AI should be practical, actionable and built into the technology distributors are already using. 

In MDM’s recent AI for Distributors Summit, our VP of Product Kristen Thom offered a preview of some of the ways we’re incorporating AI into our CRM and business intelligence software, including recommending top products, reminding sales reps when customers usually reorder, and creating marketing campaigns based on slow-moving inventory. AI sales forecasting is another great example. We can now use a company’s historical data and other data sources to train a model that develops predictive sales forecasts, accounting for seasonal trends and other factors. 

We look forward to a near future when distributors use AI to sharpen their strategies and focus not just on reacting to metrics, but taking the actions that will have the greatest impact on their revenue. To learn more about what metrics matter most for distributors today and in the future, download our updated resource, 7 Key Metrics Every Distributor Should Be Tracking.

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