White Cup Exec Outlines KPIs to Improve Customer Approach, Grow Margins

Supply chain issues and other disruptions are likely to continue, but distributors who leverage data into efficient customer relationship management can succeed in 2022, Brian Friedle says in the latest MDM webcast.
MDM webcast White Cup Feb 10

The wholesale trade industry experienced an impressive 2021 in the shadow of lingering disruptions caused by supply chain issues and the protracted COVID-19 pandemic. Despite those headaches, the industry pulled in more than $7 trillion dollars in revenues — a 22% increase over the prior year — as 2021 ended an exceptional demand year for many distributors.

In the current economic climate, however, leading distributors have learned to expect the unexpected. Using analytics to shore up inventory, improve sales processes and sharpen customer relations is now paramount; and resting on a fleeting status quo will be a tenuous position, said Brian Friedle, vice president of business development for White Cup.

“We’ve moved the goalposts,” Friedle said during a recent MDM webcast. “It used to be that you were just compared to your competitor down the street. But now with social media, with all the feedback and reviews, you’re now compared to every experience they’ve had in any industry.”

In 2022 and beyond, distributors looking to grow will need to leverage quality data into key performance indicators to help them take more initiative and be predictive in managing market instability.

Friedle outlined a revenue intelligence cycle that distributors can use to obtain reliable data, explore relevant insights, pursue needed action, and measure the effectiveness of their approach. Here are a few of his insights:

Analyzing inventory is the first step:

When analyzing inventory, Friedle said there is one metric more companies should rely on: gross margin return on investment. As a performance indicator, GMROI measures whether it makes sense to invest in certain inventory based on what a company earns in return. A company’s GMROI is its sales minus its cost of goods sold, which is effectively gross margin divided by average inventory on hand, Friedle said. Distributors can use this equation to find out how much of something they must sell to make it cost-effective to stock.

Customer relations is at the heart of the cycle:

How can distributors know if their approach is successful? There are several metrics companies must consider when answering that question, including customer satisfaction, retention rates, online feedback, and net promoter scores, Friedle said.

And while upholding long-term, friendly customer relationships is vital, figuring out how to reach new or untapped customers on their level is equally vital. Sales teams must learn to “bring value” to every customer interaction, and that happens by leveraging insights based on quality data collection. “Part of the key to that bringing value is making sure the places you’re investing in that value matches up with the customer expectations.”

Companies can link behavior with sales:

In an efficient and effective revenue intelligence cycle, distributors will need to link behavior with results to improve sales processes. “How often is the salesperson doing what they said they were going to do and following up on their calls and their tasks?” Friedle said. “We have information on that now.”

Beyond analyzing sales staff performance, companies also can look at individual customer behavior to backfill gaps where customer-retention efforts may not have succeeded. Distributors can zero in on customers whose CRM interactions are in decline and may have been overlooked. Predicting and preventing customer-interaction drop-off can head-off potential profit gaps and increase margins.

To watch the full webcast and hear more of Friedle’s top KPIs for 2022, click here.

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