The average distributor’s customer buys from different channels in a variety of ways, making it difficult for distributors to have a full grasp of the data available via multiple sales channels. Typically, decision makers look to digital channels like e-commerce or punch-out for insights into customer behavior and buying patterns since the data points are easily accessible. However, insight from only a few channels is incomplete. The preferred buying method among customers of distributors across construction and industrial vertical markets is still email, with 74% of orders still being placed this way, according to a 2016 report by Jonathan Bein and Dean Mueller of Real Results Marketing. As a result, a substantial amount of valuable insight is missed. Unstructured data that resides in formats like emailed orders must be analyzed so distributors have a complete view of customer order transactions and the true cost to serve each customer.
Transforming Unstructured Data into Actionable Insights
Unstructured emails are not considered as an area of operations that is rich with data. Moreover, they are often thought of as difficult to compile and analyze. However, distributors should consider making use of available software tools to maximize this valuable resource. As most customers in wholesale distribution still prefer to submit orders via email, automation of emailed purchase orders can turn previously “unstructured” data into digital data for easier analysis. With a comprehensive view of orders coming in from all channels, decision makers receive informed insight into order volume, timing and patterns of order placements, ordering preferences, and transactions for each customer.
Evaluating actionable order data from an automated solution, for example, helps distributors to understand how customers want to buy, allowing more accurate forecasts and decisions that increase margins and productivity. The data points can be used in the following ways:
Timing of orders. Identifying trends in timing of order placements from customers can deliver benefits for business operations. For example, knowing the time of day a customer makes a purchase allows distributors to time discounts or promotional offers, thus creating more opportunities for sales.
Inventory management. Understanding the periods of high/low order volume helps distributors better manage inventory. Insight into the type of products a customer typically orders also improves inventory control as distributors can predict the quantity needed for a specific product.
Traffic patterns. With data accumulated from orders placed through all channels, including email orders, distributors can pinpoint the channel(s) with the highest traffic. This then allows informed decision making on staffing needs for each channel, and whether technology improvements are needed to boost productivity. If e-commerce is the most used platform, consider using document automation tools that can convert orders placed online into existing ERP systems.
Customer preferences. Ultimately, patterns gathered from mapping data from all sales channels provide information on customer preferences and buying habits essential to profitability and efficiency. Customer profiles created using this data can be used by sales reps to upsell or cross-sell, as well as deliver targeted sales messages. This is especially important as products like fixtures are evolving quickly, and distributors will need product experts who can provide technical knowledge for customers who need the additional support.
The bottom line is that a substantial amount of valuable data is floating around in unstructured sources like emailed orders. If this data is not used, organizations might miss out on opportunities to serve customers better and increase loyalty.
Why Having an Accurate Snapshot of the Cost to Serve Matters
Data points from all types of order channels also provide distributors the opportunity to re-evaluate how customer transactions are being managed, allowing for a full view of the true cost to serve each customer. Distributors frequently look at the total sale figures or gross margin as indicators for success. However, a critical area that has significant impact on margin but is often overlooked is the true cost to serve each key account.
While distributors may have many effective but expensive sales platforms like electronic data interchange (EDI) or web portals in place to deliver a seamless and efficient customer transaction experience, the execution is not always as originally expected. When customer transactions encounter exception handling, it can significantly increase cycle times and operational costs to serve. For example, those who use special pricing agreements to secure a special contract or a new customer channel understand the headache associated with processing such unique orders. From a customer management perspective, the complex process makes it difficult to assess the time it takes to support customers using special pricing authorizations (SPAs). When special discounts are applied, it further underscores the need to understand the cost to serve as SPAs are extremely complicated to manage.
Assessing transaction management and effort is as important as looking at gross margins when strategizing for growth. A challenge distributors often face is that they do not have visibility into the genuine operational and financial strain when customer service exceptions happen. To maintain customer satisfaction, decision makers need a solution that provides a true snapshot of customer transactions — one that includes information from unstructured sources. Specifically, data from sales orders uncovers how much time sales staff spend serving each customer. This then helps decision makers identify the accounts within profit forecast, while revealing bottlenecks in customers that require more effort to serve than planned. These insights ultimately steer strategies that enhance resource allocation and target the specific accounts that require improvements to maximize margins.
When making any business decision, it’s important to have thorough insight into processes to pinpoint where improvements can be made. Distributors looking for new ways to increase profitability can explore internal processes, such as reviewing customer transactions and how orders are processed for hidden opportunities. During a time where almost every organization is digitally transforming, decision makers need be creative with the challenges they face and consider digital tools that transform challenges into new ways to grow.
Earl van As is vice president of marketing & product management of Ecmarket, a cloud solutions developer of the patent-pending Conexiom sales order and invoice automation solution. Conexiom allows manufacturers and distributors to focus on serving customers and managing supplier relationships instead of entering data. For more information, visit conexiom.com.