How to reduce customer churn in B2B distributor sales: 4 AI-powered use cases
B2B distributors lose up to 15% of their annual revenue due to customer churn. New AI-enabled tools help sales reps break the cycle.
Wholesale distributors face tremendous complexity: Thousands of products and customers, hundreds of sales reps, cost volatility, and growing competitive threats. It’s no wonder that B2B distributors often struggle to set and manage effective pricing strategies that both meet P&L objectives and help sales representatives win deals.
According to benchmark data, the average B2B distributor is losing 2.0% to 11.7% of profit each year due to misaligned and inconsistent pricing.
Recent trends in wholesale distribution are reshaping the landscape in significant ways, threatening profits even further:- B2B buyer expectations for speed
- The rise of digital self-service
- Volatility everywhere
- Declining customer loyalty
How distributors respond to these trends can reveal weaknesses in their pricing practices.
Speed is the name of the game in B2B distribution
The new generation of B2B buyers demand interactions that are fast (and getting faster). A common example is turnaround time for a price quote. Gone are the days when the B2B distributor sales rep could take a quote on Monday and get back to the customer with prices on Friday.
Buyers expect prices immediately, in real time, and deals are lost to competitors even before you return your price quote if it takes more than a day.
But customers aren’t the only group pushing for speed. Procurement and finance are facing more frequent supplier cost changes than ever before, and they also demand rapid price updates to avoid margin erosion.
Digital self-service changes wholesale distributor sales
The impact of digital, self-service channels for B2B sales is undeniable and will increase rapidly in the coming years. But there’s a catch – many B2B distributors aren’t equipped to deliver the right price in support of their omnichannel ambitions.
Customers who have their contract prices loaded in ERP have been calling inside-sales or executing EDI orders for many years. However, when they move to the new e-commerce portal, they’re frustrated to see only list prices on their contracted items and an instruction on the screen to “call for price.” Inserting this manual step into an online process is a sure way to kill its adoption.
Volatility on all fronts demands dynamic pricing
Changes in supplier costs, competitor prices, global supply, and market demand are more frequent and consequential than in years past.
In this “new normal,” distributors need price agility to pass-through their costs more effectively, respond to competitive threats earlier, and use price as a strategic lever to balance supply-demand realities over time.
The age of set-and-forget pricing is over. The future belongs to intelligent data-driven, dynamic pricing.
Loyalty trends down for distributors
Customer loyalty is in decline in distribution. Why? B2B price transparency has increased due to online portals and switching costs are lower than in the past.
As a result, customers defect when you price them incorrectly. This may happen on just a few product categories at first, but often expands to their total spend. Pricing has become a significant customer satisfaction issue and smart CX leaders are seeking to increase retention by providing real-time, consistent, and personalized pricing.
“Within wholesale distribution, pricing is often viewed more as an administrative burden rather than as a strategic capability which helps drive other top-level initiatives across the business,” said Magnus Meier, VP and Global Head, SAP Wholesale Distribution Unit.
“As the wave of digital transformation continues, the opportunity for significant and sustainable impacts from managing the full pricing lifecycle has never been greater,” he added.
Cost recovery: Reclaiming lost profits in wholesale distribution
Cost recovery is a key area where digital transformation can help wholesale distributors boost profits and gain competitive edge.
Get pricing right, protect profits
Pricing is by far the most effective profit lever available to any distributor. If done properly, pricing is also a primary means by which B2B distributors can respond effectively to these market trends by exceeding customer expectations, increasing profitability, and earning a place among the leading distributors of the future.
