Four ways AI can help distributors grow
By Benj Cohen
As the market has picked up – in some cases rapidly – some distributors are seeing a bumpy recovery while others have recovered smoothly. To win in 2021 and beyond, distributors need a game plan that will give them a competitive advantage moving forward, including these four strategies:
1) Build a more predictive business model.
Predicting customer behavior is one of the biggest challenges distributors face today. To accurately forecast what each customer is going to buy, distributors need to leverage mountains of data ranging from product information, customer behavior, firmographic and demographic data, and more. While distributors have this data (and lots of it), it tends to be too messy and arduous for most to really leverage. Today, distributors can rely on AI to make noisy data usable and to use that data to create foresight that drives sales.
If you fed an AI program enough data on accounts that had churned, for example, it would begin to see common characteristics among unsatisfied customers. This could be used to create a churn-risk model that flags accounts as at-risk before they churn, giving distributors an opportunity to save that business. Distributors can apply AI to basically any function that they have pertinent data on. For example, distributors could use customer data to predict each buyer’s next likely purchase. Or they could use various sets of interaction data to figure out an ideal schedule for outbound sales pitches. The idea is to finally make full use of data to build a more intelligent sales strategy.
2) Bring together the digital with the personal in sales.
Analysts believed that COVID-19 would cause a permanent shift toward digital sales channels. For distributors, this means investing more in ecommerce and inside sales. These changes and the need for a multi-channel approach to meeting customer needs (in other words, providing both self-service and human-aided options) has stuck. So, instead of choosing between people or technology, distributors should seek tools that combine both. What does it look like to combine people and technology? You give people that interact with your customers better tools to help customers and sell more effectively. It also means that your digital channels are providing a more human-like experience, meaning customers find stuff on your website easily and are guided with personalization that is informed not only from their online shopping, but also from the purchases and conversations they’ve had with your sales or customer service teams. When both digital and non-digital channels are leveling up with technology, sales don’t slip through the cracks. With these tools, distributors can cash in on the speed and efficiency of digital selling, without giving up the personal touch or deep knowledge that veteran reps bring to the table.
Like Amazon, distributors stand to drive a heavy percentage of revenue through AI-powered recommendations online, but distributors have a key advantage: They have knowledgeable salespeople with decades of experience. In fact, a McKinsey survey found that 76% of B2B buyers still want to talk to a person before buying a new product.
3) Enhance your ecommerce with AI.
Well-trained and personable reps are as important as ever, but to stay relevant, they need to level up. Distributors also need to level-up ecommerce so that the entire experience across channels is consistent and additive. As distributors move beyond the pandemic, ecommerce will be a critical puzzle piece.
There is a big difference between ecommerce and AI-supported ecommerce. Websites that use AI to improve search and their real-time product recommendations sell significantly more than comparable websites without AI. Gartner estimates that by 2023, companies with AI capabilities will enjoy a 25% improvement in customer satisfaction, ecommerce revenue or cost reduction. The average distributor that has deployed Proton’s ecommerce personalization has seen double-digit increases in average order value.
This is due to:
- AI-driven product recommendations, which create a personalized shopping experience for each individual customer. For context, Amazon’s AI recommendation engine fuels 35% of its customer purchases. Distributors have similar types of data and upsell/cross-sell possibilities, so it’s natural that this opportunity exists within distribution as well.
- Greater search relevancy, fueled by cutting-edge AI that can interpret the meaning of each customer search even if there are spelling errors or if a customer is searching for product data that’s buried in a sell sheet or document. At Amazon, for example, searches are three times more likely than comparable sites to end in clicks because of its AI-boosted search effectiveness.
4) Coordinate your sales channels.
For most distributors, each channel operates in silos. Sales reps don’t know what a customer has been looking at online, customer service reps have to dig to figure out what items a customer has previously purchased, websites don’t know what items customers are due to re-order, and so on. This must change.
By breaking down these data silos and connecting channels, you gain a 360-degree view of every customer. Once data has been aggregated, distributors can use AI to enhance every customer interaction. So when customers shop online, they get accurate product recommendations based on conversations with reps, historic sales transaction history and information about what similar-looking customers are buying. Because if your ecommerce recommendation engine only uses website browse and intent data to make personalized recommendations, it’s failing to account for all you can learn about that customer from their cross-channel activity.
Cross-channel AI allows distributors to create a consistent and constantly improving customer experience across all channels.
Planning based on proactive modeling, equipping websites and reps with AI sales tools, and coordinating channels are all proven ways of increasing revenue. However, implementing all of these solutions takes time. Distributors do not need to do everything at once, but they do need to act fast.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
