Why Distributors Shouldn’t Wait for Customers to Reorder
By Benj Cohen
In the fast-moving world of B2B sales, distributors can’t leave things to chance. With a myriad of alternatives just a click away, customers could easily turn to a competitor offering the same product if they’re not reminded to order from you.
Even for products that customers buy regularly, relying on them to remember to reorder is a gamble. Distributors need to be proactive. Instead of waiting, they should remind customers when it’s time to reorder. This isn’t just a friendly gesture — it’s a vital strategy to keep customers from leaving and to maintain a steady stream of income. In this competitive market, reminding customers to reorder can make all the difference.
When distributors’ sales reps are proactive about reorders, they have a reason to reach out to customers. Solving customers’ potential out-of-stock problems before they occur improves the customer experience, builds trust and increases sales.
AI-driven reorder reminders yield real results for distributors. In 2022, an industrial distributor we worked with reduced churn by 31% by empowering their sales team to remind customers to reorder the right products at the right time. By leveraging an AI-powered system to equip their sales team with precise reorder reminders for customers. This system scrutinizes the customers’ transactional data, identifying patterns and trends that would typically elude human analysis. It’s the AI, not the reps, doing the heavy lifting — ensuring the right products are reordered at just the right time.
In an era before AI, this distributor may have banked on customers to remember to reorder products, or they might have depended on their sales rep’s in-depth knowledge to recognize when a client abruptly stopped purchasing a particular item. However, this approach heavily relies on the superior product and customer expertise that only the top 5% of sales reps possess.
The reality is — across all customer segments by spending — when customers received more than one AI-generated reorder reminder, they were less likely to churn by switching to a competitor or stop buying that product.
Staying on top of customers’ ordering cycles has several business benefits, including:
- Increasing customer retention: According to a study by Bain & Company, increasing customer retention rates by just 5% can boost profits by 25% to 95%. A proactive approach to reordering can help retain customers and foster loyalty.
- Simplifying customer journeys: A Gartner survey of B2B buyers found that 77% considered their most recent purchase to be “very complex or difficult.” Meanwhile, these buyers spent only 17% of their customer journey meeting with suppliers. It’s clear that they could benefit from a more hands-on approach. Distributors can streamline the ordering process and minimize any order-related issues by proactively reminding customers about their reorder needs and providing information they may be missing.
- Avoiding lost opportunities: According to CustomerGauge, wholesale distributors have the worst churn rate among all B2B industries, at 56%. Customers in this space are always looking for better deals, and they could quickly switch to a new vendor if they encounter any problems. Distributors who proactively contact customers about reorders can catch them before they switch.
- Reducing customer attrition: According to Gartner, 89% of companies compete primarily based on customer experience. In a highly competitive market, neglecting to actively remind customers to reorder products could lead to them seeking alternative suppliers or switching to different products.
How Can B2B Distributors Protect Their Revenue?
There are two key approaches distributors should adopt to safeguard their cyclical revenue. Firstly, investing in a system to identify when customers halt their regular product orders is crucial. This might entail a distribution CRM or sales intelligence tool that eases the burden on sales reps to detect when a customer has discontinued purchasing a specific product. Sales reps juggle hundreds of customers and thousands of items.
When overall spending is on the rise, it can be difficult to pinpoint churn within a particular category. Instances where reps have lost categories of business, masked by an increase in a customer's overall spend, underscore the need for such a system. It's a powerful tool: not only does the distributor secure its revenue, but it also ensures that the customer's supply never runs dry.
Second, B2B companies should invest in building proactive sales teams. When customer sales reps are armed with useful reorder insights, they can turn each inbound conversation into an opportunity to remind a customer about a product they might be running low on.
The truth is, your customers need that nudge. Across all spending categories, data shows that customers who receive more than one reorder reminder are less likely to jump ship. They're less likely to switch to a competitor or stop buying a specific product.
The message is clear: leaving customers to remember their reorders is a gamble distributors can't afford to take. Instead, by taking control, by using technology to prompt reps to remind customers to reorder, distributors can keep their customers loyal and their revenue flowing. In the end, it's about protecting your business, and these reorder reminders are an invaluable tool in your arsenal. The choice is yours: risk customer churn or embrace AI's power to keep your customers and revenue secured.
Benj Cohen founded Proton to help distributors harness cutting-edge artificial intelligence. He learned about distribution firsthand at Benco Dental, a business started by his great grandfather. Later, while studying Applied Math and Data Science at Harvard University, Cohen saw an opportunity to bring his two worlds together. He’s on a mission to supply distributors with the innovative technology they need to thrive in modern markets. Contact Benj at benj@proton.ai.
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.
