Customer Relationship Management for Wholesaler-Distributors

Transcription

1 Customer Relationship Management for Wholesaler-Distributors A Strategic Guide for Planning and Results Preliminary Report February, 2013 (The complete report will be available in June, 2013) By Mark Dancer President Channelvation, Inc. 1

2 About this report This report contains preliminary findings from our research on the current state of Customer Relationship Management (CRM) software among wholesaler-distributors. The insights underlying this report were obtained through in-depth conversations and an online survey of distributor executives. We added insights and management tools based on our many years of experience working on channel strategy and sales effectiveness issues in distribution-intensive industries. The NAW Institute for Distribution Excellence will publish a book containing our complete report in the spring of Until then, this early report should help interested distributors begin to assess their own decision to adopt CRM. For those distributors already using CRM, this preliminary report offers ideas on how to use CRM even more effectively to improve sales results and profitability. When the full book is published, we anticipate that it will serve as a strategic guide for executive decision-making by wholesaler-distributors. Major Findings The idea for this book began as a question: Can today s customer relationship management tools create value for distributors? The answer is yes. Distributors are aware of CRM and many have already adopted CRM tools. Use of CRM ranges from simple contact and lead management tools all the way through robust pipeline, forecasting, and social networking / communication applications. CRM has traction with wholesaler-distributors because it fills a gap it gives them the ability to manage sales by using data and metrics. More and more distributors are using CRM because they have discovered CRM can help them improve their profitability. At a high level, our research showed that distributor executives generally agree on four key points regarding CRM and its impact for wholesaler-distributors: 1. CRM can improve distributor profitability CRM is not a magic solution, but when distributors properly apply CRM solutions to their unique challenges and sales objectives, CRM can work effectively to improve distributor profitability 2. CRM is quickly becoming a standard practice among distributors According to one distributor we interviewed, The use of CRM will grow in the way that and websites became the norm for distributors. By automating some aspects of customer relationship management, CRM software tools can offer distributors a competitive advantage or at least help them keep up with peers who have already implemented CRM programs 3. CRM implementations usually start small, and then grow To build credibility, most implementations start by launching just a few CRM features with part of the sales force. As CRM proves its value and establishes its credibility, distributors expand CRM usage and add features 4. CRM can be transformational One distributor executive coined a phrase: CRM helps sales people become opportunity managers and thereby rise above today s focus on transactional, reactive selling and order taking What is CRM? CRM is a category of software tools designed to automate interactions with customers and sales prospects. CRM allows distributors to automate and synchronize certain customer-related processes and activities primarily sales activities, but also those of marketing, customer service and technical 2

3 support. Instead of purchasing a CRM software license and installing the software on their own hardware platform, nowadays distributors may choose to pay a monthly fee to use cloud-based CRM software solutions. Our research found that CRM can mean many different things for wholesaler-distributors. For instance, three different distributors defined CRM as follows: CRM delivers the following benefits: pipeline management providing a clear picture of where all sales are in the sales cycle, win-rate percentages per salesman and by location, and lead-toopportunity win rate percentages tracked by sales people and sales managers. We also share win-rate percentages with suppliers. VP Sales, Construction Equipment Distributor CRM enables contact management, e-marketing campaigns, sales dashboards, opportunity tracking. We don t use CRM much for funnel or overall forecasting. VP, Information Technology, Electrical Distributor "CRM provides a common base of information that includes a customer's purchases, technical and anecdotal information, quotations and contacts." President, Industrial Gas and Welding Distributor Are distributors adopting CRM? Our research found conclusive evidence that distributors are adopting CRM not for its own sake, but because today s competitive markets and difficult economy demand that every aspect of their business, including sales, operate as productively and efficiently as possible. Our online survey of 158 wholesaler-distributor executives found that 61 percent are already using at least a basic CRM package, and that many are already advanced users. Among distributors that have not yet adopted CRM, more than 40 percent are actively shopping for a CRM solution and more than 20 percent are in the process of initial launch and implementation (Exhibit 1). 50% Survey Results: Adoption Curve Among Non Users Exhibit 1 40% 30% 20% 10% 0% Not Aware Aware Understand Shopping Implementing Only a very small minority of distributors are not aware of CRM. Among wholesaler-distributors that are not using CRM, very few believe CRM is not a fit with distributor needs. Many non-users, however, are concerned about gaining an acceptable return on investment or the difficulty of implementing CRM. 3

4 We shared these worries with experienced distributor executives and asked for their advice. Almost without exception, experienced executives counseled others to take a serious look at the features and benefits of CRM and consider how CRM could help them improve sales productivity and win rates. These executives described their success with CRM as a journey that takes time and effort, and ultimately produces measurable results in the form of better lead management, accelerated sales, and improved profitability. As one distributor owner summarized, Stick with it the results are worth it. These findings, and many others that will be shared in our upcoming book, represent the perspectives of distributor executives across all sizes and ownership categories (Exhibit Two) and a wide range of lines of trade including industrial MRO, capital equipment, foodservice, chemicals, electronics, building materials, sanitary supplies, paper products, outdoor power equipment and many more. Online Survey Results Exhibit Two Participants by Distributor Sales Revenue Participants by Ownership Type 17% 11% 41% 31% < $49 Million $50 to 249 Million $250 to 999 Million >1 Billion 32% 9% 59% Public Private family-owned Private not familyowned Why are distributors adopting and using CRM? Distributor executives identified ten practical benefits for wholesaler-distributors (Exhibit Three). Top Ten Benefits of CRM for Wholesaler-Distributors Exhibit Three 1 Manage customer contact information 2 Manage sales pipeline or territory results 3 Provide access to customer data for sales people 4 Provide data for coaching by sales managers 5 Improve handling of leads and prospects 6 Automate reports for sales people and management 7 Provide data for management decisions 8 Execute marketing programs through sales people 9 Optimize product mix sold to customers 10 Improve accuracy of sales forecasts 4

5 Many of these benefits are useful to distributor leaders and sales managers, but at its core, CRM usage is growing because it helps sales people be more effective in three primary ways: Opportunity management CRM can help redefine a sales person s role by providing a tool for tracking opportunities across the sales cycle as a sales pipeline. As they shift their efforts to managing opportunities, sales people create more value for customers and deliver better results for the distributor s business Customer Information CRM puts information at a sales person s fingertip in the form of customizable dashboards which provide the following data: account sales and margins, deliveries, back orders, order accuracy, product mix, pricing and rebates, complaints or trouble tickets, response to promotions, and more. Sales people use this information in many situations including preparing for customer calls, conducting account review meetings, and holding on-thefly discussions with customer decision makers Internal communications A relatively new feature of CRM enables communications that are similar to instant messages or postings on a blog. In one use, as a sales person clicks open a sales opportunity, CRM enables conversations with colleagues inside the company who are tracking that specific lead. This CRM-enabled conversation produces timely sharing of useful advice, problem solving, pricing decisions and other information that helps accomplish the sale. All of this happens within CRM, not an inbox Which CRM vendors are distributors using? Distributor executives identified more than 20 CRM vendors currently used by wholesaler-distributors and a market place with more than 300 potential software companies (Exhibit Four). Selecting the right CRM vendor is crucial, but executives should not make decisions solely on the technical merits of a software package. Many of the distributors with whom we spoke emphasized the importance of choosing a CRM vendor with the aim of establishing a long-term partnership. As such, the vendor should ideally have a good understanding of the distributor s business. The distributor should also have confidence that the CRM partner will be around to assist with the implementation and expansion of the CRM system. As one distributor put it, the vendor selected should, reflect our core values and needs in the vendor s products, support, sales strategy and profitability. Exhibit Four provides a summary of CRM vendors used by wholesaler-distributors. This finding is offered only as a starting point each distributor should follow a well-designed and disciplined selection process appropriate for its own business, sales process and strategic goals. CRM Vendors Used By Distribuors Exhibit Four Our online survey of distributor executives identified many software companies as CRM vendors used by distributors: Contact Activity Manager (SX Enterprise) Infor Sage SalesLogix Solve360 Clear Technologies Insightly CRM Salesforce.com SugarCRM Constant Contact ITML CRM SAP Tour De Force CORrelation Microsoft Dynamics SAS Tribridge Epicor Prophet 21 Oracle Siebel WP-CRM (WordPress) Goldmine Sage ACT! SMP - Sales Management Plus ZOHO 5

6 How will our book help wholesaler-distributors? The findings presented in this preliminary report represent only a fraction of the facts, experiences, examples, best practices and recommendations that we gathered from over 200 wholesaler-distributor executives. Combined, these insights have been compiled into a powerful strategic guide to enable executive decision making. Each chapter of our book will present a summary of strategic findings, an in-depth discussion of key topics, distributor examples and experiences, useful exhibits and a management tool for applying the lessons learned in the chapter. Chapter One: An Essential Tool Chapter Two: Getting to Go Chapter Three: Focus on Behaviors Chapter Four: Selecting a Vendor Chapter Five: Implementation and Change Chapter Six: Today and Tomorrow Chapter Seven: Always be Closing Content Overall strategic benefits for improving sales and profitability Examples of CRM use by distributors Research methodology Current state of adoption and use Practical benefits for distributors Sales strategies enabled by CRM Answers for skeptical executives CRM-enabled behaviors that lead to improved sales and profits CRM s benefits for sales people, sales managers and distributor leaders Guiding principles and selection criteria for picking a CRM vendor Two CRM selection processes Success factors for the initial launch Three phases of implementation for optimizing profits with CRM Best practices for overcoming initial resistance and barriers Distributor case study spanning many years for driving adoption and results Visions of CRM s future potential for distributors, given current forces and trends A primer on capability-driven growth and profit strategies for distributors Summary of all strategic management tools Management Tool Suggestions on how each distributor s leaders and management team can get the most out of the book as a strategic guide A sales effectiveness framework for distributors with five drivers, offered as a tool to identify the CRM benefits that will have the best impact Apply the sales effectiveness framework to identify the sales behaviors that are critical for each distributor s unique challenges A checklist for designing a selection process to fit each distributor s business needs, sales opportunities and management culture A change manager punch list for managing the organizational change necessary to achieve the highest possible benefits from CRM How to step away from day-to-day business pressures by running a successful management retreat that addresses the long-term potential of CRM Our final chapter is itself a management tool for leveraging those parts of the book that are most useful for each distributor What gets measured, gets managed! Peter Drucker, Management Guru 6

7 About the author Mark Dancer is the President and Founder of Channelvation, Inc. We work with leaders and entrepreneurs to create competitive channels and winning sales teams. Our working style is collaborative, challenging and fact-based. We focus on achieving each client s specific and unique goals. Channelvation combines experiences and fresh ideas with hard work and dedication. Our client engagements include audits for assessing sales effectiveness, leadership academies to solve problems and develop managers, as well as customized projects for creating and implementing channel and sales strategies. Mark s experience spans many markets and industries. He is a frequent speaker and author. Mark s full bio, along with a description of Channelvation s mission, services and an ideas blog for channel innovation can be found at Mark can be reached directly at or mark.dancer@channelvation.com About NAW Institute for Distribution Excellence The NAW Institute for Distribution Excellence provides a comprehensive library of research and expert knowledge on strategic management topics for wholesaler-distributors that no other organization can replicate across all lines of trade. The NAW Institute s studies stand out as leading sources of groundbreaking research, practical guidance, and real-world distributor examples that address the specific challenges of wholesaler-distributors of all sizes across the industry. The core strength of the NAW Institute s publishing program is that our resources deliver the industry intelligence wholesaledistribution executives need in order to be successful and to make their businesses more profitable. Each year the NAW Institute aggressively produces new books in both print and electronic formats. To learn more, visit 7