by Art Waskey | Feb 27, 2024 | Art of Sales Weekly, Featured
Independent distributors succeed based on the added value they bring to the customer relationship. In 2024, strengthening customer personalization will be critical to your success.
Here are three key areas to focus on.
- Vendor Managed Inventory — According to a report in Modern Distribution Management, business for one of our industry’s largest distributors is good. Fastenal posted a 2023 net profit of $1.16 billion, up 6.3% compared with 2022.
In addition, Fastenal transformed its company from a distributor-dependent-on-its-branch-network to one that prioritizes integrated supply and self-service at the customer location using vendor-managed inventory (VMI). This created significant savings in transportation, reduction in inventory, and ease of operation for both Fastenal and the customer. Introducing this ease of operation and personalized attention allowed Fastenal to gain market share within the customer base.
Additionally, Fastenal’s continuous growth of in-location personalized sales is a wake-up call to the independent distributor. Distributors need to build VMI manufacturer partnerships and start installing units. Fastener’s goal for 2024 is to add 400 additional onsite customer locations. Also, they added 326 in 2023. These gains will come from the traditional distribution network!
- Robotics — As a vice president of sales for an independent distributor from 1985 to 2018, I watched robotic equipment costs decrease and product efficiencies increase. This enabled our company to increase sales of this equipment each year. Today, the cost of selling a Cobot is less than $100k. The ease of training customers on this product is negligible, particularly for the computer-savvy operator under age 30. To be successful in 2024, your reps must be selling robotics.
- Warehouse automation – One of the biggest issues a distributor faces is warehousing errors. As a sales executive, I spent countless hours working to resolve warehouse-related problems. Today, logistics software can streamline your warehouse operations and save your company time, money, and customers. Moreover, a typical logistic warehouse automation center uses less space than a traditional warehouse and can receive and retrieve stock quickly while eliminating shipping errors. Automated warehouse logistics includes the management of networking operations, information, transportation, inventory, warehousing materials, and handling and packaging. Lastly, having an automated warehouse enables an outside salesperson to take inventory correction responsibility off their customer support list.
Increased customer personalization
In conclusion, for your sales team to represent the company with increased customer personalization in 2024, distributors must pay attention to the changing dynamics in vendor-managed inventory, robotics, and automation.
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by Art Waskey | Feb 22, 2024 | Art of Sales Weekly, Featured
The traditional marketing landscape is changing rapidly as Artificial Intelligence (AI) tools are introduced. AI is disrupting the usual sales processes that distributors have depended on for success. To stay competitive, businesses need to adopt new marketing approaches.
A Sea-change
Furthermore, AI is changing how marketing is done at a fundamental level. A recent article in Fortune describes how Wharton School professor Ethan Mollick experimented with how much AI could do for him on a single, 30 minute project. AI, “did market research, created a positioning document, wrote an email campaign, created a website, created a logo and a ‘hero shot’ graphic, made a social media campaign for multiple platforms, and scripted and created a video”. Professor Mollick’s experiment results represent a sea-change in how marketing can be done with AI.
Cultural shift
AI represents more than just a change in business processes. It is a cultural shift. For that reason, you need to be sure your C-level team members are on board with AI applications and that employees don’t feel devalued by them.
You will always need salespeople to add value to the customer relationship. Moreover, they bring knowledge and experience to the deal. With the right AI applications, your best salespeople become even better. AI is most effective in sales when it’s treated like an aid instead of a replacement for key human practices.
More effective customer experiences
AI is a script. Use data generated with AI to make your sales reps better prepared to create a more effective customer experience. Salespeople can benefit from AI when it provides the right product for each customer. AI also can be used to help your customers create business efficiencies through their dealings with you. AI can analyze consumers’ shopping habits, preferences, and behaviors, providing reps with customized client recommendations.
Adopt new approaches
In conclusion, being competitive in today’s market will require that you adopt AI applications in your marketing approach. These changes can be difficult to accept and may leave reps out of the process. Ease reps into new sales approaches by focusing on the success of AI applications in terms of increased sales. Once implemented, AI will keep you on track for success in 2024.
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by Art Waskey | Feb 14, 2024 | Art of Sales Weekly, Featured
Looking Back
As I start the New Year, I like to make observations about the previous year. Looking back, 2023 was a year replete with some big challenges for business. Stubborn inflation affected pricing. China’s post-COVID chaos continued exacerbating supply chain issues and accelerated attempts to restore manufacturing. Labor shortages plagued many business sectors. The third-worst year of global economic growth this century (behind 2009 and 2020) slowed sales and geopolitical tensions made us all uneasy. And finally, the use of artificial intelligence (AI) accelerated the pace of change in how business is conducted.
The secret to success in 2023 was adaptability. The best distributors got creative in confronting the year’s biggest challenges. The most important consideration in finding the right path through the weeds was maintaining a focus on customer-centricity. Independent, privately owned businesses’ greatest advantage over alternative channels is their customer relationships.
Selling Then
In the 1970s and early ‘80s, I worked for an international company that distributed welding supplies and atmospheric gases. We sold primarily through independent, privately held businesses. Our field salesforce was comprised of both generalists and specialists. Additionally, the generalists, who were sales engineers, called on distributors in 8 to 10 local territories. The product specialists covered a larger geographic region. Both sales engineers and product specialists reported to regional offices.
The sales engineers were responsible for maintaining personal relationships with their distributors. They managed new product demonstrations, pricing, backorders, administrative issues, and all other corporate communications. The product specialists managed specific technical offerings. For our industry, this included cutting and welding products to identified industries such as railroads, large manufacturers, and other highly sophisticated end-users. As well as all product specialist accounts were assigned to sales engineers to ensure customer-centric relationships.
Selling Now
The sales model above changed radically with the introduction of the Internet. Consider today’s digital-driven Enterprise Sales approach. Account reps have the IoT (Internet of Things), which connects them to all advanced technology applications. Also, the Enterprise Sales rep is now a customer advocate. Communication is largely online and things like product demonstrations can be virtual.
Adapting to digital tools
In conclusion, Enterprise Selling in 2024 requires that sales reps be tech-savvy. To be adaptable to the rapid changes in the sales process make sure your team has the necessary digital tools. Lastly, these include ERP programs, E-commerce capabilities, and artificial intelligence applications, to name a few.
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by Art Waskey | Jan 29, 2024 | Art of Sales Weekly, Featured
One of the greatest advantages of deploying Artificial Intelligence (AI) applications is the effective cost containments they yield. AI can help businesses be more efficient in several areas.
Inventory levels
In short, consider their effects as customers, distributors, and suppliers go through economic cycles. Disruptions can wreak havoc on inventory levels. In fact, predictive analytics like AI can make stocking levels a concern of the past. With AI, your trading partners can enjoy the continuous improvement (CI) of just-in-time (JIT) supply from manufacturer to end user.
Transportation costs
I worked in the welding and gas distribution industry where transportation expenses were a significant factor. In one project — pre-AI — we evaluated how to reduce rolling return stock on cylinder trucks. We estimated customer cylinder usage before the trucks left in the morning. Despite our best efforts, some trucks returned with 40% unused cylinders. Additionally, the cost of loading, unloading, and carrying these unused cylinders was staggering. Nowadays, vast amounts of data are generated through the use of telemetry systems, vendor-managed inventory (VMI), and order history. With this information, AI can be used to improve the proper frequency and loading quantities of products on trucks. In the welding and gas industry, this includes hard goods, gas cylinders, and bulk cryogenic gas deliveries.
Pricing optimization
As a vice president of sales for a distributorship, one of my chief responsibilities was customer pricing. We reviewed spreadsheets and printouts with each sales manager to determine annual price increases, tackling one territory at a time. Today, interactive AI can sort that data and determine the right price for each customer. Moreover, AI software providers boast that they can increase their distributor customers’ returns 10X to 30X with price optimization programming. Based on the results, we recommend that distributors prioritize implementing pricing optimization software in their ERP system.
Warehouse automation – One of the best ways distributors can realize cost improvement is by improving material handling processes in the warehouse. Above all, Robotic Process Automation (RPA) is already revolutionizing warehouse labor costs and can improve working conditions. Additionally, robotic automation empowers artificial intelligence to enhance warehouse handling processes by utilizing data.
Cost containment
In conclusion, consider implementing AI in your business today. Also, enjoy the cost containments you can achieve in pricing, inventory, transportation, and warehouse operations.
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by Art Waskey | Jan 18, 2024 | Art of Sales Weekly, Featured
Artificial Intelligence (AI) applications offer exciting possibilities for transforming how business is done. Its applications are complex and very new. There is a lot to consider when choosing which AI tools to implement. Here are some key factors to look at when researching what’s best for your company.
Manage your data
Distributors collect a myriad of valuable customer, internal, and vendor information in the process of doing business. AI can generate outputs based on that internal data, whether stored in the cloud or on-premises. If that data isn’t properly managed, your AI-driven business processes might suffer the consequences. In a recent Forbes article on this topic, Simon Jelly points out that only 23% of your collected data will probably be “good” data. Your AI applications are only as effective as the data you input. According to Jelley, there is a lot of data to clean to get to the good stuff.
Classify your data
Jelley suggests that after you have captured the relevant data, you classify it. There are 3 key steps to this:
- Create the sets of definitions, labels, and groups you will use to organize your data.
- Apply that taxonomy to your data.
- Establish a single source of truth (SSOT) location for each category of your data.
Clean your data
Once classified, clean your data to rid it of the ROT (redundant, obsolete, or trivial). Redundant data can give AI the impression that something is more important than it is because it’s repeated. Once AI has clean data, it will help keep it clean.
Optimal results
Remember, only about a quarter of the data you collect will be useful to your AI tools. When considering how to get the most out of your AI applications, look to good data management. Classify and clean your data for optimal results.
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by Art Waskey | Jan 11, 2024 | Art of Sales Weekly, Featured
Coming to your market
Artificial Intelligence (AI) applications are rapidly infiltrating market spaces. McKinsey has declared that “AI is poised to disrupt marketing and sales in every sector.” The company predicts that generative AI could increase marketing productivity by 5% to 15% across various applications. These benefits include generating personalized content at a large scale, improving customer engagement, gaining deeper customer and data insights, and enhancing lead identification and development.
Two examples
I recently finished a Zoom training session with a distributor sales rep. As I started Zoom, I received notice of a software update. Someone asked me if I wanted to include AI in the session.” When I accepted, I had no idea what was going to happen. At the end of the training session, I received a pleasant surprise. Zoom AI had captured, classified, and cleaned our entire interaction. The results were amazing. I sent the information to both the trainee and the owner of the distributor. The trainee was able to review our session and the distributor owner received confirmation of its usefulness. Additionally, I gained relevant information for the book I am writing on the topic of training.
In the same week, I had a similar software update from Prezi. I use Prezi to produce the slides for my various training, writing, and speaking applications. Moreover, my digital marketing specialist and I can’t wait to see AI’s impact on enhancing those presentations.
Be more productive
AI’s impact on training and marketing using tools like Zoom and Prezi is just the tip of the iceberg. AI applications are transforming many business processes. One example of how technology can be helpful is by improving the tracking of inventory levels. These tools can also take data generated by GPS and other transit technologies and use it to improve your transportation costs. In conclusion, the same is true for warehouse processes and many more. It’s time to take a serious look at AI’s applications for your business and improve your marketing productivity. Get tips and tricks like the above in The Art of Sales books. Or subscribe to the FREE monthly articles here.
by Art Waskey | Dec 23, 2023 | Art of Sales Weekly, Featured
Data is the basis of Artificial Intelligence (AI) and drives its application. Additionally, it’s accuracy impacts the tool’s effectiveness, making the need for good data management imperative. To use AI effectively for your business, you need to understand the role that good data management plays in its application.
Data management affects the output
The more sophisticated the AI tool is, the more important it is that the data behind it is accurate. In a recent Forbes article on this topic, Simon Jelly explains: “Yes, you can use platforms such as OpenAI’s ChatGPT and Google’s Bard to write a marketing email or improve your product descriptions without worrying about how your data management practices affect these tools’ output. But that’s not true when your organization takes the next step on its AI journey and begins using AI-driven tools for autonomous customer support, supply chain optimization, and cyber resiliency (i.e., identifying and preventing cybercrime such as ransomware)”.
Understanding the terms
It is important to understand the terms that set AI apart from other technology. Jelley writes that autonomy is not the same thing as automation. He states: “Autonomy is self-sufficient and requires no human intervention; it can learn and adjust to dynamic environments and evolve as the environment around it changes. Conversely, automation is narrowly focused on a specific task based on well-defined criteria and restricted to certain tasks it can perform.” AI is an autonomous tool, whereas a robot is an automation tool.
Good data yields good results
It’s time for distributors to embrace the marketing advantages of AI to stay competitive with other supply chain verticals. As well as distribution marketing leaders adopt AI, their success will hinge on proper data management. Your AI applications are only as effective as the information on which they are based. In conclusion, When implementing these new tools, remember that good data yields good results. Get tips and tricks like the above in The Art of Sales books. Or subscribe to the FREE monthly articles here.
by Art Waskey | Dec 18, 2023 | Art of Sales Weekly, Featured
Be a differentiator
The distribution business is built on managing change, building trust, strong relationships, and the ability to find solutions tailored to customers’ needs. The digital marketplace has changed the customer experience. However, today distributors are competing with internet verticals, where relationships are impersonal. By focusing on the customer’s best interest and by staying on the cutting edge of technology, distributors can provide a better customer experience. Moreover, this differentiates them from the internet verticals and enables them to manage the changes in customer behavior.
Sharpen your focus
You have the customer’s trust, now build on it. Your customers won’t use the other verticals if you continue to deliver the best experience. You have the advantage of being more intimately aware of customer needs. Continue to do your homework.
Find the time to view webcasts from the best-in-the-business gurus. These webinars provide insights from top consultants as well as analytics. Distribution Strategy Group, Modern Distribution Management, and the National Association of Wholesalers are three great groups to start with. Additionally, they have daily blogs with industrial news including M&As, earnings, feature articles, events, and up-and-coming webcasts.
Keep digital applications current
Whether you are in the initial stages of your digital journey or are seeking to enhance existing strategies, you must stay current with the rapid changes in the digitalization of your channel. For example, Artificial Intelligence (AI) can serve as a continuous improvement agent. When implemented, AI can optimize and enrich supplier and customer pricing information, relationship content, product selection, promotional strategies, etc.
Managing Change
Managing change is never easy. Navigating the digital customer experience in a rapidly changing world requires time, energy, and financial investment. It demands you have an ongoing focus on delivering the latest product, price, and promotion improvements. Lastly, the challenge is to provide all this in an easy-to-use digital format while continuing to build and strengthen your customer relationships.
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by Art Waskey | Dec 11, 2023 | Art of Sales Weekly, Featured
Digital tools have altered the customer experience. For example, product research, once the realm of the sales rep, is now done routinely by the customer online. So how does the independent distributor, whose business is traditionally relationship-based, compete with the big online verticals? One way is to look outside your company for platforms you can access to strengthen your sales position.
The specialists you need
Within your industrial vertical, some companies and associations specialize in the products and services you need. Specialists include trade associations, buying groups, manufacturers, and software providers. These resources for the independent distributor, when tapped, can increase your product knowledge. They offer information on the latest technologies, continuous improvement tools, marketing techniques, APIs (application programming interfaces), VMI (Vendor Managed Inventory) practices, etc.
In the distribution industry where I worked, one ERP provider commands the market. It provides regular forums for information exchange between themselves and their distributor clients. Furthermore, this ensures that their product enhancements and solutions work within that particular business space. It also reduces the cost of updates to the distributors as the provider spends less time on product development.
Differentiated product knowledge
For the traditional distributor, the ability to provide customers with differentiated product knowledge is its greatest asset. The availability of online research allows customers to look for information on their own, however. However, online research can be overwhelming to a customer. No one wants to waste time getting answers from automated attendants or overly dense web pages. Salespeople can use this problem to their advantage. Reps can do the research and provide product knowledge especially selected for their customers. In the digital world, sales reps need to increase their focus on customer education and product information.
Strengthen your sales position
Maintain your commitment to personal sales relationships and use digital tools to strengthen them. Devote time to building stronger partnerships with key vendors that demonstrate superior products and digital technology prowess. Lastly, use technology to customize and deliver the best product knowledge to your customers. In these ways, you strengthen your sales position in the digital world. Get tips and tricks like the above in The Art of Sales books. Or subscribe to the FREE monthly articles here.
by Art Waskey | Nov 20, 2023 | Art of Sales Weekly, Featured
Changing Customer Relationships
I consult primarily with distributors with revenues of $10 million and below. This group’s success stems from exceptional customer service and quality products. Technology has dramatically changed the way these services are delivered. The salesperson’s regular customer visits to catch up on personal and professional information have been replaced by online communications. With so much material available on the internet for their customers, salespeople struggle to add something technically significant to a discussion. Also, digital interactions broaden the time between sales calls, diminishing a rep’s ability to build strong personal relationships. In addition, these trends are of great concern to my distributor clients. They fear losing their long-term, hard-earned customer relationships to the digital world. An important part of the solution to this problem is to build online confidence.
Adapt to Change
To adapt to the changes in the customer experience, learn how to make these digital interactions work for you. Moreover, look at the widespread adoption of technology as an exciting challenge. Find ways to build trust with your customers that differentiate your distributorship from competitive virtual channels.
Build Online Confidence
We all recognize the need for an online presence in the form of a good website. You can’t stop there, however. You need to continually build online confidence by adding more digital tools.
Today, in addition to a website, any serious distribution business also must have business management software known as ERP (enterprise resource planning). Furthermore, business consultants predict that if you don’t have an operational ERP in the next 12 to 18 months you will not remain relevant in today’s competitive digital world.
A functional ERP gives your sales force rapid access to important tools. It provides inventory accessibility, customer finance engagement, digital product information, and other distribution efficiencies. Your team may show initial resistance to an ERP due to concerns of losing control of their accounts. That is generally quickly overcome by the realization that its application improves customer experiences.
Strengthen the Customer Experience
Lastly, once an ERP is implemented, consider the addition of some third-party APIs (application programming interfaces) for eCommerce. APIs can provide improved product descriptions, pricing, and inventory management. These build your online presence and strengthen your ability to provide a great customer experience.
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