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Chuck Schaeffer Searching for the Best CRM Software for Distributors

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How to Choose the Best CRM Software for your Distribution Company


  • Wholesaler distributors have unique business requirements that are only satisfied with CRM software built for the wholesale distribution industry. For example, distribution CRM software is designed to support inventory carrying companies, with real-time visibility to internal inventory and inventory across the supply chain. CRM software that cannot directly support inventory pricing, order processing and fulfillment is far less effective than CRM software that can.

  • The best CRM software for distribution companies is designed to accommodate many additional industry specific requirements such as mobile order processing, complex pricing, promotions, negotiated trade agreements and supplier rebates with bill backs, chargebacks and SPAs.

  • The top 4 wholesale distribution CRM software systems, as measured by market share and market growth, are Salesforce, Microsoft Dynamics, Oracle NetSuite and SAP CRM.

Customer Relationship Management (CRM) software for wholesale and distribution companies has different goals and requirements than the generic CRM software shared across many industries. Wholesale and distribution business success measures are based on efficient and effective inventory movement.

They must bring visibility to inventory pricing and logistics, and that includes trade promotions, deductions, negotiated (sales price) trade agreements and supplier rebates with bill backs, chargebacks, and SPAs (Special Pricing Agreements). Yet most CRM systems have little to no visibility to these things, leaving distribution managers and sales reps scurrying to other systems and unable to deliver real-time response to customers.

That’s why the best CRM software for distributors includes key industry requirements such as simple and efficient order processing, pricing optimization to improve margins and supply chain visibility to improve inventory utilization. That’s why they offer the tools to respond to fluid customer demand, logistics disruptions, changing market boundaries and the need for improved cost containment. And that’s why they offer the analytics to know when to expand into new channels and how to find the optimal balance among stockouts and overstocking to increase cash flow and free up capital that was previously tied up in inventory.

Choosing the Best CRM Software for your Distribution Company

When searching for the best distribution CRM software many novices evaluate technology features. That’s a mistake as CRM software features and functions may or may not deliver business results. A better approach is to lead with the most strategic business objectives and then identify the CRM software capabilities that directly accelerate those goals.

The four most strategic wholesale and distribution CRM objectives are to acquire more customers, grow customer share, increase customer retention and lower cost to serve.

I cannot cover as much as I’d like in a single blog post, so I’ll focus on the capabilities I’ve used to deliver significant and sustained financial impact at many distributors.

CRM to Increase Customer Acquisitions

Distribution is a sales-driven business. Improving sales productivity aids cost containment while improving sales conversions drives revenue growth. Here are several CRM software capabilities to do both.

  • Customer segmentation
    Many wholesale distribution companies categorize their customers at a very basic level and based on what they buy. Segmentation can be used to define customers by the customers’ growth objectives, complimentary products that they are not purchasing, profitability to the distributor, cost to serve and other factors that drive revenue growth and margins.

    Effective customer segmentation identifies the most profitable customers, the customers with the highest probability for profitable growth and those that are resource drains. This permits distributors to focus their time and value-added services where they will be most effective.

  • 360 degree customer view
    Every CRM vendor claims to deliver a 360 degree customer view. But most don’t. At least not for wholesale distributors. What most deliver is a customer view with company firmographics and contact demographics. What’s needed is a complete and detailed history of purchases, fulfillment, returns, trade agreements, special pricing and profitability per order, item and customer.

    To achieve a 360 degree customer view in the distribution industry you need 5 types of customer data - demographic, transactional, behavioral, environmental and social. From my experience, when sales reps have a complete and centralized 360 view, they improve productivity by 4 to 7 percent.

    360 Customer View

  • Sales calls and visits
    Sales reps spend time meeting with customers on the phone and on site. They use that time to learn their customers’ goals and pain points, understand the tasks they do, review product mixes, suggest promotions, offer value-added services and most of all, build the customer relationship. Everybody’s busy and doesn’t have much time so they need to make that time count. CRM software can provide the scheduling, routing, agenda points, proposed next actions and 360 customer view to minimize overall time and maximize productivity.

  • Sale methodology
    The most successful distributors have shifted from good ole boy selling to strategic selling backed with a sale methodology. A sale methodology is a prescriptive but dynamic framework of sales strategies, tactics and responses that systemically and predictably advance the sales cycle and maximize the sellers win rate. A sale methodology shifts your selling strategy from what you sell to how you sell.

    Sellers with disciplined sale methodologies always achieve higher sales win rates than those with informal sales methods. The best CRM software for distribution companies are designed to integrate the sale methodology with CRM software activity and opportunity management.

  • Optimized sales process
    A structured sales process defines the methods or techniques to advance sale opportunities through each step of the process. For example, it defines the investigative questions to qualify a lead, the path to align buyer pain with solution benefits, the strategy to create a win plan, the negotiation methods to preserve revenue, the incentives to get the deal closed and many other tactics to win competitive deals.

    The best CRM software for distributors supports defined sales processes with guided selling tools. Many times, these are visual process flows with branching or conditional logic that display Stages and Steps and can streamline sales cycles, facilitate repeatable processes and suggest best practices. These capabilities collectively increase sales win rates.

    The combination of a sale methodology and optimized sales process integrated with CRM automation can grow distribution revenues by high single digits or low double digits, depending on the particular sale methodology and sales adoption discipline.

  • Sales order processing
    The order to cash process includes complexities not found in other industries. Things like complex trade promotions, SPAs, negotiated trade agreements, consignment inventory and supplier rebates with deductions, bill backs and chargebacks. And every one of these interaction points is an opportunity for either incremental revenue capture or revenue leakage. When CRM software helps manage these voluminous and complex interactions the distributor squeezes out more margin in the order to cash cycle.

    Other sale order processing capabilities include mobile order entry, EDI, Next Best Offer suggestions and automated recommendations for up-sell, cross-sell, kits and bundles. Pricing must accommodate SKU proliferation to manage the voluminous item pricing from many suppliers to many customers.

    The best CRM software for distribution can do these things and also create fast, accurate quotes, easily convert quotes to sale orders, and monitor sale order progress through cash collection.

CRM to Increase Customer Share

Sales teams in most B2B industries allocate the bulk of their sales efforts to winning new business. Wholesale distributors tend to focus more on growing relationships with existing customers. Distributors earn an average of about 25% gross margin and 4 percent profit. Selling more products to the same customers lowers the cost of sale and increases slim margins. Here are two CRM software capabilities to increase customer share and financial margins.

  • Orchestrated fulfillment
    Distributors keep customers happy with timely order fulfillment that adheres to service level agreements. Distribution CRM software helps deliver orders on time, every time, while minimizing shipping costs.

    But it’s a difficult balance as distribution salespeople must work with their customers and partners to align inventory with fluid customer demand. The challenge is exacerbated due to managing more inventory (SKU proliferation) over more channels.

    The best distribution CRM software responds to these challenges. Accurate order fulfillment starts at sale order processing with CRM software that displays real-time inventory quantities and available to promise. It uses order entry to facilitate the pick, pack and ship process. It uses the sales and marketing applications as the front end to improved demand forecasting. It uses partner relationship management (PRM) to manage fluid customer demand and it provides tools to streamline VMI (Vendor Managed Inventory). It also offers seamless integration with ERP and supply chain systems so that all of these capabilities help get the right goods to the right place and the right time and at the lowest cost.

  • Ecommerce
    Distribution sales order processing is incurring a sea change. Even small or unsophisticated customers expect to be able to place all or certain types of orders on demand, online, and with their mobile devices. And this demand will only increase as Millennials continue to fill procurement and inventory management roles.

    Adding to the challenge, they expect more than just basic ecommerce. They expect product details and rich information content. They expect the ecommerce site to know their reorder points, SPAs and service level agreements. And they expect to complete the entire process online and without having to speak to a person.

    For many wholesale distributors, it’s not that they don’t do ecommerce, it’s that they don’t do it well. Delivering a poor ecommerce user experience, or an experience disintegrated with customer pricing or agreements, or a standalone or discrete channel experience will invite customers to look elsewhere. It will also encourage customers to reach out to manufacturers or other sources and accelerate the disintermediation of the middleman. Fortunately, the best CRM software for wholesale distributors satisfies these essential ecommerce requirements.

CRM to Increase Customer Retention

Even with new customers coming in, company revenues, growth and valuation deteriorate when too many of those customers leave through the back door. Two ways to increase customer retention are to offer online self-service and engage customers at risk to prevent their defection.

  • Customer self-service
    Customers have lots of questions. They want to know things like “where’s my product?” and “why did you charge me this price?” CRM customer self-service portals can answer these and other questions on-demand, 24 by 7, and without incurring customer service labor cost.

    The best CRM software for wholesale distributors offers self-service knowledgebases, chatbots, virtual agents and other tools that when properly implemented can handle up to 80 percent of routine customer service questions or problems.

  • Customer churn prediction
    The ability to improve customer retention delivers significant and sustained revenue growth. So, to aid that goal some CRM software can automatically calculate customer health scores and use artificial intelligence (AI) algorithms to identify customers most at risk of churn.

    Even better, knowing why customers churn is more powerful than knowing which customers will churn as it allows companies to fix causes of churn and prevent customer attrition before it happens.

    Customer Churn Prevention

The Top 4 CRM Software Systems for Whole Distribution

While understanding how to choose the best CRM software for wholesale distributors is important, the most common question I’m asked is, “What is best CRM software for distributors?” The short answer, based on market share and my experience from having implemented CRM systems at distributors for more than two decades, is Salesforce, Microsoft Dynamics 365, Oracle NetSuite, and SAP CRM. The longer answer and a deeper analysis is available at the top four distribution CRM systems.

Best CRM for Distribution Companies

If you are evaluating CRM software, you may also want to consider our CRM software selection framework to identify the best CRM solution. End

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Most CRM software apps do not support inventory visibility, orchestration, and utilization. That's why most CRM software apps are not a good fit for wholesalers and distributors.


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