Tips for Better Distribution Market Analytics

Your distribution company will be ahead of your competitors if you evolve from using reactive analytics to proactive market analytics.

In the 1990’s wholesale distribution companies were using reactive analytics to manage operational changes and comply with ISO9000 Inventory Management initiatives. By 2000, distribution focused on predictive analytics for pricing and profitability. Today, a gap is developing between distributors who are using proactive market analytics to assess customer profiles versus those who are not.

Use market analytics to target high potential growth areas

Reviewing your customer base, segmenting it into categories of transactions, services, profitability, margin and other dimensions will help you determine your optimum customer profile. Review your customer behaviors and purchasing patterns. Work with your analytics and data to gain a more complete picture of your best customers.

When examining the data ask:

  • What is the market potential of a particular customer segment – are there more customers to approach?
  • What is your market share of the business – is there room for growth?
  • What is the wallet share – do these customers have more budget to spend?
  • Where is the demand for your highest margin products or services?

Determining the right customers to approach can focus your sales team on higher probability targets with higher profitability for your company. Your sales team’s time is valuable. Make certain they strategically plan and utilize their presentations on your best, targeted potential customer segment.

Your ERP Holds the Key Data to Gain Competitive Advantage

Start with your ERP Customer and Order data and reports for your analysis. A three to five year time horizon of data works best to provide a view of how your customer’s behavior has changed over the most recent economic period.

A best practice recommended by Modern Distribution Management in their recent Executive Briefing is to appoint a champion outside of the Sales team to review the data, and develop conclusions and specific strategic action plans based on the data. More details and information is available in their report on the “2014 State of Analytics in Distribution”.

Many distribution companies indicate they do not have the analytic tools or technology needed to create this analysis and strategic plan. Contact Socius about how the Distribution 20/20 ERP tools can help you bridge the analytics gap.

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