How do you plan when all certainty has gone out the window more than once in the past year? Even with an end to the pandemic in sight, distributors may be looking at their 2020 business plan and wondering if it’s even worth putting a plan together for 2021. It’s tempting to stay light on your feet and be ready to pivot.
Despite the uncertainty of the markets, supply chains and customer behavior, you are responsible for getting your stakeholders a clear answer on where you want to go.
An effective strategy today must recognize these four market drivers:
1. The critical need for digital transformation: Prioritize the customer experience when identifying which investments to make and align your resources accordingly. Play the digital game in your own market, with your own customers in mind. Distributors must sell to customers the way customers want to buy. It’s as simple as that. If you’re complacent, you’re going to be roadkill in the information highway. Not only do companies need to invest in technology, but the entire company needs to become involved in the sales process.
2. Shifts around sales enablement: Increasing sales efficiency does not happen overnight; it often involves turnover and learning curves for new systems and digitized processes. It means relearning customer segmentation and making tough choices to create stickier value propositions. Get salespeople out of transactional activities and into helping customers solve problems and creating recurring revenue streams. In shifting the value proposition off salespeople’s shoulders, reps can work on expanding the number of relationships between the customer and the distributor, eventually becoming a secondary contact as the business itself becomes the draw.
3. Rising use of analytics: Along with securing top talent, it is no secret that technology and data are driving the future. But even if you collect every piece of data under the sun, only share what your employees really need. Remove the noise of historical or non-essential data at the end of a day when everyone is in crunch mode trying to get orders loaded.
4. Innovations in talent management: Distributors must revisit their recruitment strategies to reflect different perspectives in what prospective and current employees are prioritizing. Training and education opportunities must remain at the top of this list, but it can’t end there. Compensation packages alone are not enough to lure potential applicants; they want to work for a company that values work–life balance and prioritizes social responsibility.
The pandemic has accelerated these challenges, pushing five years of progress in a half a year.
Added to these challenges are continued industry consolidation, rising channel conflict from Internet-only players, and the perennial issue of rising costs and margin pressures.
Consider these three lessons when launching your strategy for 2021:
- The hockey-stick forecast never develops.
- Mission statements help to define a vision, but they don’t address market realities that determine whether any of the lofty goals are actually achievable.
- Diving directly into budgeting or planning without considering the “big picture” may simply reinforce established habits and cherished beliefs.
Distributors often get caught up in an echo chamber that only serves to promote their beliefs about the market, rather than understanding the needs and wants of their customer. Get out there and talk to your customers. Ask them about their challenges and goals. Find ways to stay relevant to existing customers and capture new ones.
No one can predict what will happen in 2021, but you can take action and double-down on the planning process, ensuring resources are being allocated responsively to emerging opportunities and threats.
To learn more about Mike’s approach to value creation in distribution, read his NAW-published books: What’s Your Plan? Smart Salesforce Compensation in Wholesale Distribution, Working at Cross-Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully and Value Creation Strategies for Wholesaler-Distributors.