Did you miss our panel discussion on how distribution companies use AI to improve sales? Watch now.
Distribution companies are moving the needle towards greater productivity, improved profitability and increased sales with artificial intelligence (AI).
What are these new software platforms powered by AI and how are distribution companies using these tools today?
Ian Heller, Co-Founder of Distribution Strategy Group, hosted a panel discussion with some of the leading experts in this space:
- Andrew Creamer, COO of Proton.ai
- Jason Hein, Principal B2B Visionary at Bloomreach
- Graham Smith, Business Development Manager at Esker
What did they have to say about the impact of AI on distribution sales?
> Want to get front-row seats to the latest on leveraging AI in your operations? Join us for our Oct. 3-5, 2023, conference in Chicago: Applied AI for Distributors. Learn more.
Generative AI vs. Machine Learning
The word AI is cropping up everywhere. So much so that the term’s definition is getting blurred.
Distributors often talk about AI within the context of generative AI programs like ChatGPT. Generative AI programs appear creative. You can ask a generative AI program to create a 500-word blog on just about any topic and it will produce it within a few seconds after the system searches through massive databases and distills the averages of the answers it finds to complete your request.
The content the AI produces isn’t plagiarized per se because the program pulls together a new response from all the underlying patterns in the data it scrolls. However, it also isn’t creating anything new. Behind the scenes, the software uses algorithms to create its response.
AI is powered by machine learning that uses algorithms to extract patterns from data and make predictions or decisions without being explicitly programmed.
AI’s Impact on Revenue, Profitability and Customer Satisfaction
“Customers come to your website because you are the experts,” Hein said. “They may search your website with a term they use every day. If it doesn’t recognize the search term or offers products that aren’t relevant, you don’t look like an expert. The customer will walk away thinking, ‘These people don’t know what I need.’”
AI tools are helping distributors avoid that fate. They are supporting distributors in three critical areas:
- Revenue: AI-powered algorithms can analyze purchase patterns and preferences faster than humans and predict what to sell your customers. Machine learning drives the suggestions you experience Amazon, such as, “Customers who bought this also bought that.” But this approach can expand to your CSRs and field staff to help focus and personalize their product pitches for higher revenues.
- Profitability: AI can cut down on manual sales processes to refocus your field and internal customer service reps (CSRs) on closing more deals faster. This refocus moves your sales teams to the tasks they love, becoming consultative advisors and relationship builders instead of order takers.
- Customer satisfaction: Personalization is the new customer requirement and machine learning can meet it. AI-driven recommendations can offer your customers the products they’re looking for faster to improve their shopping experience. But these tools also can suggest what to offer these clients to your sales teams.
“We’ve seen distributors excel when leaning hard on these tools to scale that perfect sales model across the entire organization,” Hein said.
AI Stories from the Field
Creamer shared the story of a multibillion-dollar industrial distributor that launched an inside sales team from scratch. An AI-enabled tool was beneficial in quickly bringing these employees up to speed by guiding their sales efforts.
“A proactive outbound inside sales team has the unique challenge of not being in outside sales. You’re not in the field gathering intelligence,” he said. “So, you need to find another way to make these reps smart. In these cases, the inside sales reps rely on the AI for suggestions about what to do next. Our customer found that their reps who used AI were growing sales a thousand basis points faster than the reps that weren’t.”
An AI-enabled tool gives CSRs and field teams insights into what activities will yield the most ROI. “We see AI in two use cases: One is putting customer insights into the hands of reps so they can use it; and two, using it to make active recommendations for purchasing on the ecommerce site,” Creamer said.
Other uses include a much more robust ecommerce search and better merchandising, said Hein. AI can drive better product discovery by analyzing the behavior of buyers online.
Smith said AI tools can also improve order entry, claims management and customers’ self-service experience. “It was taking one company an average of 45 minutes to process a single order because they had long item numbers,” Smith said. “With AI, they honed a 45-minute order-taking process to two minutes. Augmenting existing processes with AI can substantially help with operational costs and headcount.”
How Does AI Make Distribution Selling Easier?
Creamer described a typical sales use case for AI-powered software. “A big issue in sales is how do you collate information in one spot? The average sales rep pulls information from several different systems. They have notes, Excel spreadsheets and more. Keeping track of all this data is hard. Something we’ve seen for making a sales rep’s life easier is putting all the data into the AI-fueled CRM.”
The sales rep pulls up the customer record and the data is already there. Having a view of a customer where everything is in one place is freeing. Creamer called it “the easy button for my ERP or CRM.”
From the customer’s perspective, they arrive at the distributor’s virtual doorstep with specific product needs. AI software can offer proactive insights to these customers, making selling easier. A CSR can say, “Hey, I see you are probably about to run out of this product. Would you like to place an order?” Or we know a particular product is discontinued, so here are some substitutions.
Smith agreed and added:
“There was a company I worked with that distributed laboratory supplies. They said it took 48 to 72 hours from reception to order entry. That unnecessary delay hinders the customer relationship. It leads to losing orders and customers because somebody else can fulfill that order faster. AI helps you facilitate that transaction sooner. Answering questions and handling customer claims faster will help with retention.”
Why AI is Better for More Complex B2B Sales
Every distributor knows that sales in B2B can be more complex. AI can address these challenges faster than humans can.
“When I was in distribution, my customers would email me they needed a particular product,” Smith said. “Now customers send us 700 lines of order data with descriptions. AI can match these details with an SKU to speed up order entry.”
Pricing is also complex. There may be a system, but in practice, a CSR must open multiple documents and systems to create the quote. Aggregating this data with AI can speed up ordering by reducing manual lookups.
“What is different in B2B distribution is the expectation that you will take care of your customer,” said Creamer. “Say you are a factory buying an expensive sensor. There’s an expectation that the sales rep will know the product and accessories that make it work for you.
“The stakes are higher than B2C; if the sensor doesn’t work on the factory floor, that production line could go down, costing the customer a lot of money.”
In these situations, the sales rep with the most experience wins because they’ve learned how to fulfill the customer’s needs over time. But a newer sales rep has a much more difficult time; they need to gain the knowledge to support the complexities of a B2B customer base.
“The question for distributors is: How do you help all the sales reps, regardless of their length of time in service? AI tools can do this by making predictive suggestions to fulfill customer needs,” Creamer said.
Hein said that in B2B, reps must change contexts more quickly. “If I personalize a B2C interaction, I base it on prior brand loyalties. In B2B, the real driver is what is the application today. Suppose I’m an electrical contractor working on the production line of a chicken processing plant in Kentucky. In that case, I will need very different kinds of products from renovating a hospital in downtown Chicago.”
It’s a good point; distributors sell to various customer types. The industry segments are often wildly different, from contractors to research universities to aerospace. Sales reps must learn a little about many different businesses, which takes time. Currently, this knowledge only grows via sales interactions. There is an inherent risk of losing the sale when a sales rep has a learning curve.
“I’m ideally served when system search parameters quickly personalize around the specific industry,” Hein said. “But I don’t have time for a sales rep to get up to speed on a new client industry. An AI platform can quickly handle data from a new client, reducing that learning curve. On day one, you can look much more knowledgeable.”
Most Immediate ROI of AI in Distribution Sales
We’ve asked this question before, but it bears repeating: If AI-driven software is such an excellent tool for distribution sales, why hasn’t adoption exploded?
Smith suggested implementing AI requires the right data volume to ensure the tool’s effectiveness. “Two things: Is that data clean and usable? No matter what tools you use, you’ll lose effectiveness if it isn’t. Second, if you don’t have the capabilities to leverage application programming interfaces (API) and can only do a flat file transfer, it won’t be a good fit.”
APIs are bridges in software that allows disparate online platforms to talk with each other. They are critical to integrating other software, such as your ERP or CRM.
Hein suggested another barrier to AI implementation: cultural acceptance of the tool. He said: “Sure, data is important. But everyone must be willing to embrace the workflow changes that come with these tools. There can be a lot of friction stemming from a culture not yet ready for AI. AI is still a new tool, bringing unique change management tasks. Your teams will have to trust the insights from the software.”
But all three panelists agreed on one thing: The impact of AI can be nearly immediate. They’ve seen it happen.
Creamer’s company regularly sees up to a 20% uplift in sales per customer from ecommerce sales recommendations. On the sales rep side, he said they increase sales productivity as soon as they start using the software.
Smith said: “It depends on your goals. But if we reduce errors and cut manual tasks by 50% it’s a big win for productivity right out of the gate.”
The discussion ended with a common concern we hear from distribution sales reps: Will AI take my job? Smith said sales jobs will change. AI will lessen the labor-intensive manual tasks, focusing sales reps on the higher-value consultative sales tasks.
“Distributors must figure out how they set their sales teams up to focus only on the skills they’ll need to succeed in the next era,” Creamer said.
Customers keep setting the bar higher and AI can help you deliver what they want. Technology may disrupt business as usual, but distributors should prepare now for a different way to sell, thanks to the growing promise of AI.
Join Distribution Strategy Group for our Oct. 3-5 conference in Chicago: Applied AI for Distributors. Learn more.