When distributors want to grow, they often focus on the usual strategies: finding new customers, entering new markets, adding new product lines, or generating more new leads.
Those strategies can create growth. But adding new customers, while necessary, is difficult and expensive. Focusing too heavily on acquisition can also come at the expense of another opportunity: a distributor’s existing customers.
Most distributors have years of transactional data sitting in their ERP. It’s easy to think of that order history primarily as a record. But it can also provide valuable intelligence about where to look next for growth.
Every order adds to the picture of a customer relationship, including:
- What they buy
- How often they buy
- How much they spend
- Which products they purchase together
- How those patterns change over time
Together, this data can help distributors identify where there may be room to expand an account. A customer may be buying only part of a product category, purchasing fewer complementary products than similar accounts, or spending less with the distributor than its profile would suggest.
But identifying where a customer could buy more is only part of the equation. Distributors also need to understand which opportunities are likely to contribute profitable growth and give sales teams enough context to pursue them.
Start With What Customers Buy Today
Before you can identify where a current customer relationship could go, you need to understand what that relationship looks like today. For distributors, that means going beyond total annual sales and looking at the customer’s purchasing footprint.
This establishes a baseline. It shows how much business a customer is doing with you today and where that business is concentrated. Once you understand a customer’s current history, the next step is to look for patterns that could point to opportunity.
For instance, customers with similar profiles might regularly buy from four product categories, while the customer consistently buys from only two. That doesn’t automatically mean the other two categories are an opportunity. The customer may buy those products from a competitor, may not know you carry them, or may have no need for them. But the difference gives a sales rep something worth investigating.
Products commonly purchased together can reveal similar possibilities. If customers who regularly buy Product A also tend to buy Product B, an account buying A but not B may warrant a closer look.
Growth within the account can provide another clue. A customer that has increased its order frequency, added product categories, or expanded its purchasing over the past year may be ready for a broader conversation. Rather than waiting for the customer to ask for something else, the sales team can use those patterns to identify where the relationship has even more room to grow.
Prioritize Profitable Wallet Share
Finding additional wallet share is only valuable if it’s the right wallet share. Distributors have traditionally paid close attention to measures such as total revenue and account size. But a large customer isn’t necessarily a highly profitable customer.
Special pricing, frequent expedited shipments, discounts, small orders, manual processing, and service exceptions can all affect what an account contributes to the bottom line. The same economics should factor into decisions about where to pursue growth.
The best account-growth opportunities sit at the intersection of purchasing potential and profitability. Look at the margins on the products that could fill gaps and the cost of serving the account. That helps distinguish a cross-sell opportunity that adds profitable volume from one that just adds more revenue and work.
It can also identify accounts that might otherwise receive less attention. A mid-sized customer with healthy margins and obvious gaps in its ordering may offer more attractive growth potential than a much larger account that already buys broadly and requires significant discounts or service resources.
Profitability-based segmentation makes differences easier to see. Combined with purchasing behavior, it can help distributors identify accounts that are already contributing healthy margin but still have room to expand, giving sales teams a stronger basis for deciding where to pursue additional wallet share.
Turn Customer Data into Sales Priorities
Having the data and being able to use it are two different things. Customer intelligence should be a starting point for account development rather than another report for the sales team to interpret. A sales rep shouldn’t have to sift through thousands of order lines, compare purchasing histories, and calculate profitability before deciding who to call on Tuesday morning.
Ideally, they should be able to easily answer three straightforward questions:
- Who should I call?
- Why should I call them?
- What should we talk about?
Some of this analysis, like comparing similar customers or spotting missing categories, can start with good reporting and an analyst who knows your data. What’s hard to do manually is watching for behavioral change across hundreds of accounts and thousands of SKUs, and knowing which changes are worth a call.
Cavallo’s Profit Max Platform helps automate this analysis by connecting to the distributor’s existing ERP data. Customer Intelligence combines purchasing behavior with profitability-based ABCD segmentation, helping teams identify high-value accounts, uncover opportunities to expand share of spend, and decide where sales attention is most likely to produce profitable growth.
In SalesPad for GP and SalesPad for BC, Customer IQ brings customer information into the systems where teams already work. Rather than asking reps to analyze years of order history themselves, distributors can use that intelligence to narrow a large customer base into a more useful set of accounts.
Put Your Order History to Work
Growing an existing account still requires earning more of that customer’s business. The difference is that distributors don’t have to start from scratch when deciding where those opportunities exist.
Years of order history can show which customers have room to buy more, where their purchasing differs from similar accounts, and which opportunities are most likely to contribute profitable growth. Used well, that information can help sales teams spend less time deciding where to look and more time pursuing specific opportunities within the accounts they already serve.
With Cavallo’s Profit Max Platform or Customer IQ, part of SalesPad for GP and SalesPad for BC, distributors can put their existing customer and transactional data to work identifying and prioritizing those opportunities.
Request a demo to see how Cavallo can help you find profitable growth within your existing customer base.