Manufacturing & Distribution

Five Predictions for Commercial Teams in 2023

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What’s the Big Idea(s)? Bold Predictions for Manufacturers and Distributors in 2023

For manufacturers and distributors, commercial teams (marketing, sales and service) faced their share of challenges in 2022. From supply shortages and pricing volatility to developing value-add services and translating customer data, the investments made today will dictate the proficiency and profitability of your commercial team as we head into 2023 and beyond.

Based on Alexander Group research, benchmarks and client work, we believe the following five bold predictions will impact manufacturers and distributors in the upcoming year.

Prediction #1: While the supply chain conundrum is coming to an end, prepare your sales team to get back to the art of selling.

Certain parts of the supply chain cycle like logistics are happening quicker and smoother, getting back to normal levels. However, in the last year, sales organizations that have had zero product to sell were focused on long apology tours to their customers and explaining why they didn’t have products readily available to ship and trying to provide updates on the next order or shipment. What does this mean for the sales team? Did their skills erode? Are steps like negotiation, scoping, pricing and closing deals back to where they need to be and ideally beyond where they were in the past? Organizations need to ensure that those selling behaviors will come back to the forefront, while also focusing on new account hunting for growth.

Prediction #2: For those riding the wave of pricing increases through natural inflation, be prepared to wipe out.

Enduring manufacturers and distributors will create pricing strategies that differentiate their products and services from the competition. Avoid the inevitable crash in profitability by focusing on your buyers. If you’ve taken price, double down and ensure your strategy is executed to maintain that leverage. If you haven’t, it’s likely too late. If you think about 2022, many of the price increases were passed on to distributors, dealers or customers. Use alternate levers to grow your base for profitability and maximize customer lifetime value (e.g., investing in lower cost resources like inside sales and self-service channels).

Prediction #3: Double down on X! The X as a Service (XaaS) model means finding X―the “something” that is providing value to your customers―and sell it!

Buyers have changed and are reevaluating their own economics. Being able to sell something as a service, to sell or create value and not just deliver a product, is the key to the equation of customer lifetime value. What are you doing to provide something as a service that moves you closer to some sort of operating model that doesn’t rely exclusively on CapEx? Manufacturers and distributors are providing services that are wrapped around products that are valued by customers, maybe a differentiator, but are not being valued appropriately or being paid for by the customer. Develop messaging around these value-add services (i.e., inventory management, warehousing, break fix, remote monitoring, priority delivery) and determine how to monetize it. Drive the adoption by focusing on customer success after the sale to lock in predictable revenue.

Prediction #4: Customer data is no longer a differentiator―competitors have it too. How you translate that data is what will separate you from others.

Data is everywhere. But it’s all about what you do with the data. Only 29% of companies surveyed are integrating the traditional sales operations functions with some element of either marketing operations or service operations. Structuring that in the right way, allowing the data to flow and hiring the skill set to create the insights that then get fed to your commercial engine is critical. Developing a revenue operations team that can pull insights from the data to arm your marketing and sales teams will not only provide greater opportunities for upsell/cross-sell but will also create stronger customer lifetime value. This is the team that can ensure that we’re placing our bets and making our investments in the right spot.

Prediction #5: Investment in your commercial talent is the competitive advantage.

With the acute issue of turnover and more importantly, finding those next new hires with differentiated skills sets than we’ve seen in the past, the race for talent will remain a challenge deep into 2023 and beyond. The answer? Make sure you have a talent development program in place and that your employee engagement model is set up accordingly. What are you doing from a training and development perspective? How are you delivering a clear career path for employees to navigate the organization? While compensation remains important, career path competency models, better coaching and better training are all elements of the talent piece to drive better attraction and retention. In addition, thinking outside the box of traditional industry talent provides additional opportunities for upskilling and development. The tech and med device sectors offer additional skills that will be necessary in manufacturing and distribution’s future state go-to-market approach.

The big idea(s) are clear – ensuring your organization is poised with the fundamental elements and investments to support and enhance your commercial team is the ace for profitability in 2023 and beyond.

Interested in additional details on the 2023 five predictions for manufacturers and distributors? Access the full podcast hosted by Alexander Group practice leaders.

For more information on how to optimize your commercial team, please contact Alexander Group.

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