An unsteady global economy impacts everyone, but not equally. Understanding how your customers’ sentiments and behavior correlate to economic changes is critical for identifying differentiation and growth opportunities.
A one-size-fits-all growth equation no longer computes.
Strategies for growth and profitability into 2025 are shifting for manufacturers and distributors. According to Vendavo’s 2024-2025 Top Growth Drivers Report for Manufacturing and Distribution – which surveyed more than 300 CFOs and general managers in manufacturing and distribution – it is time for a healthy mix of strong partnerships, smart pricing, and advanced sales and incentive strategies. Respondents reported their preferred financial strategies for growth as enhancing channel/partner programs (60%), rebate programs (56%), price optimization (54%), and advanced RevOps tools and processes (54%).
Growth for savvy organizations doesn’t come from waiting to see what the economy may do, but with unified pricing, selling, and rebate management initiatives. The priority is to protect value and improve processes rather than get caught flat-footed through economic disruption.
The power of partnership
Effectively selling through and rewarding partners is critical to growth and profitability. Rebate programs are a best practice for driving strategic growth across price, volume, and mix. They can encourage specific customer behavior and help build loyalty among your partners and suppliers. 87% of North American and 77% of European CFOs say their rebate programs have increased organizational revenue, for example, and 88% of CFOs say their customers love the offerings.
But rebate management can also be administratively painful. Are the rebates working? Are discounts being extended based on purchase promises that aren’t fulfilled? How can you accurately report against the activity? Payouts based on promises made by a salesperson on the back of a napkin are difficult to fulfill on time and impossible to measure. Nearly two-thirds of respondents say their program is a mess for these and other administrative reasons.
Another crucial ingredient for success is finding and offering the right price for your partners and customers. Price optimization is the practice of deciding upon the most effective pricing strategy for a product or service. It is about finding the right price for the right customer at the right time – not so high you risk losing a customer’s business, but not so low you sacrifice margin. Manufacturers and distributors rely on various approaches to pricing their products and services, and many use multiple strategies simultaneously.
Leverage good data with great AI
Successful channel strategies and price optimization require deep insights into your partners’ and customers’ expectations and preferences. Sales, service, and support-driven communication will reveal important customer and partner insights and strengthen relationships. But there is no substitute for technology-driven fact-finding, automated updates, and AI-powered analysis to smooth out many of the challenges associated with these strategies and effectively scale them.
Implementing AI can bring a new level of intelligence to selling, pricing, and rebate strategies. It can rapidly and accurately analyze large volumes of data, ease program inefficiencies, predict customer actions, and provide your sales team with timely pricing and selling guidance that maximize your competitive advantage. You gain timely insights into partner needs, customer preferences, buying behaviors, market trends, and competitive intelligence.
According to the study, however, most organizations have yet to use AI. One-third of surveyed manufacturers and distributors report they don’t use AI in their price optimization and rebate management efforts at all, or they do so only on an ad-hoc basis. Another one-third say they plan to build an implementation strategy.
From market turbulence to competitive pressures and inadequate staffing, manufacturers and distributors face many challenges. Implementing AI is unsurprisingly the primary concern for the next 12 months (18%). Second on the list is understanding/meeting customer expectations (14%) which, ironically, could be supported by AI implementation.
Elevate customer insights for maximum value
Consistent growth comes from delivering value. Value starts with a solid understanding of your customers and partners. Their sentiments and behaviors should be the driving force behind your product development as well as the pricing, selling, and incentive strategies and processes you use to serve them. Virtual and in-person handshakes will get you partway in understanding needs and preferences, but purpose-built technology is how you will go the distance.
Eric Carrasquilla is CEO of Vendavo, the global leader in pricing, selling, and rebate solutions. Vendavo has been powering the profit transformations of global manufacturers and distributors for more than 25 years.
