Global Materials Distributor Moves to Digital Commerce

Overview

One of the world’s largest materials distributors and provider of infrastructural services for the B2B sector struggled to improve revenue growth and profitability in today’s evolving, digital world. In recent years, this company had seen many transitions, including mergers, leadership changes, intensifying competition, and especially the rapid acceleration of digital commerce. As the world quickly changed, this distributor struggled to keep up, and its business performance reflected that. It needed cutting-edge pricing and selling solutions to optimize both its sales and the customer experience.

The Digital Transformation Journey

When the company’s new leadership decided it was time for a change, it kicked off a project to transform and digitize their business. The chief technology officer and about 20 teams set off to prioritize digital transformation. At this point, the company had already established two online portals for its customers and was then focusing on gaining efficiency, flexibility, and control over pricing and discounting. As the distributor searched for a partner that could support these initiatives while also powering its transition from traditional sales to digital sales, PROS emerged as the ideal candidate.

Goals & Challenges

The distributor’s main objectives were to improve margins, sales processes, and win rates. These goals were driven by challenges such as the dynamic market environment, changing customer needs, higher price transparency, intensifying competition, and rising costs.

Improve Margins

In the ultracompetitive materials business, customers routinely ask several suppliers for quick quotes and choose whichever answers fastest with the best price. Unfortunately, since sales reps lacked insight into appropriate discounting levels, they would struggle to respond quickly to customers, which negatively affected margins, win rates, and sales cycle length. When sales reps did respond quickly enough, they would often offer overdiscounted prices, which caused margins to plummet. The distributor’s existing pricing solution vendor could not deliver the pricing guidance that the sales team needed. These and other challenges made it clear that the business required an end-to-end platform to support and integrate pricing, sales guidance, quoting, and agreements through all sales channels.

Improve Sales Processes

Streamlining the negotiation process was another need that was identified. Traditionally, when a sales rep receives an order, they would have to call the head office to discuss pricing. At that point, the sales rep would respond to the customer, the customer would negotiate, and then the sales rep would have to call the head office again. This cycle would often repeat itself, which affected the company’s effectiveness and, most importantly, the customer’s buying experience. Additionally, all agreements made with customers would sit on individual sales reps’ desks, which caused many issues. For instance, there was not a central repository to fully view all active agreements, so if the customer contacted a different sales rep, the rep would not know what agreements were already in place. 

Improve Win Rates

One of this distributor’s priorities was to improve sales and win rates through digital channels such as its B2B storefront, mobile app, email, and even online fax. At this point, only 5 percent of sales were coming through these digital channels. The remaining 95 percent came through phone calls or one-on-one meetings between the customer and the sales rep. It was evident that though these online portals were available, customers continued to feel that they could get better deals by directly calling sales reps. To scale its digital channels, the distributor identified the need for real-time, synchronous, customer-specific pricing that made sense and was consistent with what the customer would get through a phone call. The goal was to digitally offer the best prices and secure immediate wins.

Solutions

To address its goals and challenges, the distributor selected an integrated commerce platform that delivers: dynamic, omnichannel pricing; automated quoting; streamlined workflows; and AI-powered online and offline pricing guidance.

Dynamic, Omnichannel Pricing

The distributor ultimately selected PROS dynamic, omnichannel pricing solution, which delivers accurate, market-relevant, reliable pricing that wins deals and delivers the best buying experience for customers. This AI- and machine-learning-powered solution brings pricing and sales data together. With this solution, the distributor can ensure it provides consistent buying experiences both on and offline. Additionally, this solution gives the distributor the ability to react quickly to changing conditions (such as fluctuating raw material costs, especially for alloys, and inventory shortages of specific materials) by automatically updating prices across all channels. Doing so ensures the distributor’s pricing remains competitive and market-relevant. 

Automatic Quoting & Streamlined Workflows

To improve sales, the distributor selected PROS quoting and agreements solution, which simplifies negotiations, sales, and renewal processes for its contractual business (which represents about half of its business). This allows the distributor to easily record terms and conditions while enforcing price protection clauses so that customers can get their negotiated prices regardless of what channel they engage with. It also allows for streamlined workflows and collaboration. Instead of going back and forth with the head office, everyone is in sync and can collaborate on quotes and RFPs simultaneously. The solution then houses all terms, conditions, and agreements in a centralized repository, ensuring the customer receives the correct information regardless of whom they contact or what channel they engage with.

AI-Powered Pricing Guidance

To improve margins, this distributor selected PROS price optimization solution, which provides sales with pricing guidance. This solution empowers sales reps to provide winning and personalized prices for every product/service, for every customer, through any channel. It provides price recommendations in tiers to the sales rep and online channels based on AI, machine learning, customer segmentation, buying patterns, market data, competitive data, and the customer’s willingness to pay. It also gives sales reps real-time insight into profitability and deal performance so that they can see how deals impact the business and their quotas.

Results

This global distributor’s goals of improving margins, sales processes, and win rates are well underway. Throughout this process, cross-functional and executive team buy-in was critical for success. Despite the company’s global scale and the many teams involved, it was able to close the deal on these solutions in only eight months. 

It became clear during the implementation process that these solutions outperformed the ones they replaced in terms of price accuracy and ease of use, so the distributor immediately began switching off its former pricing provider to focus solely on PROS solutions. Additionally, the distributor found particular value in PROS pricing, adoption, and Agile deployment expertise. The leadership team is so confident PROS solutions will exceed all ROI expectations that it even shares knowledge and best practices with other companies.

“Our friends from PROS, all the experts we met, show an incredible understanding of our business, our challenges, and our plans. We developed an outstanding teamwork.” 
–chief technology officer, global materials distributor