Bids and Request for Proposals constitute a significant part of revenue for distributors. However, many distributors still rely on outdated methods to service these RFPs and submit effective bids. Their methods are manual and lack data-driven intelligence and market intelligence, resulting in symptoms such as slow turnaround and low bid conversion. This clearly impacts a company’s revenue and profits.
Industry trends like consolidation, increased competition and changing buyer expectations are driving the need for distributors to overhaul their approaches and adopt fresh techniques rooted in technology.
Here are five steps B2B distributors need to take to improve bid performance:
Standardize and digitize the bid input process
Many distributors serve their customers through various channels such as call centers, account representatives and self-service e-commerce. With these multiple channels come myriad bid formats for submitting bids. Standardizing the bid input process and automating it via investments in optical character recognition, online forms, apps, etc., will go a long way toward improving performance.
Deploy machine-learning algorithms to improve product matching
Accurate product matching—offering products and alternative products that match the specifications a customer has requested—is a vital and often time-consuming step in the bidding process. The current approach for many distributors involves throwing pricing analysts at the problem and/or applying existing product-matching rules wherever possible. Effective use of machine-learning algorithms can help create comprehensive cross-referenced databases to aid product matching. Deploying such algorithms will also help support the seasonal volatility of bids without having to deal with staffing for such volatility. Leading distributors are beginning to deploy matching-learning algorithms to identify exact, similar and alternate products to drive more relevant and competitive bid.
Incorporate competitive price intelligence
The rise of price transparency is a significant change in the B2B distributor landscape. The new buyer behavior of beginning product search online has prompted many distributors to migrate their catalogs online. And as the catalogs go online, so go the prices, making them more easily discoverable. Many large distributors now present some transparency of price online to unregistered visitors. B2B pricing is complicated, since it varies based on client needs and order size, so obtaining competitive proxies can help support a pricing decision. Distributors need to start collecting and incorporating competitive pricing intelligence as a part of their bid workflows.
Simplify and incorporate price-optimization algorithms
Arriving at a bid price is, for many distributors, complicated. Prices go through a lot of iteration internally within the sales and pricing teams, and then between the sales teams and their clients. Many times discounts can’t be justified, and sales teams struggle through static, black boxes that produce prices without providing options to simulate price based on different client scenarios. There is a need to simplify and incorporate price-optimization algorithms to meet the needs of both the distributor and its clients. Pricing teams must be assured that there is governance to the pricing methods, and that the methods follow the distributor’s strategic policy. Sales teams, meanwhile, can better contribute to the bidding process if they undertake their own price simulations that consider client interests.
Invest in deployment and continuous improvement
Last but not least, these steps won’t deliver value if distributors don’t deploy them properly. Distributors need to invest in effective change management, training and deployment to truly harness the value of an effective bidding process. And it doesn’t stop there. They also need to invest in continuous improvement to make sure their bidding systems are supporting business needs.
By applying these steps, distributors have seen noticeable improvements in bid turnaround time, bids accepted and increased revenue via alternate matches – that is, products of a different brand with similar attributes that can be easily substituted for one another – and freed up time for more value-added activities.
Mihir Kittur is co-founder and chief commercial officer at Ugam, a global managed analytics firm serving brands and marketplaces, retailers, and market research companies. He is primarily responsible for developing new engines of growth and fostering a culture of innovation within the company.Favorite