Next-Gen Pricing and Sales Strategies for a Volatile Food Service Distribution Industry

As supply chain issues, inflationary pressures, and cost volatility cause significant B2B pricing and sales challenges in the current pandemic recovery landscape, digital solutions for overcoming these challenges are more critical than ever. This is particularly true in food service distribution, which is a highly competitive industry where customer relationships and geography play important roles and growth means taking market share. However, in a June 2021 poll from the International Food service Distributors Association that asked “How would you describe your company when it comes to technology adoption,” only 33.5% of respondents answered leading, with the remaining 66.5% answering average or lagging.

This poll illustrates how even as the pandemic forced many industries and companies to rethink their approach to digital and technology adoption, food service distributors are still not fully embracing digital transformation and making the appropriate shifts when it comes to eCommerce, data science, and price optimization. Here are a few strategies from a pricing and sales perspective that food service distribution companies can leverage as they look to the digital-focused future and strive for sustainable success.

Ensure Consistency Across All Commerce Channels

When the pandemic substantially decreased in-person interaction for sales reps, many companies had to rethink their digital and eCommerce strategies. For food service distributors, eCommerce can be quite a challenge because of the vast number of products and customers. Additionally, the highly negotiated nature of B2B pricing wherein customers receive different prices depending on their business relationship (list price, negotiated price, customer-specific pricing, etc.) adds an additional layer of complication. As cities reopen and restrictions are lifted, while having a robust eCommerce channel is absolutely essential in our new digital normal, some in-person sales rep interactions will return.

Therefore, it’s more important than ever that pricing and product recommendations at the point of sale are consistent across all channels, whether it’s a phone call, going online, or meeting a sales rep in person. The customer needs to be able to pick their preferred business channel, and it’s crucial to ensure that any new customer that browses online receives a competitive price that doesn’t undercut current customers. As modern B2B buyers become accustomed to B2C and Amazon-like buying experiences, it’s imperative that all channels deliver convenience, ease, and consistency when conducting business with B2B suppliers.

Enable Sales Teams with Predictive Technology

Hitting revenue targets while maintaining profit levels and minimizing customer churn was already a challenge for food service distributors due to increased pressure from competitors, but that challenge is becoming even greater due to supply and inventory issues driving a volatile marketplace. Making matters worse, sales teams are getting smaller at most broadline food service distributors, and buyers often cherry-pick or defect as choices increase and purchasing becomes easier and more convenient. On the surface, a simple solution would be to provide sales teams with reports that offer data and analytics on customer behavior and identify new opportunities. However, few sales reps would consume said reports due to time constraints.

One solution that can minimize these challenges and even transform how companies do business is a predictive technology. A predictive model can set market-aligned prices for any selling circumstance and allows companies to gain insight into how pricing impacts future profit and loss performances before prices are put into market. Predictive technology can also help with profit and loss forecasting, leverage pricing as a strategic lever to meet business objectives, and most importantly, deliver market-aligned pricing guidance to sales reps directly in their current quoting systems. This enables your sales reps to spend less time hand pricing top items for customers, and instead, spend more time engaging with the right opportunities to grow wallet-share.

Use Price Optimization Technologies to Conquer Pricing Complexity

Due to the nature of food prices, distributors typically update prices on a weekly basis, which is a challenge due to a large volume of products across a large volume of customers. Category managers often calculate suggested pricing for products by using standard markups over cost. These prices are then delivered to sales teams, but they lack customer specificity and do not account for the granularity that exists within the marketplace. Additionally, sales reps often ignore this guidance since they aren’t relevant to their deals, and instead, apply subjective judgement for quotes, which can’t fully account for all the unique factors that drive price in various selling circumstances. This results in a proliferation of under- and over-pricing in the market.

By leveraging price optimization and management software, pricing can be optimized and more easily managed, mis-aligned pricing can be corrected, and price elasticity can be leveraged to ensure market-aligned pricing on each transaction. Additionally, sales effectiveness solutions better equip sales teams to uncover hidden opportunities, act on various sales growth campaigns, and gain insight into where potential customers are defecting to competitors.

Two Zilliant solutions that have proven incredibly beneficial for food service distributors are our flagship price optimization solution Price IQ®, and our prescriptive sales analytics solution, Sales IQ™. Price IQ generates price micro-segments and optimizes alignment to ensure rationalization of price relationships within and across segments and measures price elasticity. Price IQ also delivers market-aligned price guidance and prices can be refreshed on a regular basis. 

Combining Price IQ with Price Manager™ gives companies an even greater level of control by streamlining burdensome tasks such as updating prices as market conditions change. Sales IQ uses advanced data science to determine which customers have incremental revenue opportunities and what products and quantities customers should be buying. It turns valuable customer data into actionable sales insights at a scale not possible through manual analysis or traditional business intelligence.

These pricing and sales strategies can significantly help food service distributors execute commercial strategies, effectively respond to changing market conditions, increase profitability, and gain a strategic advantage in the highly competitive and often volatile food industry. Additionally, by combining this software with Zilliant's Real-Time Pricing Engine, a robust, REST-based API, companies can deliver real-time market pricing and sales guidance into any commerce channel to ensure consistency.