So how does a firm determine which go-to-customer approaches must change to position for the upturn? Alexander Group held virtual roundtable sessions with 50+ manufacturing and distribution sales executives to discuss what measures are being tracked, how they are managing sales employees and headcount and what changes to channel partner programs must be implemented for a strong rebound. Including insights provided by recent Alexander Group Manufacturing and Distribution Surveys along with live audience polling, the following approaches were identified as the focal points for a sound recovery.
100% of participants agreed – tracking new revenue and bookings is still the number one focus. However, cash flow/accounts receivables and supply chain/inventory levels were both high on the list at 82% and 77% respectively. Interestingly, tracking statistics on COVID-19 was low at 27% while in past surveys this subject was in the top three. This indicates a likely movement from crisis to upswing.
The next play – capitalizing on pent-up demand and recalibrating for long-term growth. But these strategies will vary by industry. Will manufacturers and distributors find the opportunity to accelerate recovery or simply stabilize efforts into 2021? 67% of respondents predict a moderate to severe (over 15%) drop in full year sales. As one executive noted, “Uncertainty across the value chain makes it difficult for long-term planning, as everyone is focused on securing the short-term (i.e. Q2 & Q3).” Building agility into the deployment and investment process will be key, noted another executive who indicated that his company is, “Strategically monitoring which locales, states and countries are opening up and when. (We) are actively planning on redeploying sellers into new markets as they come back online.”
Manufacturers and distributors agree that protecting current employees and deferring non-essential hiring to 2021 is still top of mind. 67% of participants have suspended new hiring plans. Commercial taskforces have been implemented to train and prepare teams for the rebound, one that will be a phased and measured approach to recovery. Field sales resources will return to their territories, but virtual selling will likely play a larger role in sales models than in pre-crisis times. As sales teams have adjusted to the new normal, manufacturers and distributors have found that less travel has reduced SG&A and has opened up new talent pools, specifically individuals that never considered sales because of travel’s impact on the work/life balance. The president of a commercial and residential building materials firm stated, “Sales leaders are going to need to adapt. Customers are welcoming new virtual selling relationships.”
As with any economic crisis, some markets are faring well through the storm while others are flailing. Manufacturers and distributors need to gather market data from their channel partners to reallocate focus and resources into market segments that are currently providing opportunities and prepare to double down on those that will rebound sooner. This results in a major challenge – smaller manufacturers and distributors are struggling with cash flow and are asking for relief on agreement terms and payment plans. While firms want to support their partners, they cannot become lenders or lines of credit. However, if manufacturers do not do enough to support partners, the health of partnerships may be in jeopardy. Will partners be able to sustain the pandemic and keep the number of people staffed as needed? Competitors’ status should also be tracked – are their customers satisfied or is there an opportunity to capture orphaned accounts?
Overall, manufacturers and distributors are anticipating an upturn before 2020 is out. It’s time to dramatically reduce the short-term noise and plan on reinvigorating (and potentially re-structuring) sales teams while protecting sales talent going into mid- and long-term strategies.
You can register for any or all of our manufacturing and distribution virtual roundtables by visiting our website and completing the online form.
For more information and insights on how to manage in times of disruption, please contact an Alexander Group Manufacturing or Distribution practice lead.