Revolutionizing the Customer Experience: ERP's Impact on the Marketing Mix

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September 2, 2024By Jeff Botsch | Industry Field Executive – Distribution

The real value of an Enterprise Resource Planning (ERP) system lies in customer happiness. In a recent discussion with technology executives, a crucial question emerged: What is the true value of having a well-integrated ERP system? Better reporting? Improved efficiency? Scalability? Compliance and risk management? While these are all benefits, the single most important reason for implementing ERP is making customers happy.

But can a well-integrated ERP really make customers happy? To answer this, I evaluate how ERP and supporting edge solutions such as AI, CPQ (Configure, Price, Quote), and WMS (Warehouse Management System) can boost customer satisfaction. I do this by examining their impact on the renowned four Ps of marketing: Product, Price, Place, and Promotion. This "marketing mix" forms the cornerstone of business strategy, guiding companies in crafting plans that satisfy customers and meet business objectives.

Let us dive deeper into "the mix" and explore the technology use cases that drive customer happiness:

Product
Product refers to the tangible goods or services a business offers. While you likely have an established core lineup, technology can enhance customer satisfaction in several ways:

  • AI-powered product recommendations: By leveraging artificial intelligence over your ERP sales order entry system, you can provide personalized product suggestions, offering both alternative and complementary items. This helps customers easily find suitable alternatives or ensure they have all necessary components for a project.
  • Visual product configuration tools: These interactive tools (commonly referred to as Configure-Price-Quote or CPQ solutions) allow customers to visualize products with various options and configurations. For complex products with multiple customizable features, this technology significantly enhances customer confidence in purchase decisions.
  • Streamlined product line expansion: AI and process automation can simplify the incorporation of new products into your operations and ERP, allowing distributors to more readily diversify their offerings. This enables you to provide more comprehensive solutions to your customers, becoming a one-stop-shop for their needs.

Price
Price is a critical factor for all customers. ERP systems play a crucial role in managing and optimizing product pricing:

  • Real-time pricing discounts: When customers have negotiated discounts, they should see these reflected immediately when placing an order. This transparency builds trust and streamlines the purchasing process.
  • Price promotions and rebates: ERP software can efficiently manage complex promotion and rebate programs. The system can automatically apply discounts, manage time-limited promotions, or calculate rebates based on predefined criteria, enhancing customer satisfaction with your pricing structure.
  • Margin optimization: AI can conduct granular analysis of each line item on an order, allowing you to optimize margins dynamically. This enables you to present win-win quotes to customers, balancing competitive pricing with profitability.

Place
For distributors, "Place" is about ensuring product availability and efficient delivery to customers:

  • Demand planning: Advanced ERP systems offer sophisticated inventory classification capabilities, analyzing and predicting demand at multiple levels. This allows distributors to optimize inventory levels and placement, ensuring high product availability without excessive overstock.
  • Seamless execution: An advanced warehouse management system (WMS) optimizes every aspect of operations, from receiving and put-away to picking, packing, and shipping. When a customer places an order, the system can automatically determine the optimal fulfillment location, initiate the picking process, and schedule the most efficient delivery route.

Promotion
In the context of distribution and ERP systems, promotion encompasses the various channels through which customers engage with your business and place orders:

  • Counter Sales: ERP systems equip your sales team with real-time inventory and pricing information, enhancing the in-person customer experience.
  • Electronic Orders: Advanced ERP systems can use process automation and AI to efficiently handle orders received via email or EDI, including managing exceptions.
  • Fax/Phone/Text Orders: AI and Process Automation can be used to enhance the integration of these traditional order methods into the same workflow as other channels.
  • Website Sales: A well-integrated e-commerce platform with visual product configuration tools can significantly boost customer confidence and satisfaction.
  • 3rd Party Drop Ships: Integrated drop-shipping capabilities allow you to fulfill customer needs seamlessly, even for products you do not directly stock.

The key to customer satisfaction lies in providing a seamless, integrated experience across all these channels. Modern ERP systems support this multi-channel approach, ensuring consistency in pricing, discounts, rebates, credit terms, and invoicing, regardless of how customers interact with your business.

Conclusion
Customer satisfaction is a multifaceted endeavor requiring the seamless integration of various service aspects. The ideal customer journey should be both effortless and transparent, with distributors positioning themselves as valued business partners who consistently deliver on and refine their four Ps.

In today's digital age, ERP systems enhanced by artificial intelligence and EDGE solutions have become indispensable for distributors aiming to excel in delivering the marketing mix. These advanced technologies enable distributors to offer personalized product recommendations, implement dynamic pricing strategies, ensure timely product availability, and provide a consistent, omnichannel promotional experience.

As the distribution landscape evolves, it is crucial to assess your current systems and processes critically. Ask yourself: Are your systems equipped to deliver this level of integrated, customer-centric service? Can they adapt to changing market demands and customer preferences? If not, it may be time to consider upgrading your technological infrastructure to stay competitive and ensure sustained customer happiness.