How to choose analytics software for distributors: questions, data and traps

Most buying decisions for analytics start from a feature list. For distributors the better start is the questions that come back every month, the files already on hand, and the traps that make a tool look right in a demonstration and wrong in the first board meeting.

Start from the questions

Any tool you consider should answer these from your data, not from a sample. Ask to see it.

The data you already hold

• CRM activity
• Assignment file
• Ledger
• Invoice ledger
• Account master with segment
• Delivery, order, visit and returns files
• Price file
• Delivery file

If a vendor needs a warehouse built before it can read these, count that in the cost and the time.

Ten questions to ask any vendor

1. What does it need in place before the first answer? A warehouse, a data model, a modelling language, a partner? Ask for the list and the typical weeks.
2. Who does the setup, and who maintains it? Your team, the vendor, or a partner, and what that costs after year one.
3. Does the AI calculate figures, or choose from computed ones? A language model that writes queries or code can produce a plausible wrong number. Ask what it is allowed to do.
4. Does every total reconcile to a control figure? Ask to see a bridge that does not sum and what the product does about it.
5. Can every figure be opened to its rows? An answer nobody can check becomes a debate in the meeting.
6. What does it cost in the first year, all in? Licences, consumption, implementation, modelling and training, not only the seat price.
7. How does data arrive, and who holds credentials? A file your systems already export, a scheduled drop, or a live connection with the vendor holding keys.
8. What happens to the data, and where is it stored? Residency, retention, deletion, and whether names can be replaced with identifiers.
9. Can we see it on our own data before we sign? A demonstration on a sample dataset tells you little about your own.
10. What does the tool do when it cannot answer? It should say so. A confident guess does more harm than no answer.

Checks specific to distributors

Ask whether the tool enforces these, and what it does when they fail:

• Coverage: Assigned accounts = covered + uncovered; no account in two books
• Dormancy: Customers = dormant + active + too few orders to judge
• Contribution: Allocated cost to serve = sum of the cost pools
• Lost lines: Lines ordered = shipped complete + shipped short + cancelled + open

The traps

Contribution after cost to serve. The ledger shows gross margin, and the costs of delivering, keying and visiting sit in other systems, so the two are never joined. When they are, a tenth to a fifth of accounts usually turn out to cost more than they earn, and most of those are one minimum order value away from profit.

Category share against similar customers. Revenue per account says how big a customer is, not how much of its spend you have. A contractor buying pipe and no fittings is visible only when compared with what similar contractors buy.

Dormancy against the customer's own pattern. A fixed ninety-day rule lists annual buyers who are fine and misses weekly buyers who have been gone for five weeks.

Measures to leave out

Calls per day. Effort without direction. Replace with coverage at cadence, by value.

Gross margin percent as a customer ranking. It rewards the accounts that cost most to serve.

Number of active accounts. A count that treats a $500 account and a $500,000 account alike. Use value-weighted measures.

A scorecard

Where Covirage fits

Covirage reads the exports above, answers the questions with figures our tools compute and check, and is set up for you within a week. See analytics software for distributors compared, AI analytics for distributors and Covirage for Distributors.

For the measures in full, with formulas and exports, read Sales KPIs for wholesale distributors.