Why industrial distributors need to stop relying on their sales departments for growth
28 October 2025
If you’re an industrial distributor, doing more than about ten million in revenue, and you’re expecting your sales department to drive growth, you’re in for a rude surprise.
Your sales department is not driving growth; it hasn’t for a long time, and that’s not about to change.
It’s likely that you’re unaware of just how bleak the case for sales-led growth is because your sales department is unaware themselves (or, perhaps, because they would prefer you didn’t know).
Regardless, I don’t have a dog in this fight, so I’m about to spill the beans!
It’s not all bad news
It’s not all bad news, fortunately.
You can grow an industrial distribution business in this business environment. And your sales department can make a positive contribution to that growth.
The critical realization is that you need a small group within your organization that’s focused exclusively on growth. This group should include Sales, but it cannot be limited to Sales, and Sales cannot (and must not) lead it.
The creation of this group will require a redesign of your organization. That sounds like a scary proposition, until you realize that this redesign is long overdue. If you don’t make the necessary changes today, in pursuit of growth, there’s a danger that you’ll be forced to make them tomorrow, in pursuit of survival!
The pursuit of revenue is not the pursuit of growth
In order to understand why your sales department can’t drive your organization’s growth, all you need to do is ask a salesperson why their role exists.
They will tell you it’s their job to generate revenue. And therein lies the problem.
While this point is not widely appreciated, in an established business, the generation of growth is not the same as the generation of revenue. And the larger your organization, the more important this distinction becomes.
To make sense of this, consider the primary cause of revenue. The primary cause is not the activities of salespeople, it’s the habits of customers. I’d hazard a guess that around 90% of your revenue is the result of existing customers making repeat purchases.
The truth is that your customers will continue to purchase from you for as long as it makes commercial sense. In other words, if you ensure that your product range meets customers’ requirements, that your prices are competitive, and that delivery lead times are well within your customers’ tolerances, then your customers will continue to purchase, and your revenue stream will be dependable.
But that ain’t growth.
No one will pick up the phone!
Your revenue emerges spontaneously from a basket of accounts.
It’s more useful to think of your primary source of revenue as a basket of annuities, where each annuity takes the form of an implicit agreement to purchase a particular category of products until further notice.
Your salespeople should not be focused on generating revenue because they have very little influence over your customers’ purchasing habits. Remember, your customers’ propensity to purchase is a function of pricing, product range, and on-time delivery performance. These all fall within the purview of Operations, not Sales.
Your salespeople should be focused on the pursuit of new business, where new business consists of new categories for existing accounts and new accounts.
However, there are two significant problems with the pursuit of new business. These are the problems that make sales-led growth impossible. (The same problems that your sales department may not be in a hurry to discuss with you).
The first is that your sales department is ill-equipped to sell new categories of products to existing accounts. The second problem is that your salespeople find it very difficult to pursue new accounts because virtually no one answers their telephone calls!
Both of these problems originate from a misunderstanding of growth. Growth does not come from the pursuit of revenue (as we’ve discussed). It does not come from the pursuit of new business (although that’s closer to the mark). It comes from the pursuit of new sources of revenue.
Four sources of revenue
There are four sources of revenue: new business, new products, new territories, and acquisitions. (New products includes value-added services.)
These sources of revenue are tightly interrelated. The pursuit of new business is likely to necessitate the development of new products and services. Acquisitions are an accelerant for territorial expansion. And the existence of an operational growth engine is both an aid to acquisitions and a contributor to multiple expansion.
These four sources of revenue are so interrelated that growth is impossible unless you devote effort to all of them simultaneously.
In summary, my position is that growth does not come from the pursuit of revenue; it comes from the simultaneous pursuit of all four sources of revenue: new business, new products, new territories, and acquisitions.
The importance of decoupling
This means that your sales department cannot drive growth in isolation.
Your organization needs a dedicated Growth group. This group should encompass all parties that contribute to the four sources of revenue. And, most importantly, this group must be decoupled from the elements of your organization that are responsible for revenue generation.
A fast-growing business is not a single system. It’s two sub-systems cohabiting within the one organization.
You have the revenue-generating system that extracts a steady stream of revenue from a basket of existing accounts (and from goodwill). And then you have the growth-generating system that grows the size of that basket.
The critical insight is that these two sets of activities are antagonistic. What that means is that if a person has both revenue and growth responsibilities, over time, the effort they devote to the latter will go to zero.
If a salesperson is responsible for managing existing accounts and winning new ones, the latter will be neglected.
If an engineer is responsible for designing custom solutions for customers and new product development, the latter will be neglected.
Not sometimes: always!
If you’re serious about growth, you must ensure that individuals (and teams) operate exclusively within either the revenue-generating group or the growth group, never both.
Innovation
There’s no avoiding the fact that innovation is the fountainhead of growth. But it is more important now than ever before. Today, it is simply impossible to brute-force your way into most markets with me-too products and a superior salesforce.
Innovation isn’t limited to new-product development. Distributors can package me-too products in an innovative service wrapper. The incredible success of vendor-managed inventory is a testament to this.
And as America’s largest distributor of industrial products, Amazon has demonstrated the potential of supply chain innovation.
There’s also potential to package technical services with core products to create hybrid products.
Innovation (like all of the precursors for growth) will not occur unless you have individuals who are focused exclusively on it and whose continued employment relies on a consistent output.
A minimum requirement for innovation is that at least one member of your team must spend extended periods within your customers’ businesses, developing a profound understanding of their fundamentals.
Your Growth Group
Your Growth group doesn’t need to be large. It just needs a full cast of characters (relative to its mission), and these characters need to have precisely zero responsibility for revenue-generating activities (I’m not going to stop stressing this point!).
Obviously, this group needs a leader.
My preference is to replace the Chief Revenue Officer role with a Chief Growth Officer position. Most mid-sized industrial distributors do not need layers of sales management. If the sales team is responsible exclusively for the pursuit of new business, it will be small enough to require only one or two supervisors.
Of course, if the sales team is exclusively responsible for the pursuit of new business, then this team is part of the Growth group. If your sales department currently contains people who are clearly responsible for revenue (for example, Customer Service and Strategic Account Management), then these folks need to be moved to Operations, and Operation’s remit needs to be expanded to encompass the entire revenue-generation process.
At a minimum, you need one Corporate Development Manager who is responsible for acquisitions. If you have a superior business model, you should be acquiring other businesses periodically. The cold, hard reality is that it’s a lot easier (and cheaper) to grow your account base via acquisition than it is to do so organically.
Finally, both your Engineering and Marketing departments need small teams that live and work within the Growth Group. This means that the managers of your Engineering and Marketing departments need to be mature enough to understand that their departments contain teams that perform different work at different cadences, with different worldviews. Consequently, these teams will conflict from time to time. And that’s a good thing. If there’s no creative tension, there’s no innovation!
This requirement for creative tension is the reason why your Growth team should not hire its own engineers and marketing people.
By the way, if you do not currently have an engineering team, it’s because technical advice is being dispensed by salespeople who are masquerading as engineers. If you have some salespeople who can do a convincing impersonation of an engineer, then make them your new engineering department’s first hires!
Tip of the spear
This transformation signals a radical rethink of the role of Sales.
Traditionally, your salespeople have been semi-autonomous agents who were essentially responsible for your organization’s entire customer interface.
In this new growth-oriented model, your sales team becomes the tip of the spear: an elite group of communication specialists who are responsible for persuading members of your marketplace to do things they wouldn’t otherwise do.
This includes convincing existing customers to adopt new product categories, persuading potential customers to trial an innovative new service offering, or even persuading competitors to entertain a pitch from your Corporate Development Manager.
Your sales team will no longer operate autonomously. They will be a critical component of a tightly integrated Growth group.
Will your Sales department like this transition? A few will. The balance should be shifted into roles that align with their current mode of operation. Some will move to Strategic Account Management (within Operations). Some will move to your Engineering department. Others can be converted into what we call Field Specialists, which really means field-based generalists who perform discrete tasks on customers’ sites at the behest of various departments within the larger organization.
Zero to one is not the same as n to n+1
When you start a business, the receipt of your first customer check is a momentous event. It’s the first and only time that your enterprise will experience infinite growth!
It’s understandable if that experience results in a strong association between revenue and growth. But revenue isn’t growth, any more than velocity is acceleration.
Growth results in an increase in revenue, but it isn’t caused by the pursuit of revenue (at least, not from the second check onwards).
The design of your organization needs to reflect this critical distinction.