Optimize sales efforts for maximum ROI
Tariffs and persistent inflation are squeezing margins in manufacturing and distribution, making every sales dollar count more than ever in 2026.
Key takeaways
- •Recent U.S. tariff increases from 2025 have raised import costs significantly, with only partial pass-through to consumers so far, forcing distributors and manufacturers to absorb higher expenses and protect profitability through sharper sales focus.
- •Sales teams face longer cycles, tougher quotas, and intense competition, with data showing many reps struggling to hit targets amid economic pressures like elevated costs and subdued demand.
- •Prioritizing high-value customers via segmentation can cut cost-to-serve by up to 20% and boost revenue per rep by 15%, offering a critical edge when broad-based growth is constrained.
Margins Under Siege
The backdrop for sales optimization in early 2026 is one of unrelenting cost pressure. Tariffs imposed in 2025 have driven up prices for imported goods by around 5.4% above pre-tariff trends, with domestic products in affected sectors rising about 3%. Much of this burden remains upstream, but distributors in particular are caught between reluctant price hikes and eroding margins.
Manufacturing and wholesale sectors, key users of tools like Phocas Software, contend with subdued demand despite some output gains. Factory gate prices are climbing faster due to tariffs, yet customer affordability limits sales volume. This creates a squeeze where revenue growth is harder to achieve organically.
Broader economic trends compound the issue. Business leaders expect modest revenue increases in 2026, but cite tariffs, workforce shortages, and competition as top hurdles. Sales cycles have lengthened 30-40% since pre-pandemic levels, and quota attainment remains elusive for many teams.
The non-obvious tension lies in the trade-off between volume chasing and value focus. Spreading efforts evenly across all customers dilutes impact, while data-driven segmentation uncovers leakage and at-risk accounts early. A small lift in retention—say 5%—can yield outsized profit gains, far more than equivalent new-customer acquisition in a high-cost environment.
Phocas Software itself reflects the moment: fresh from a major 2025 investment by Accel-KKR valued over $500 million, the company is accelerating product enhancements around sales insights, signaling strong industry demand for efficiency tools amid these headwinds.
Sources
- https://www.phocassoftware.com/resources/blog/product-highlights-2025
- https://www.moodys.com/web/en/us/insights/data/data-for-growth-optimizing-sales-and-marketing-roi-in-2026.html
- https://www.jpmorgan.com/insights/markets-and-economy/business-leaders-outlook/2026-us-business-leaders-outlook
- https://www.library.hbs.edu/working-knowledge/eight-trends-for-2026-pricing-passion-and-the-risks-ahead
- https://www.wipfli.com/insights/articles/2026-distribution-industry-outlook-its-time-to-go-digital
- https://www.accel-kkr.com/phocas-software-receives-strategic-investment-from-accel-kkr-to-fuel-middle-market-bi-and-fpa-innovation-and-growth
- https://www.phocassoftware.com/events
You might also like
- Feb 23Reece HY26 Results: Live Investor Webcast
- Mar 12The Multiplier Effect: New Ways to Convert Webinar Leads to Pipeline
- Mar 17WEBINAR: Cut Through the AI Noise. What Really Matters for Distributors in 2026
- Mar 31[Leader Talk] Developing Sellers Who Deliver Results
- Apr 22Power of the Pivot: Leading Through Imperfect Conditions