Monthly Archives: July 2016

31. What’s New In Distribution Strategy? Not Much

“Distribution Strategy” is a mature 50-year old. But, 90% of distributor’s (that do financial performance surveys) need some Strategy homework. Their 15-year-average grade is 7% Return on Total Assets while the top 5% have been scoring 22%+. What strategic wisdom are the Distribution Strategy Nerds following?


Actually, don’t imitate anyone’s strategy. Their competitive soup and strengths aren’t yours. But, do imitate guidelines that generally work for distribution channels. Like:

  1. The power — in mature, consolidating channels in which 90% of sales are on commodities in global, excess supply — has shifted to the larger, growing/consolidator end-customers. So:
    1. Partner and retain these customers better than your competitors to grow faster and more profitably. (Do all employees know your top 10 customers by heart?)
    2. What do these customers want? More supply-chain value and/or lower cost solutions. (Get/learn: Line Item Profit Analytics (LIPA) and Cost-To-Serve (CTS) Math to sell them what they want.)
  2. Don’t service all customers with the same standard service model and experience. You will over-serve 50% of your smallest accounts and under-serve 5% of your biggest, profit (potential) accounts.
  3. Shift your service-people, activity time and costs to be proportional to each customer’s profit potential (the reverse of #2). Then, eat competitors doing #2.
  4. Service-value metrics vary with the needs of each customer niche. And, bundled or unbundled services with the product prices depends upon customer volume and average order size.
    1. Tiny customers pay for most services a la carte.
    2. Big accounts can get “extra services for free” if they meet some target Sales and Sales per order.
    3. Find and cure the Big-Sales, Small-order customers that are killing both parties with hidden activity-costs from too many, small orders.
    4. Get the LIPA and CTS analytics to support guidelines 4.a-c.
  5. With customer profitability analytics identify your Core customers: the 10-20% that provide 120-140% of your profits to pay for your losing accounts. Do a “Core Renewal” to: 2X Sales; 2X GM$s/employee; and 5X Profit Dollars/employee.


30. Dynamic, Service-Triage-Program: Case Study

Do you want to hire the best employees and keep them stoked? Here’s a successful distributor’s thinking and how to put a service-triage-program in place:

  1. Best employees (like thoroughbreds) cost more upfront. And, they want a career growth path.
  2. But, raises and profits to reinvest into growth must both come from growing Gross Margin Dollars (GM$s) per Full-Time Equivalent Employee (FTEEs).
  3. So, freeze headcount and trade low, unprofitable, GM$/service-hour, accounts for high GM$/hour accounts.
  4. How? Give your 5 most profitable and 5 most potentially profitable accounts much better service.


  1. Every employee memorizes ten biggest (potential) profit accounts.
  2. Ideas are listed and play-acted for diplomatically giving “the Big 10” line-cutting service at the inconvenience to unprofitable “minnow accounts”.
  3. Service goals for the Big 10: they will never be handed off to another employee with any delay or fumbles. They will get: faster, perfect and more-creatively, thorough service.
  4. Give everyone customer profitability information and trend reports for both GM$s/FTEE and Profit$s/FTEE. If Profit$s/FTEE clears a target, then gainsharing bonuses accrue for all.


All inside sales people were busy. #2 Target Account calls. The “overflow person” enthusiastically tells #2 to: “Wait just one second”. Then yells: “Can anyone Triage for #2?”

Tony is talking to “Micro-Plankton Man” (MPM). In mid-speech, he hits the blinking button to work with #2 for more than an hour. #2 needs some product specs, pricing and a shipping date – for a potential factory direct order. Tony walks the call over to purchasing. The team (using the speaker phone) calls the factory to get all needed information in record time.

#2 then quotes their customer and wins by being the first-back bid. Tony and associates then collaborate with #2’s folks to create a “Speed Quoting Wins” process.

#2 then wins more business with faster quoting. Their purchases grow from $30K to $500K with profits rising from 3 to 6% of sales. MPM’s sales, meanwhile, go from small at a loss to zero. He switched to a competitor when assigned to a new service model and terms that would have made him profitable.

The team needed MPM’s service activity and more to reinvest into #2’s booming activity without adding people. GM$/FTEE doubled; Profit$s/FTEE quintupled; and gainsharing bonuses and reinvested profits/FTEE happened.

Will you lose key accounts and gain more minnows? Or, get Waypoint Analytics  first to hit competitors both high and low?


29. Minnow Busi-Ness Prevents Big Account Wins

A US economist tours China in the early 80’s. Seeing a canal being dug by an army of workers with shovels, he inquires: “Why not use a bulldozer?’

The Manager snaps back: “Do you want to put these poor workers out of a job!”.

The Economist muses: “Then, give them spoons” (and create more jobs).

The extra Busi-Ness of the spoons idea is laughable. But, the real problem is that the Manager can’t envision what his Unseen, Next, Higher-Level Opportunities are for redeploying slack workers after getting a bulldozer. What are your next-level, value and profit improving opportunities that you are dying to pursue?

Continue reading 29. Minnow Busi-Ness Prevents Big Account Wins

28. 5 CEO Goals to Finish Big

Bo Burlingham of Inc. Magazine wrote the book: Finish Big: How Great Entrepreneurs Exit Their Companies on Top. He distilled his CEO survey results into these five general goals:

  1. Be treated fairly during your exit process.
  2. Have a sense of legacy accomplishment. The world is better for your fun work invested.
  3. Be at peace with what happens to those who helped you build the firm.
  4. Have new things to do that you are looking forward to.
  5. The company will continue to thrive (even better) without you.

But what pre-requisite skills must you to achieve these goals?

Continue reading 28. 5 CEO Goals to Finish Big