“SERVICE IS VITAL; OURS IS GOOD!”
Most distributors know/believe this phrase. But, are you living
in Lake Woebegone where everyone is above average? We all practice some degree
of the “self-enhancement bias”. It’s good for our species’ happiness, sanity
But, if competitors have “good service” too, what’s the
tie-breaker? Isn’t it meeting a “price”? Then, won’t you get commodity returns,
and struggle to attract and keep new young talent?
Continue reading 155. Your Lake-Woebegone Service Value
Forecast the Global-Everything
The global economy is slowing down. Do be more cautious with
debt and big, long-term investments. Otherwise, focus on the net-profit gains
that you can best forecast and control. Take your 5-10 biggest
net-profit-upside-potential accounts to the “next-level”.
Assumptions About Customers:
- Top 20% customers may yield 80%-plus of your gross profit dollars (Pareto). But, one in five is typically unprofitable. They are big losers due to huge, small-dollar picks, orders, and/or returns.
- For net-profit rankings: your top 2% will yield 70-90% of operating profit. (All net-profitable accounts – about 20-40% – will yield 120-150% of your financial profits. They pay for both the losing accounts and residual operating profit.)
- A team effort will always find new, upside possibilities within best 2% accounts.
- Another 4% subset of customers are high-growth “gazelles”. They are run by ambitious, innovative leaders and have a tightly focused strategy at which they excel. Gazelle buying needs (and sales) grow 2-4X faster than their peers. As innovators, they are apt to be open to your ideas for replenishment-process improvements. Partner them, and they will grow you for years.
- Your competitors are not thinking this way. Their reps do what they can. And, those reps won’t be able to (on their own) counter your total-team solutions.
- Rank all customers by year-over-year increases-to-decreases in gross profit dollars. (Better by net-profit gains, if you have a cost-to-serve model). The most up and down accounts will shock you.
- Focus first on most-up accounts. Why? Nobody wants to take credit for fumbled, down accounts. And, big-up accounts may be still expanding with unsolved replenishment process needs.
- Some accounts will be way up. Are they gazelles? Do more research to create a top-5, gazelle, target list.
- Selling and installing next-level replenishment systems requires honcho-led team selling with three stages. Find new system needs to fill. Co-create and resource them. Then, do ongoing, proactive maintenance. For much more on – “Enterprise Account, Team Selling” – follow the link at the bottom to an appendix of past documents and how-to blogs.
Will This Work for
Certainly! As you and colleagues skim through the appendix
material, reasons for why you can’t change will arise. Work through them. As Henry Ford said: “if you think you can or
can’t, you are right.”
CLICK HERE to view the appendix
Invent Your Own
Analytics software is big news. But, your richest analytical insights are
hiding under foot. To uncover these insights, get curious. Make specific observations
about the good and bad activity that you know intuitively exists within your
business. Are these observations
symptoms of what underlying root-causes? Write down the questions and theories
that arise. Do some customer field research and quick statistical analysis to test
and refine your questions and theories. Then, do small, fast, learning-forward
experiments to find the golden insights.
Continue reading 153. Analytics for Silos to Supply Chains
Many distributors do
not share general financial numbers with all employees on a regular basis. So,
new plays and innovation metrics (based on insights from customer and SKU
net-profit analytics) can’t be pursued. Too bad! All stakeholder groups would
WHY NOT SHARE?
In many of my
presentations over the years, I’ve asked roomfuls of distributor principals:
Continue reading 151. Share the Secret: “Profit” Is a Clean Word!
“Bruce, KISS It!”
For years on the distribution speaking circuit, Polished
Pleasers have advised me to: “Make your
message simple, appealing, dumbed-down – with memorable sound-bites or key
distributor folks won’t listen. Your advice on service-value innovation for
net-profitable customers and customer niches is too complicated. Tell them what they want to hear. (Be an
Some distributors (along with my own turnarounds) have pursued
what I preach for great results. Wins keep you going! But, many distributors are
still not suffering enough (yet) to want to upgrade their simplistic, operating,
The intent behind KISS was not to adopt simplistic notions for
success. Simplistic always yields weak, commodity, follow-the-herd returns!
What was KISS’s intent? How did it get distorted? What should you do about it?
Continue reading 152. Don’t Misapply: “Keep It Simple Stupid” (KISS)