Lollapalooza Effect: (A Charlie Munger
term) When multiple cognitive biases reinforce one another within a group,
irrational beliefs will take over.
WITH SMALL CUSTOMERS WITH UNPROFITABLE, AVERAGE-ORDER SIZES
When distributors create a Cost-to-ServE (CTS) model to estimate
and rank customers by net-profitability, there are typically two, customer-group
Continue reading 134. The Small-Customer, Small-Order “Lollapalooza Effect”
The “Yellow Vest”
protests in Europe echo the “We are
the 99%” (Occupy Wall Street movement) – back in August ’11. Both are
symptoms of declining, discretionary income for the bottom 95%+ of households
(in first world economies). Buying homes and having kids in the US is
unaffordable for the average Millennial. And,
if you have any promising, young employees,
are they job shopping?
Continue reading 133. Your Reply to the 2020 “Crisis of Capitalism”
FINANCIAL TACTICS AND SERVICE METRICS TO WIN NET-PROFITABLE CUSTOMERS
Financial KPIs urge: “try harder, be cost efficient”. Good stuff. But, what are your analytics to achieve unique service-value capabilities which win and keep big, targeted, net-profitable accounts that average higher margin dollars per order than their average service-cost per order? And, do they keep and motivate best-service-ethic people to:
- Achieve the service-metric goals for the target accounts?
- Cure root causes for net-unprofitable customers and SKUs?
THEMES BEHIND MY BLOGS?
This note is one of 130 blogs posted at www.merrifieldact2.com. A big underlying theme for these postcards has been “inventing analytics to better measure and manage true causes of Profit-Power”.
I’ve rotated through sub-topics (or lenses) including:
- Finance. What are the dysfunctional financial-management assumptions and blind spots that plague many distributors?
- Profit-Equation Management (or order-size economics). You make money at the line, order and customer level when: Margin Dollars minus Cost-To-Serve Dollars equals Positive Profit Dollars. Most distributors vastly underestimate their losing customers, SKUs, and Sales Territories – all of which have losing Profit Equations. Building a cost-to-serve model is not hard. What is? Giving up old beliefs that all customers and gross-profit dollars are all equally good.
- Customer (and SKU) Profitability Ranking Reports. By creatively focusing on the top/best and bottom/worst 5% of these reports, huge profit improvements are possible.
- Field research to discern next-level, service metrics for most net-profitable customers and customer niches (“nichonomics”). Distributors who do this kill those who don’t.
- High-Performance, Service Cultures to attract, engage, and focus talent needed to turn insights (from topics 2-4) into better service-value and profits.
- Key, defining capabilities that customers reward and no other competitors have. Topics 1-5 create these capabilities which win profitable order-streams from best customers. Then, all financial numbers (which are downstream, aggregated, averaged-out symptoms) improve.
- Envisioning Omnichannel Cloud Commerce circa 2021. Do you have the analytics to inform and enable your digital transformation strategies? Topics 1-6 provide the profits, agility, and confidence to change to win in 2021.
AN E-BOOK OF MY BLOGS?
Would an E-book that re-sorts my blogs into sub-topics with additional comments and discussion questions be useful? If YES, let me know: firstname.lastname@example.org
The global, debt-fueled, everything-bubble is deflating. Will
the US economy go into recession? Accurately unforecastable and uncontrollable
by us! Why not, instead, make controllable changes that will out-perform possible
Continue reading 129. For Big Gains in 2019, Forgive to Change
Invasion of Better Clone SKUs for Less
Retail “hard discounters” (HDs: Aldi, Lidl and Trader Joe’s) and Amazon have attacked B2C factory brands in the past 18 months. In 2017, the HDs announced big expansion plans for the US, while Amazon ramped up their B2C private-label-clone SKUs. Then, in October (’18), AMZ quietly announced their “brand accelerator program”. Prediction: this program will spark the creation of new B2B clone products on Amazon.
The Clone Formula: Equal or Better Quality For 50% Less
Continue reading 128. Brand Power-Shift To Your Service-Value Solutions
FINE-TUNE 2018; OR, REAL CHANGE?
If your distributorship is a top 5% performer due to perpetual innovation, keep innovating in 2019. If your financial returns are in a low-level rut with an unchanging, aging sales force – then change your belief system to change your results. Continue reading 127. Old Beliefs v Your 2019 Strategic Plans