13. Questions to Ask Yourself Along Your Customer-Profitability Journey

Educational Journeys Should Never Cease!

In second grade, I was stunned to learn of the number of years of formal education still ahead of me. But, my PhD dad assured me that this big journey would be well-mapped and had been completed by many, non-exceptional adults.

He told me “Have courage, you can easily do it too!”

Besides, he was looking forward to helping me as needed, one fun grade-step at a time. Supportive, well-educated parents were, for me, a thankful given.

For your customer-profitability educational journey, how many steps are there still ahead?

  • Have you ranked customers by their estimated operating profit contribution yet?
  • Have you already done a Profit Equation* for every customer?

*Profit Equation:

Gross Margin Dollars (GM$s) (less) Cost-To-Serve Dollars (CTS$s) = Profit Dollars (P$s)

If you answered yes to either or both of the above questions, congratulations!  You are well on your way!

The next big question, though, is:

  • Did you find the results shocking and stop?! (as many distributors do!)

Now is not the time to stop!  Rather, NOW is the time to really push forward and make big, truly bold profitability changes in your business by asking and answering the “Next Best 10 Questions” of yourself and your business.  Once you begin facing these tough questions and pursuing the answers, you’ll begin to realize your company’s true potential.

The Ten “Next Best Questions”

  1. What is an optimally complex Cost-to-Serve model to use?
  2. If you don’t like seeing some big-sales customers as losers, should you put your collective heads back in the sand?
  3. If you stop the experiment (see discussion in the video below pertaining to experiments), what then is your default CTS model and related blind spots?
  4. Big customer profits or losses are not problems but rather are symptoms of what underlying root causes within each customer’s buying practices?
  5. What analytical tools are needed to statistically uncover why customers are so profitable and unprofitable?
  6. What root-cause insights have other distributors discovered by solving these questions?
  7. What actions did they take to create win-win savings for both parties and capture a bigger share of customers’ spend?
  8. What new CTS Math skills, tracking reports and incentive schemes – will we need to enable this journey?
  9. Why reinvent the wheel if someone (Bruce Merrifield, perhaps?) can provide the entire journey – map, tools, education and cheerleading as needed?
  10. If modest-appearing distribution CEOs have doubled sales and 5-10X’ed profits while putting competitors out of business with CTS Math insights, why not investigate the general steps to this journey?

While you ponder the answers to the questions above, watch the 5-minute excerpt below from Chapter 3 of our recently-released CTS Math Training Program.  Note, this is just an excerpt. The entire chapter will have you thinking about things like

  • How to identify the real root causes of a customer’s lack of profitability,
  • How identifying these causes could result in a win-win for both you and your customer, and
  • How to roll out this kind of information to your entire team so that everyone, including your customers, is on the same wavelength when it comes to increasing profitability and decreasing overall cost-to-serve

For more insight into the training, feel free to download a copy of the instructor’s guide here.

The questions above may seem a bit overwhelming, but as I discuss in the video, with the proper roadmap, the journey is not quite as daunting as it originally appears.

If you haven’t already looked at WayPoint Analytics, I strongly suggest you request a free demo.  There’s no obligation, and I think you may be surprised at what you’ll learn and how much easier the above-described journey will seem.

Lastly, attend APIC in February.  There’s a special running through the end of December that will give you $100 off each seat you register for, which basically pales in comparison to the profitability knowledge you’ll gain from attending.

Leave a Reply