With net-profit ranking reports for – customers, items, suppliers, and sales territories – it is easy to focus on the few accounts that can contribute big moves in net-profit. Every branch manager needs to focus on about 5 accounts in three different groups: super-profitable, super-growing, and super-losing (to fix). 3 How might “Joe Branch Manager” (JBM) proceed?
GROWING SHARE OF RIGHT, PROFITABLE ACCOUNTS (A Dream Scenario of JBM’s)
(Scene 1: JBM is calling on a honcho at a 5-most-profitable – or big upside – account)
JBM: “Mr. Whale we think that if you give us more business, then we can make more money and then grow along with your own, innovative, organic-growth trend.”
MR. WHALE: “That’s true, but why should we marry you? All of your competitors are begging us for the same favor with lower prices? What is your compelling, value proposition that will grow my bottom line better than what your competitors are offering or can quickly match?”
JBM: “Well, we aren’t mind readers about what “best value” is for you and your company. We need your help to define the service metrics and processes that will give you best value at two levels. For basic service excellence, we will guarantee zero errors and 100% on-time delivery or pay a penalty/upset fee. And, we have some ideas for more basic service metrics. For level two, we need to understand how we should deliver what mix of products to and through your business in what process-way to minimize all hidden procurement costs and maximize your company’s up-time, on-time productivity and value for your customers. We will assign whatever resources are necessary to make this vision happen. Shall we at least work together to get to a written plan that we both like?”4
MR. WHALE : ‘Interesting and unique pitch! Other reps don’t discuss inter-business process economics, and they can’t request back up resources to invest in making those ideas happen. How shall we proceed? (Scene fades as JBM moves toward the written plan.)
SCENE 2: JBM MOTIVATES THE TEAM TO ACHIEVE GUARANTEED PERFECT SERVICE (+)
Joe assumes that if he:
- Puts pictures of 5-10 key customers on the wall…
- Insists that every employee know them by heart…
- Empowers all to practice, first-priority, make-perfect-service-happen with extra-efforts (“heroic acts”) for these few accounts…5
- THEN, service excellence (+) will happen.
- And, he can assemble special SWAT teams (with some outside part-timers) to: install, measure, manage and maintain the new, improved procurement processes for each target account.
But, his troops are tired and hungry. The branch has been through 3 rounds of layoffs since the fall of ’08 and total compensation has been cut many ways for a net reduction of over 10% and still sliding on health care costs.
“What’s in it for me?”(WIIM) they will ask. Why should they bust their butts to make JBM’s numbers look better?
FINANCIAL NUMBERS + SERVICE VISION/PLAN + WIIM NET-PROFIT GAINSHARING = YES!
The fair solution to re-engaging the “associates” is to treat them and pay them like Joe gets incented on positive improvement in “net-profit” for the branch. He will share and explain the branch P&L every month along with the net profit improvements in the 5-5-5 accounts. If the team achieves perfect service (+), and he and the sales reps do their supply chain value creation work, then everyone is going to earn a gain-sharing bonus.
What if it doesn’t work? Joe will entertain any better ideas. But, business as usual isn’t an option after looking at the net-profit analytics, tracking and gain-sharing reports from Waypoint Analytics. Net-profit insights have highlighted “the plan” and will enable its “execution”.
Be like Joe, request a Waypoint demo or meet a lot of folks like Joe at the Fall Conference in Chicago on October 20-21st. Request an invitation today.
- “Most CEO’s Prize Growth..” by Joe Light. WSJ 4/18/11, p. B8. ↩
- Read “Islands of Profit in a Sea of Red Ink” or request a Waypoint Analytics demo or fall conference invitation to find out why/how 20% of the customers generate about 140% of the profits to pay for the losers. ↩
- For an entire “kit” on the 5-5-5 program see Exhibit 44 at www.merrifield.com ↩
- Want how-to’s for this statement? See Exhibit 59 at my site. ↩
- See Exhibits 63 and 3 at my site. And, modules 4.1-13 in my “High Performance…” DVD training kit free through Waypoint Analytics. ↩