Are your 2016 Sales-Growth Plans guided by some of these unspoken, dated assumptions?
- All expenses are fixed (for the time being).
- Incremental, new sales and Gross Margin Dollars (GM$s) (less some commissions) flow through to profits and earn more rebates at year end. Carpe economies of scale!
- To get more sales, get more reps to make more calls on more accounts with selling scripts for products from “key suppliers”.
Why Are Macro and Micro Numbers Flashing Red?
In the big picture, 90% of all distributors (that have been participating in association financial performance surveys for 15+ years) have averaged weak returns. Buy low sell high, sell more, and pay “fair wages” to work hard & lean stopped working long ago.
At the micro analysis level, the average new client of Waypoint Analytics’s “Line-Item Profit Analytics” web-service discovers that:
- 80% of costs are variable (not fixed)
- 70% of all line item events are profit losers
- 65% of all orders are profit losers
- 80% of all customers are either break even or losers
- 1%+ of big customers are super-losers averaging small-GM$ lines and orders
- 50 to 80% of all sales territories are profit losers
- Old/new, small customers consume more, (incremental) service-activity-cost dollars than their (new) GM$s for losses.
- The good news is:
- 20% of customers produce 150% of profits to pay for all losing activity.
- Less than 5% of accounts are big, profitable, innovatively-growing and looking for supply-chain solution partners. Why not you?
Updated Selling Assumptions?
- Sort accounts into three, service-cost-model divisions: Enterprise/Team; Standard/Rep-Covered; and Small-Account. Innovation metric: 100% customers profitable
- Use customer, Cost-To-Serve (CTS) buying statistics to cure previously-hidden, high activity costs for low dollar picks and orders. Turn lose-lose, buying activity-habits into win-win ones. Retain and earn more share of the most profitable customers.
- Freeze Full Time Equivalent Employees (FTEEs). Redeploy fulfillment slack from order consolidations into processing big-account sales wins.
- Measure both 12-month-trailing, GM$s/FTEE and Profit$s/FTEE. The first will grow, the second soar. Why? How? Watch my short video-clip (link below) for more answers.
- Get fluent with CTS Math. The link below is lesson 39 out of 49 in an on-line course.
- Get a demo on a Line-Item, Profit Analytics, subscription, web service (waypointanalytics.net)
- And, attend the Advanced Profit Innovation Conference on Feb 29th/March 1st in Phoenix (apicconference.com). See you there!