156. Measure and Act on What Matters

How important would it be to know who your most net-profitable customers are? Which ones are growing the fastest? Would a team effort to better partner the profitable, fast-growers payoff?

Why not try a simple experiment?

THOUGHT EXPERIMENT:

A contractor-supply distributor identified 10 accounts out of 4000 that were BOTH: hugely net-profitable AND growing at 15 to 50% over their previous year totals.  

Get your similar list and inquire:

  1. What are the root causes for their fat, average, margin-dollars per transaction that cover their average-cost per invoice and yield a big, net-profit-dollar per invoice?
  2. Why are they growing faster than their peers and the economy? (Ambitious, innovative leadership? Focused strategy well executed by highly engaged employees?)
  3. Do answers to 1 and 2 suggest an account could continue to grow you?
  4. How painful would it be to lose such an account?   
  5. What next-level, service-value can you invent to better secure them?   
  6. How and where will you look for new, total-procurement-effectiveness needs to fill on a win-win basis?
  7. What partner-able, past-track-record score does each account have for synergizing with their employees, customers, and (hopefully) vendors like you? On a range from: a “1” being daily price-shoppers with multiple distributors; to a “10” being like McDonald’s with their distributors. They seek to marry one category vendor to then continuously-improve a win-win journey.
  8. Based on answers to 1-7, which customer will you experiment with first (to last)?  

CASE DISTRIBUTOR’S ACTION STEPS:

The distributor subscribes to Waypoint Analytic’s cloud-service. It has 15 deep-dive tools that reveal what and how each customer has been buying every SKU. You can pinpoint the hidden and avoidable small-dollar picks, orders, and/or returns/credits. You can see how tweaks of purchasing assumptions and/or of the existing replenishment system will:

  • Reduce both high buying and servicing activity costs.
  • Reduce downtime costs for lack of goods.
  • Improve both employee productivity and final customer satisfaction.

With a list of insights and next-level questions, the team went on customer site visits. They followed their product, paperwork, and people-interaction, which flows through each account. These first-time explorers always found multiple opportunities.

RESULTS:

The distributor offered special, free fixes for the inefficiencies. They also identified, asked for, and earned new volume sales.  The delighted customers obliged. And, relationship bonds were both increased and strengthened.  

Are you doing this? For more… please be in touch. bruce@merrifield.com  

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