Augment Associations’ Financial-Performance-Survey Reports

Strategic Insights 40

Give Al Bates a lifetime-achievement award for outstanding service to independent distributors. No one has taught more distributors the basics of financial management and goal-setting than “20% ROTA” Al.

For more than 30 years, Al has crunched numbers for over 40 different distribution trade associations compiling a historical database for about 10,000 distributors as a byproduct. To paraphrase his longitudinal findings:

  • 90% of (the same individual) distributors have been averaging a 7% pre-tax, Return on Total Assets (ROTA) for over 15 years.
  • The 90%-group does creep up to 8%+ in good economies and down to 5% in tough times, but few seem to escape from their commodity-hell ROTAs.
  • But, have hope! The same, individual star-performers stay in the top 5% averaging over 20% ROTAs. And, my guess is that they get 4-6 times the after-tax, Return-On-Investment (ROI) as the bottom 90%.

Al has supported his survey work with indefatigable teaching of financial goal-setting and discipline. But, don’t the persistent, non-results for the bottom 90% raise questions like:

  • Have the easy benefits of using financial surveys and related tactics been exhausted after many years of availability?
  • What are the – limits of, blind spots for and dysfunctional mantras from – using (only) financial numbers to run a company?
  • Are there additional, Profit-Improvement Math perspectives and education that can turbo-charge financial surveys?


All distributors must file the same federal tax-returns to pay timely, correct taxes. Don’t pay fines or go to jail! You need audited, GAAP-compliant numbers to borrow working capital loans from banks. And, financial forecasting and discipline is vital to not running out of cash to meet obligations and going broke. Be fluent and effective with what Big Al is teaching!


Financial reports are summary symptoms of unmeasured, upstream, root-causes for the net profits or losses being made on every customer and (active) SKU. Besides financial discipline, why not also manage the root causes for both big profit and loss cross-subsidies that are hiding within financial averages?

What is your current cost-to-serve model that gives you good-enough estimates for the service-activity processing costs for every line item? You could then sum them up to get Cost-to-Serve Dollar (CTS$s) totals for every SKU’s picks and every customer’s order costs. Why not know what I call the “Value Exchange Equation” (VEE) for every element in your business from lines to customer-niches and sales territories. The VEE equation is:

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

Note that “GM%” isn’t in the VEE. GM% can’t tell you either the GM$s or the CTS$s in the VEE — the factors that really matter! Most naturally occurring high GM% SKUs and customers have money-losing VEEs. Surprised? If so, what additional education might augment your financially-based and CTS-Math-free assumptions?


Waypoint Analytics provides a “Line-item, Profit Analytics Management” web service to many distributors across many channels. Waypoint’s longitudinal database for all its distribution clients concludes that the average distributor losses a little-to-a-lot of profit on:

  • 70% of all line items
  • 65% of all orders
  • 80% of all customers
  • 10% of all active SKUs

The smallest 50% of orders generate less than 10% of the GM$s, but consume more than 50% of the CTS$s for losses. The busi-ness of small-dollar picks and orders (even with high GM%) eats up everyone’s service energy. No wonder the bottom 90% have no extra resources to find and execute on extra-value opportunities for the few, extremely profitable customers and SKUs.

To help existing, data-free beliefs get CTS-Math savvy, I’ve just completed a CTS-Math course comprised of 50, 5-minute, web-delivered videos with discussion questions, etc. Once a distributor team is fluent with CTS-Math and has the right diagnostic reports, it is easy to double sales and 5-to-10 X profits with your existing customer portfolio.


  1. Contact Randy Maclean, the founder and CEO of Waypoint Analytics ( and inquire about his doing a Line-Item, Profit Analytics Database presentation for your group.
  2. Request from me, the 50 slides that backstop my 50 CTS-Math lessons at I’ll also send you more information on the course with a log-in to some sample content.

Stop managing financial symptoms and working hard to make little money. Learn how to renew the Profit Core that is hiding within your financial averages.