10. Economy Worries in Distribution? Provide “Challenger” Scripts for Your Reps

Index, LIPA, WayPoint Analytics

Global economic clouds are gathering. Rain or shine, why not get bigger chunks of your best customers’ business with lower service-activity costs?

A recommended book, The Challenger Sale by Brent Adamson, tells you how. The book’s research proves that “Challenger Reps” killed the “nice guys” at the bottom of the 2009 downturn.

The Challenger Rep has better scripts to pitch to customers. Their solutions are to work together to reduce shared, heretofore, hidden activity costs to improve both parties’ bottom lines. The nice guys — who don’t rock the boat, suck up and reactively hustle harder for any customer request — are outdated.

Since 1988, purchasing has shifted from wanting just “Price” and “Availability” to also wanting replenishment-process cost reductions (“Supply Chain”). You’ve seen this!

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9. Special Stocked Items Are Mostly Net-Profit Losers A Dream Request (?)

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A big customer asks you to special stock some odd items which they currently purchase direct. You say “YES!” believing what??

All Gross-Margin dollars (GM$s) are good for both company and rep commissions. One-stop-shopping will add GM$s to orders and lock in the customer. The now-more-loyal customer won’t check prices regularly on commodity items.  But, if they do, you will get last-look to meet prices on the commodities.

And the Customer is Thinking….(?)

Consolidating suppliers consolidates “procurement costs”, including Purchase Order (PO) activity costs. The bottom 20% of POs (ranked by dollars) total about 1% of the spending. If a PO costs $80, then converting 100 POs to extra line-items from a distributor will save roughly $8,000.

What’s the Net-Profit Truth?

Waypoint Analytics’ clients can run a report on “special stock” customers. The report totals the profitability of all items that only that customer bought (de facto special stock), then adds the profitability on items bought by more than one customer (the commodities) with a grand total.
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8. Your Financial Management Style Needs More Clothes

Big Data, Core Renewal, Index, Line Item Profit Analytics, LIPA, Profit Analytics, WayPoint Analytics

In the early ’70s, distribution trade associations started offering Financial Survey Reports to participating members. Back then, “financial management” was KING.  You wanted to achieve the financial averages of the “Top Quartile” performers (even though those averages blended different strategy outcomes and the top 5% – true innovators – dragged up the average for the next 20%).

The reports evolved. New ratios like – GMROI, Turn-Earn, Personnel Productivity Ratio (PPR), etc. – all had their moments of fame. Analytics software packages started arriving in the ‘90s to slice, dice and graph “the numbers”.  Because financial numbers and their derivatives are downstream symptoms of upstream, hidden, root causes for profitability, interesting data was not actionable for sustainable success.

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7. Empower Your Employees like the U.S. Military

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Distributors who subscribe to WayPoint Analytics’ service discover overwhelming new profit-improvement opportunities.

But, to seize the gold before competitors, the WayPoint information must be shared with all employees along with modest increases in: skills, authority, incentives and desire.

Can you “empower” and “engage” your employees?

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6. The Seven Purposes of Profits

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Distributors that have Line-Item, Profit Analytics (LIPA) can see and use seven different purposes for Profits to then grow them sensationally.

Economists See Three Purposes for Profits

  1.  Profits are a Cost of Capital.  Shareholders want a return on their money in the business. The  more risk a shareholder has of not getting their money back, the higher the return they expect. Most  distributors don’t earn a competitive, (after-tax) Return On (Shareholders’) Investment (ROI). Non-employed, minority shareholders would sell for “book value” in a heartbeat and do better reinvesting in muni bonds.

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5. Your 2020 Company Plan

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2020 is 5+ years away. Do you have a 2020 Company Plan? What are you doing to prepare for a world going exponentially digital?

Our personal shopping and education starts with Google or Amazon. YouTube currently uploads 20 hours of new video clips per minute: and increasing! Our kids (and many globally) learn whatever they want to on their mobile devices. In poor countries, they then use social media to organize protest-riots.

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