Category Archives: Core Renewal

102. High-Margin Counter Sales Aren’t Profitable!

Concierge Customer Service, Core Renewal, Cost-to-Serve Math, Distribution Industry Sales, Distribution Strategy, Index, Profit Analytics, Service Value Innovation Guidelines, WayPoint Analytics

This is one of the first insights that distributors who subscribe to Line-Item Profit Analytics are shocked to find out. Analytics reveal that:

  • Naturally high-margin percent SKUs and customers are mostly net-profit dollar losers
  • Gross profit dollars on small-dollar lines and orders are less than their cost-to-serve dollars

You can’t ignore small transaction size, or the variable service-people costs for customers with bill-me-later, paper-based trade credit. Continue reading 102. High-Margin Counter Sales Aren’t Profitable! →

31. What’s New In Distribution Strategy? Not Much

Core Renewal, Cost-to-Serve Math, Distribution Strategy, Index

“Distribution Strategy” is a mature 50-year old. But, 90% of distributor’s (that do financial performance surveys) need some Strategy homework. Their 15-year-average grade is 7% Return on Total Assets while the top 5% have been scoring 22%+. What strategic wisdom are the Distribution Strategy Nerds following?

IMITATE THEIR STRATEGY GUIDELINES  

Actually, don’t imitate anyone’s strategy. Their competitive soup and strengths aren’t yours. But, do imitate guidelines that generally work for distribution channels. Like:

  1. The power — in mature, consolidating channels in which 90% of sales are on commodities in global, excess supply — has shifted to the larger, growing/consolidator end-customers. So:
    1. Partner and retain these customers better than your competitors to grow faster and more profitably. (Do all employees know your top 10 customers by heart?)
    2. What do these customers want? More supply-chain value and/or lower cost solutions. (Get/learn: Line Item Profit Analytics (LIPA) and Cost-To-Serve (CTS) Math to sell them what they want.)
  2. Don’t service all customers with the same standard service model and experience. You will over-serve 50% of your smallest accounts and under-serve 5% of your biggest, profit (potential) accounts.
  3. Shift your service-people, activity time and costs to be proportional to each customer’s profit potential (the reverse of #2). Then, eat competitors doing #2.
  4. Service-value metrics vary with the needs of each customer niche. And, bundled or unbundled services with the product prices depends upon customer volume and average order size.
    1. Tiny customers pay for most services a la carte.
    2. Big accounts can get “extra services for free” if they meet some target Sales and Sales per order.
    3. Find and cure the Big-Sales, Small-order customers that are killing both parties with hidden activity-costs from too many, small orders.
    4. Get the LIPA and CTS analytics to support guidelines 4.a-c.
  5. With customer profitability analytics identify your Core customers: the 10-20% that provide 120-140% of your profits to pay for your losing accounts. Do a “Core Renewal” to: 2X Sales; 2X GM$s/employee; and 5X Profit Dollars/employee.

EDUCATION/EXECUTION SUPPORT:

29. Minnow Busi-Ness Prevents Big Account Wins

Concierge Customer Service, Core Renewal, Distribution Strategy, Index

A US economist tours China in the early 80’s. Seeing a canal being dug by an army of workers with shovels, he inquires: “Why not use a bulldozer?’

The Manager snaps back: “Do you want to put these poor workers out of a job!”.

The Economist muses: “Then, give them spoons” (and create more jobs).

The extra Busi-Ness of the spoons idea is laughable. But, the real problem is that the Manager can’t envision what his Unseen, Next, Higher-Level Opportunities are for redeploying slack workers after getting a bulldozer. What are your next-level, value and profit improving opportunities that you are dying to pursue?

Continue reading 29. Minnow Busi-Ness Prevents Big Account Wins →

28. 5 CEO Goals to Finish Big

Core Renewal, Distribution Strategy, Index, Profit Analytics

Bo Burlingham of Inc. Magazine wrote the book: Finish Big: How Great Entrepreneurs Exit Their Companies on Top. He distilled his CEO survey results into these five general goals:

  1. Be treated fairly during your exit process.
  2. Have a sense of legacy accomplishment. The world is better for your fun work invested.
  3. Be at peace with what happens to those who helped you build the firm.
  4. Have new things to do that you are looking forward to.
  5. The company will continue to thrive (even better) without you.

But what pre-requisite skills must you to achieve these goals?

Continue reading 28. 5 CEO Goals to Finish Big →

27. 8 Ways to Engage Distributor Employees with All-Win Information

Concierge Customer Service, Core Renewal, Distribution Strategy, Index

According to a March 2016 Gallup poll, only 33% of U.S. employees were “engaged” with their jobs. But, what if I told you that you could get much higher engagement, as well as increased growth and profit rates, simply by ensuring that all of your distributor employees know the answers to these game-changing questions? It’s true! Here are the questions:

  1. Who are the top 10 most (potentially) profitable customers that pay a disproportionate amount of your profits and payroll?
  2. What are the customer/niche-tuned service metrics that they want?
  3. How do department metrics help improve key- account service metrics?

    4. Continue reading 27. 8 Ways to Engage Distributor Employees with All-Win Information →

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.

Continue reading 8. Your Financial Management Style Needs More Clothes →