Category Archives: Cost-to-Serve Math

24. CEO Sales Calls that Win Huge, New Profit

Cost-to-Serve Math, Index, Line Item Profit Analytics

The CEO, Profit-Sales-Call Formula:

  1. Do a customer profitability ranking.
  2. Personally call on the #1 (or few) most profitable accounts.
  3. Use your title to win audiences with higher ranked folks reps don’t get to see.
  4. Have maximum account information and pre-written, best questions in advance if need be.
  5. Besides saying “thanks” and “showing the flag” have these goals:
    1. To do an immediate (or pitched for) “audit” of the buy-sell, inter-business process that has evolved between you: so far, un-managed and un-tuned. Find inefficiencies to fix with your people and dime. The account’s profits over-justify the investment.
    2. Improve the customer’s profits by the reduction of their “soft costs”. Find ways to consolidate small, frequent – line and invoice – purchases that also cost the customer recurring – downtime, expediting and emergency small order- costs. (You will save matching service-activity costs!)
    3. Find, deserve and win more share of sales.

      4. Continue reading 24. CEO Sales Calls that Win Huge, New Profit →

18. Re-Think 2016 Sales-Growth Plans

Cost-to-Serve Math, Index, Line Item Profit Analytics, LIPA, Profit Analytics

Are your 2016 Sales-Growth Plans guided by some of these unspoken, dated assumptions?

  1. All expenses are fixed (for the time being).
  2. 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!
  3. 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?

Continue reading 18. Re-Think 2016 Sales-Growth Plans →

15. SKU-Profit Winners, Losers and Amazon Tactics

Cost-to-Serve Math, Index, LIPA, Profit Analytics

Amazon Tactics for Distributors

200 of your SKUs are hugely, net-profitable, but, another 200 are hugely unprofitable. Amazon knows SKU profitability and exploits traditional competitors’ informational blindness. Want to get smarter, too?  Here’s how:

Get Profit-Equation Data

Amazon knows the following “profit equation” for every SKU (customer, etc.):

Continue reading 15. SKU-Profit Winners, Losers and Amazon Tactics →

14. Gross-Margin Percent (GM%): A Poor Indicator of Profitability

Cost-to-Serve Math, Index

Most distributors have naturally-occurring, High Gross Margin percentage (house) accounts and High Gross Margin percentage (small-dollar-pick) SKUs. These sales are surprisingly “Operating-Profit-Dollar” (Profit$s) losers.

The Gross Margin Dollars (GM$s) in these small-dollar picks and orders amount to less than the Cost-to-Serve Dollars (CTS$s) they consume, which means they cost your company more to fill than the Profit$s they generate for your company.

By contrast, direct-ship orders with low Gross Margin percentage are often quite profitable.

Continue reading 14. Gross-Margin Percent (GM%): A Poor Indicator of Profitability →

13. Questions to Ask Yourself Along Your Customer-Profitability Journey

Cost-to-Serve Math, Index

Educational Journeys Should Never Cease!

In second grade, I was stunned to learn of the number of years of formal education still ahead of me. But, my PhD dad assured me that this big journey would be well-mapped and had been completed by many, non-exceptional adults.

He told me “Have courage, you can easily do it too!”

Besides, he was looking forward to helping me as needed, one fun grade-step at a time. Supportive, well-educated parents were, for me, a thankful given.

Continue reading 13. Questions to Ask Yourself Along Your Customer-Profitability Journey →