Category Archives: WayPoint Analytics

68. Customer Profitability Analytics (CPA) for Reinvention and Amazon-Proofing

AmazonBusiness, Distribution Strategy, Index, WayPoint Analytics

On June 29th, I did a one-hour webinar for the Health Industry Distributors Association (HIDA.org) on Customer Profitability Analytics (CPA) for Reinvention and Amazon-Proofing. We had 118 folks from 60 different companies sign up, and 85 from 40 companies attend. 60% were HIDA members, and 40% were distributor friends from other channels. And, most of these HIDA guests have been pursuing the webinar’s title themes and likely skewed the three survey-question results below.

We did survey questions upfront to reveal a bi-modal audience regarding: CPA; Rep compensation; and open-book management (with potential gainsharing) for all. The chasmic results were:

  • 47% were getting traction with CPA; 31% had never even experimented with CPA
  • 31% incented reps on customer net-profitability; 39% paid on gross margin dollars
  • 63% practiced Open Book with all employees; 35% were quite closed

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62. Amazon Business Series: Grainger v. Amazon, Part 1

Index, WayPoint Analytics

Watch for the next four essays posted here, entitled Grainger v. Amazon. This will be a four-part series devoted to examining the impact of Amazon on the distribution industry upon the often unshakable Grainger.

On April 18, 2017, W.W. Grainger (WWG) management reported a 22% decrease in year-over-year earnings, along with an acceleration in branch closings. WWG stock peaked at $258 around March 1st and closed on May 5th at $189. WWG is and has always been a well-run company; Its steady innovations have powered great numbers and increased dividends for 45 years straight. But, damage control requires executives to downplay being Amazoned (the impact of Amazon on the distribution industry), while cheering plans to build on their unique strengths.  Continue reading 62. Amazon Business Series: Grainger v. Amazon, Part 1 →

48. A Catalytic Financial Survey Ratio

Index, WayPoint Analytics

As I was doing prep work for a speech to the Health Industry Distributors Association (HIDA), I noticed something interesting in their Members’ Financial Survey. The survey showed a three-year trend for gross margin dollars per full-time equivalent employee (FTEE), or service value productivity per employee.

Though channels do vary, for HIDA distributors the average gross margin dollar figure per FTEE for the last three years has been about $135K/FTEE. However, in 2015 the best performer in each of three sub-groups showed 16%, 60% and 90% higher gross margin per FTEE than the average.

Imagine what your business could do if service productivity was 50% above the average. You might be able to provide premium job-pay, job security, career growth and you would have growth-capital profits to reinvest. The best stakeholders would besiege you.

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47. Insight Into the NAED 2016 PAR Report

Index, WayPoint Analytics

Financial numbers alone offer scant profit improvement insights. For real improvement, you must develop a theory for how to improve service value and/or cost effectiveness and then create and capture new metrics to test your theory. This gives you the data to act on what is working. Amazon, for example, has roughly 500 proprietary metrics: 80% are related to customer value improvement.

However, the National Association of Electrical Distributors (NAED) industry overview PAR report does provide some helpful ratios. Insight into the NAED 2016 PAR report can help you understand how to improve your profit.

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46. Best Customer Service? None! Re-Vision Rep Value in Distribution

Index, WayPoint Analytics

To start, Amazon (AMZ) is teaching (especially) – younger, smarter, richer, busier – people to prefer buying on-line. Costly outside and inside reps aren’t in the equation. Follow below for some facts and questions about rep value in distribution.

 AMZ Service v Traditional (Distributor) Service

    1. Flexible hours, many prefer ordering digitally 24/7/365 v. 8-5; Mon-Friday; via people.
    2. Speed of Re-Buys: Re-buys on AMZ are faster than going through people. Folks are nice. But, they: slow things down; make mistakes; and offer limited, informational possibilities.
    3. Delivery response-time options from 1 hour, or to a few days beats one standard choice.
    4. Want information and demo videos on anything. AMZ and Google excel.
    5. Want crowd-sourced and rated reviews that beat one Rep’s opinion? AMZ provides.
    6. Other personal activity information? AMZ has it.
    7. Want to Check Prices or get The Best Price for popular, most-profitable-to-distributor items (SKUs that average high, Gross-Margin-Dollars per pick). AMZ has both (or Google it). AMZ can underprice most-profitable commodities due to its lowest cost: web site; warehouse picking; lack of reps; and eventually, last-mile-delivery costs.

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45. Judo Selling for Fading Sales Growth in Distribution

Index, WayPoint Analytics

The giants of the industry are announcing sales figures ranging from flat to down, to fading sales growth in distribution. Further, if any of the economic bubble(s) around the world pop, then sales and profits will be pressured even more. It seems like a good time to innovate.  But, how?

Earn a Larger and More Profitable Share of Your Biggest Accounts

You already know that your customers’ most urgent need is to stop profit erosion. Their reflexive solution is to shop for lower prices, which of course leaves you on the losing end. However, successful businesses are taking some lessons from judo and learning how to harness this customer desire to create a win-win for fading sales growth in distribution.

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