Many distributors resist vital changes out of vague fears that some sales reps might not like change or its compensation implications. Some fear losing their sales reps in distribution to a competitor and all their loyal customers along with them. Of course, there are many factors that will determine what will happen, including how strong your reps are, whether you can afford to lose a few customers based on the projected new sales, and how many of your customers have integrated contracts. Ranking sales reps in distribution by their loyalty and account profitability is a good place to start.  

Why not break down this vague fear into components? Then, you can experiment with some math modeling to reduce uncertainties enough to take actions that are positive for everyone.

Start with Reps’ Relative Rankings

First, have two or more management team members do the following steps separately and then compare and discuss the results.

1. Put your reps into three piles: Stars, OK, and Wouldn’t Re-hire. If 20–30% fall into the last bucket, don’t fret. It’s typical, but keep reading to learn how to solve this problem.
2. Rank reps from 0 to 100, rating both your existing force, as well as some of the most outstanding and pathetic reps you have all observed in your channel.
3. Then, name, list, and weight the specific attributes that you intuitively used to do your rankings.
4. Perform Step 2 again, using these second thoughts.
5. Guesstimate the odds for each rep that they will jump to a specific competitor(s).

Ranking Highest-Risk Sales Reps in Distribution by their Loyalty and Account Profitability

Analyze the profitability and loyalty of key accounts for highest-risk reps. A simple cost-to-serve model will reveal estimates that are good enough for the operating profit of each account and territory. For a profitable $60M distributor using Waypoint Analytics’ cloud service, here are typical results:

1. 21 rep territories
2. 11 are profitable, ranging from a low of $7K to a high of $91K
3. 10 territories have losses from a low of ($1.4K) to a high of ($206K)
4. All territories have quite profitable and quite unprofitable accounts
5. The most profitable territory derives 90% of the profits from only 10 accounts
6. For the reps who are most likely to jump, assign loyalty scores to their most profitable accounts from 100% will go with the rep to 100% will stay with us.

Conclusions

This exercise of ranking sales reps in distribution by their loyalty and account profitability  will spark new ideas. But, it will likely also reduce your defection fears to far fewer reps and accounts. Then, you can pre-sell key reps on the new changes (with income guarantees, etc.) to then proceed with healthy changes for all employees.

To solve your wouldn’t-hire-them-again rep problem, read these how-tos: Downsize, Upgrade Reps, and Rethink Incentives. And, don’t forget to visit us at the Advanced Profit Innovation Conference on April 20-21 in Phoenix.