Distributor Analytics Essentials Series: Perspectives on distributor analytics from a sales rep skepticSubmitted on: Wed, 03.15.2017 05:00pm Share on Facebook | Tweet
- Distributor Analytics Essentials Series
- distributor analytics trends
- analytics trends in distribution
It’s hard to justify spending cash on something with no simple-to-see quantitative return. I buy inventory, I sell it, I make money. That’s easy! What is there to gain from buying a software tool to help analyze what I buy, how I sell it, to whom I sell it, and for how much?
Well I was a skeptic too, until a distributor analytics provider showed me things in seconds that usually took me hours of scouring month end reports to find. I could see information in ways I never knew possible, slice and dice the data, drill into the details of high level trends to see if there was a general issue to address or if something more particular needed my attention.
From my Sales Rep Operational Scorecard I can easily see which accounts are paying late. With a highlight on those accounts over 90 or 120 days, I can quickly review the other areas of the scorecard to see if they appear in a concerning customers list (declining margin or declining sales, for example), or I can jump directly to a Customer Scorecard to get a 360 degree view of the customer’s performance over the last year or rolling 12 months.
In any sales report or dashboard ‘Gross Profit $’ is a very prominent figure (as it should be), however once I was able to quickly add other components to the view of a customer’s performance, I could see that not every profit dollar is the same. Some come attached to:
- very small line count orders
- many small orders placed over the course of the week instead of just 1 or 2 replenishment orders
- orders with free freight
- orders paid with a credit card (and thus a fee to us)
Adding these qualitative components to what I measure quantitatively, I have been able to redefine which customers are (by Texas A&M definitions) Core, Opportunistic, Marginal, or Service Drain. I learned that some of our ‘best’ and biggest (sales) accounts are actually our biggest service drains, but that I could also turn them into Core customers by helping them reduce our cost to service them. For example, simple adjustments like placing less orders streamlines ordering for both us and the customer: less paperwork to manage, less data to enter, less payables and receivables to administer. Overall a win-win.
New Customers to Focus On
With the top 20% of our customers taking up 80% of our time (let’s be real here, more like 98%!), I had no visibility of or alerts about new and up and coming accounts which should garner our attention (more than 2% of it anyway!). By trending the increase of Sales and Gross Profit % as a percentage change over a period of time (last 6 months, let’s say) I was able to easily identify $20,000 accounts that had the opportunity to quickly become $200,000 accounts. Each month these customers’ sales are doubling, they’re buying our bread and butter items with high margins, they’re paying their bills on time, they place a few large orders each month...this customer is great! I can even see what open orders and quotes are in the pipeline so when I call to thank them for their business I can also have a discussion about orders in process or even find new products or services they might need.
Customer is Different Than Peers
A fantastic new feature in our distributor analytics solution is the ability to compare a customer’s sales and profitability with those in the same Customer Type/Group or Customer Price Type. Our analytics made it painfully clear which customers were cherry picking our business, buying only high cost to acquire and stock ‘D’ items, or low margin commodities. Other views into the data showed us where customers were not actually paying what we thought or what their peer group paid, due to pricing overrides by our own employees!
This skeptic has been converted to a believer, and I know I’ve only started to scratch the surface of what distributor analytics can do for my sales results and the achievement of company goals.
This post is part of our ongoing Distributor Analytics Essentials Series. Continue your education by bookmarking the series page on our blog here. You can also find the first webinar in the series online to watch at your convenience: The What, Why, and How of Distributor Analytics.