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Distribution Sales Growth Story How 10% sales growth was created “with improved margins and reduced inventories” Contact: Andre Gien [email protected] 925 323 2802 www.gfbridge.com
| Date post: | 27-Jun-2015 |
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Distribution Sales Growth Story
How 10% sales growth was created“with improved margins and reduced inventories”
Contact: Andre Gien [email protected] 925 323 2802 www.gfbridge.com
We use known facts to grow sales in distribution companies
The challenge
40,000 active products 25 sales people 1,800 active customers 9 branch locations
The business had no real burning platform. Sales were improving although below expectation. Operating profit was stagnant possibly in slight decline.Inconsistent operating cash flow Management was of the opinion that everything that could be done had been done or is being done.The last thing they wanted was a data driven coach to identify and guide growth.
Behind the scene
New customer development
Existing customer growth and maintenance
Lost customer management
Gross profit Inventory Sales people
Pipeline
Prospect engagement
Purchase frequency
- Loyalty- Growth
trends
Customer retention
- Profit islands- Cross sell
Non relevant SKU’sLow performing vendors
performance paymentsRetention
Acquisition cost Risk of decline Customer deflection
Portfolio scorecard
Our brief We are busy We want this to be fully self funding We don’t want to learn new technologies We want a sales improvement of 5%-10% We want the process to form part of our monthly
sales meeting with no further disruption We want the option that individual sales people
can use your services to improve their sales We want immediate actionable tactics that will
increase sales through Opportunity identification Risk reduction
We want all recommendation to be supported by evidence
We don’t want some theoretical exercise
We want minimal disruption We want to improve our free cash
flow We feel our measures and
disciplines could improve We want our sales people to be
more strategic
Stated
Not stated
Starting place
Where are we growing
Where are we making money
What are the immediate opportunities
Our Methodology
Improving the way profit is madeHigh growth high profit islandsLow volume low profit segments
Delivering the fundamentalsNew customer developmentLost customer preventionExisting customer growth
Creating short term actionsSalesperson portfolio growthCross sell enhancementLost product sales preventionOpportunity based on similar customer purchases
Service deliveryOnline monthly meetings with sales VP Reporting structure
Previous month performance assessmentNew risk assessmentDelivering growth actions• Global growth actions• Salesperson individual growth actions• Product portfolio growth action
Assessment of performance against previous actions
Outcomes – new customer development
DiscoveryNew customer development produced promising results during the first and second purchase with limited or no third purchase
ActionNew customer checklist we created for inside sales people that ensured on going nurturing of new customers
Result26% improvement in new customer sales growth47% improvement in new customer retention
Outcomes – existing customer maintenance
DiscoveryNear perfect correlation Periods of high new customer development resulted in declining performance of existing customers. The reverse was also true
ActionRestructured the way existing customers were cared for.
ResultTotal existing customer growth showed a 12.8% sales improvement over 12 months.
Outcomes – Proactive existing customer management
DiscoveryLimited proactive management to reduce the risk of declining customers or potentially losing the customer altogether.
ActionRestructured the way existing customers were cared for.
ResultMeasured based on the number of declining customers over a 6 month period reduced by 19%
Outcomes – Proactive existing customer management
DiscoveryLimited proactive management to capitalize on good growth trends.
ActionIdentified what created the growth trends. (e.g. quality digital information delivered to targeted groups.) Ensured process was in place to repeat winning activities
ResultNumber of existing customers that delivered increasing growth improved by 7%.
Outcomes – lost customersDiscoveryLost customers were discovered between 60 and 90 after last purchase. Reducing the opportunity to recover
Action15 and 30 day no purchase customers are reported with specific people accountability to these customers
ResultLost customer retention improvements over a 12 months period of 42%
Outcomes – Protecting high profit islands
Discovery Limited good profit islands awareness. What is not known usually does not get the attention
ActionIdentified ways to elevate awareness of high profit areas and ways replicate and protect them.
ResultImproved gross profit margins close to 2 %
Outcomes – Cross sell to customer profitability
Discovery Correlated the profit quality of customers with low cross sell to those with high cross sell. Finding in the main a correlation with high cross sell and profitability
ActionStructured a cross sell loyalty program that rewarded the combination of volume and number of SKU’s purchased
ResultCross sell improved with the number of customers buying more than 50 SkU’s increasing by 27%
Outcomes – Inventory reduction
Discovery 18,000 of the 40,000 products sold to the total customer portfolio accounted for 96% of sales and 93% of gross profit
ActionEvaluated underperforming products reducing the product portfolio by 15% with no sales reductions
ResultImproved inventory holding by a permanent 18%.
Outcomes – product profitability
Discovery 29% of products were producing gross profit margins in excess of 30%
ActionIncreased prices for small volume low frequency product purchases Result
Improved margins of 1.5%
Outcomes – product profitability
Discovery Pipeline activity was focused identifying the prospect and attempting to convert the prospect into a sale
ActionCreated prospect awareness, interest and desire tactics to assist in the conversion processes.
ResultInitiated a goal and measurement based on the number of potential customers engaging other than on price or quote basis.
Improvement summaryFocus Improvement Measure
New customer development
Improved purchase frequency of new customers 26% improvement in new customer growth
Improved loyalty of new customers 47% improvement in new customer retention
Improved return on customer acquisition cost15% improvement of new customer margin as a proportion of total cost of customer acquisition
Existing customer growth and maintenance
Development of cross functional capability to acquire new customers and continue the focus on existing customers
12.8 sales improvement in existing customer sales
Installed early warning signs that reduced the risk of customer decline and ultimate loss
Number of declining customers were reduced over a 6 month period by 19%
Identification of good growth trends in the existing customer portfolio. Established ways to maintain or prolong the growth trend
Increased the number of customers with good growth trends by 7%
Improvement summaryFocus Improvement Measure
Lost customer management
Identified lost customers up to 90 days earlier allowing actions for faster recovery of the lost customer
42% improvement in lost customer retention
Gross profit
Measured high profit areas within the customer and product portfolio. Created ways to replicate these high profit areas and to protect them.
Improved gross profit by 2%Cross sell – getting customers to buy more of what we have Structured a cross sell loyalty program that rewarded the combination of volume and number of SKU’s purchased
Inventory
Evaluated underperforming products reducing the product portfolio by 15% with no sales reductions
Improved inventory holding by a permanent 18%.
29% of products were producing gross profit margins in excess of 30%. Increased prices for small volume low frequency product purchases
Improved margins of 1.5%
Data extract Cloud delivery
Analysis
Reporting
Online or in person review
Performance milestones
Actions
Accountability
Performance review
Measure
Monitor
Mentor
Enduring cultural change
Back officeWeek 1-2
Customer facingWeek 4
Our Process
Non intrusive| High impact|Evidence driven|Partner to common goal
Contact
Andre Gien
925 323 2802
Andre is our Evidence Wizard. He combines the Passion of intuition with the Power of Evidence to weave amazing stories that reveal the secrets and treasures that are locked within your business.
He has deployed the evidence based management discipline in over 150 different companies releasing more than $500 million in value and more importantly, demystifying the complexity for thousands of people.
Andre's favorite quote:
"If you change the way you look at things, the things you look at change"
