Monday, November 26, 2012

Planning Part VI:Our Friend Technology

Technology – Our Business System is our Friend
While not yet given a fruit name, your business system is your best piece of technology.

Business data is a competitive advantage.  I find it weird that many distributors have laid out big piles of hard earned cash but most aren’t getting their money’s worth.  Imagine buying an efficient new warehouse but still stacking stock on grandpa’s homemade wood racks.  Sounds goofy, but according to a sampling of consultants form our business, the average wholesaler uses only half of the power of their largest technology investments.  End of year is the time to bring your crew to a new level.

Customer Data by Product Line

For just a moment, forget the fancy CRM package, forget spending thousands on iPads, postpone that next version of smart phone, they’re all nice to have but customer data is a must have.  Here’s what we’re talking about:  Sales and gross margin numbers by product line on a monthly basis.  Without this kind of information, it’s easy to miss opportunities. 

If the information is there, get it out.  Before you decide to delegate the dissection of data to your sales managers, think about these two facts:

·        If it costs a few hundred dollars to happen, how much does it cost per hour if your sales leaders take an extra hour a month to crank the data out by hand?  If you value your sales managers at $150 an hour, calculating the information for just one hour per month costs $1,800 per year.  Sales managers tell me they spend about 6 hours a month – that’s $10,800 a year.

·       The experts (whoever they are) tell us selling to existing customers is 5x easier than selling to new prospects.  When you lack sales by product line, it’s darned hard to tell what you’re not selling.

Salesperson Data by Product Line

Just like customer data, lacking the ability to accurately (and objectively) understand your sales team’s performance by product line creates difficulty in evaluating sales effectiveness.  When you understand precisely what your salespeople aren’t selling, training and coaching move to the next level.  A monthly report by salesperson fixes those issues.

Strangely, many distributor ERP systems allow for these reports but the data lies just below the surface.  Before you spend money on additional products or services explore these areas:

Daily Price Overrides

Think about your official price strategy.  Here’s the difference between strategies that work and the ones that don’t.  If everybody can override system price without answering to anyone, then whatever your strategy; it isn’t working.

I used to be able to remember the guy who said, “That which is measured improves”.  Regardless of the origin, I believe it.  What gets measured is the role of a manager.  If you don’t know who is overriding your price, you need to study it.  Without your instruction and coaching, it’s pretty easy for a new customer service person to short circuit your pricing strategy. 

Automate your Special Pricing Agreements

Since we’re on the subject of pricing processes, here’s a thought for you.  Special PricingAgreements (SPA’s) and their close relative the Ship and Debit program, were but a glimmer in purchasing agents’ eyes during the big recession back in the 1980s.   A couple of recessions later and distributor land looks like the sweeping fire in a Smokey the Bear poster.  I am hearing growth ranges that sound like, “we used to have 30 or so SPA’s now we have 200.”

Clerical and computer errors in SPA accounting may be costing you thousands.  This is amplified in the case of ship and debit methods in place.  I can think of a dozen distributors I know who have reported losses in the thousands because somebody was out with an illness.

An automated system gives you build a procedure and process.  If you do it right you’ll have metrics and coaching points to fix the system while everybody remembers the details.

Before you ask…

Are there dozens of other things you could be doing?  You bet.  If we try to get all of them done, you’ll run out of bandwidth.  And remember, that which is measured improves… or something like that.



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