How 10% sales growth was created with improved margins and reduced inventories.
The way business is buying consulting and advisory services are changing. Value is required to be established upfront combined with measured delivery.
Management want concise action oriented strategies that can be implemented effectively.
This is the essence of the distribution growth story
1. Distribution Sales Growth
Story
How 10% sales growth was created
“with improved margins and reduced inventories”
Contact: Andre Gien agien@gfbridge.com 925 323 2802 www.gfbridge.com
2. We use known facts to grow
sales in distribution companies
3. The challenge
40,000 active products
25 sales people
1,800 active customers
9 branch locations
Behind the scene
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.
4. New
customer
development
Portfolio scorecard
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
performance
payments
Retention
Non relevant SKU’s
Low performing vendors
Acquisition cost Risk of decline Customer deflection
5. 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
6. Starting place
Where are we growing
Where are we making money
What are the immediate opportunities
7. Our Methodology
Improving the way profit is made
High growth high profit islands
Low volume low profit segments
Delivering the fundamentals
New customer development
Lost customer prevention
Existing customer growth
Creating short term actions
Salesperson portfolio growth
Cross sell enhancement
Lost product sales prevention
Opportunity based on similar customer purchases
8. Service delivery
Online monthly meetings with sales VP
Reporting structure
Previous month performance assessment
New risk assessment
Delivering growth actions
• Global growth actions
• Salesperson individual growth actions
• Product portfolio growth action
Assessment of performance against previous actions
9. Outcomes – new customer development
Discovery
New customer development
produced promising results
during the first and second
purchase with limited or no
third purchase
Action
New customer checklist we
created for inside sales
people that ensured on going
nurturing of new customers
Result
26% improvement in new customer sales
growth
47% improvement in new customer retention
10. Outcomes – existing customer maintenance
Discovery
Near perfect correlation
Periods of high new
customer development
resulted in declining
performance of existing
customers. The reverse was
also true
Action
Restructured the way existing
customers were cared for.
Result
Total existing customer growth showed a
12.8% sales improvement over 12 months.
11. Outcomes – Proactive existing customer management
Discovery
Limited proactive
management to reduce the
risk of declining customers
or potentially losing the
customer altogether.
Action
Restructured the way existing
customers were cared for.
Result
Measured based on the number of declining
customers over a 6 month period reduced by
19%
12. Outcomes – Proactive existing customer management
Discovery
Limited proactive
management to capitalize on
good growth trends.
Action
Identified what created the
growth trends. (e.g. quality
digital information delivered
to targeted groups.)
Ensured process was in place
to repeat winning activities
Result
Number of existing customers that delivered
increasing growth improved by 7%.
13. Outcomes – lost customers
Discovery
Lost customers were
discovered between 60 and
90 after last purchase.
Reducing the opportunity to
recover
Action
15 and 30 day no purchase
customers are reported with
specific people accountability
to these customers
Result
Lost customer retention improvements over
a 12 months period of 42%
14. Outcomes – Protecting high profit islands
Discovery
Limited good profit islands
awareness. What is not
known usually does not get
the attention
Action
Identified ways to elevate
awareness of high profit
areas and ways replicate and
protect them.
Result
Improved gross profit margins close to 2 %
15. 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
Action
Structured a cross sell loyalty
program that rewarded the
combination of volume and
number of SKU’s purchased
Result
Cross sell improved with the number of
customers buying more than 50 SkU’s
increasing by 27%
16. 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
Action
Evaluated underperforming
products reducing the
product portfolio by 15% with
no sales reductions
Result
Improved inventory holding by a permanent
18%.
17. Outcomes – product profitability
Discovery
29% of products were
producing gross profit
margins in excess of 30%
Action
Increased prices for small
volume low frequency
product purchases Result
Improved margins of 1.5%
18. Outcomes – product profitability
Discovery
Pipeline activity was focused identifying
the prospect and attempting to convert
the prospect into a sale
Action
Created prospect awareness,
interest and desire tactics to
assist in the conversion
processes.
Result
Initiated a goal and measurement based on
the number of potential customers engaging
other than on price or quote basis.
19. Improvement summary
Focus 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 cost
15% 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%
20. Improvement summary
Focus 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.
Cross sell – getting customers to buy more of what Improved gross profit by 2%
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%
21. Data extract Cloud
delivery
Analysis
Online or in
person review
Actions
Accountability
Reporting
Enduring cultural
change
Performance milestones
Performance review
Monitor
Measure
Mentor
Back office
Week 1-2
Customer facing
Week 4
Our Process
Non intrusive| High impact|Evidence driven|Partner to common goal
22. Contact
Andre Gien
agien@gfbridge.com
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"