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Options Outside of Standard Downsizing to Bolster Profits

January 20, 2009

Long-time industry consultant Bruce Merrifield addresses profitability in a recent post to his Web site. He says that companies have options outside of traditional downsizing moves to boost performance in these tough times.

He asks: How do we carefully: either sculpt away our corporate bloat (losing customers, products, people); or, redeploy losing-activity resources into revitalizing the ripped, profitable athlete that is hiding within the general average numbers?"
Toward the end of his post, found here, he recommends: 

  • Identifying the "super-loser" accounts that are in best segment-strata niches and try to convert them from "lead accounts into golden ones."

  • Sign up two to five of your most profitable, progressive and "open-to-us" customers in your No. 1 niche to be advisers for re-inventing the "service-value equation" for that niche.

  • Identify five best, upside-growth and growing customers within your No. 1 niche to team-sell in order to crack and partner with them to help grow your company.

  • Rank the most popular items bought by all customers within a target niche to - A. Beef up the fill-rates on the best items (Google - "fill-rate economics"); B. Create lists of most popular items that each niche customer is not buying from you and try to win that incremental business.

  • Identify all of the margin and losing accounts that: A. don't fit your business model; B. aren't within a niche that you can be competitive with except to get occasional small, money-losing, fill-in orders; and C. are shrinking into bigger losers and indirectly invite them to go elsewhere so that you can either layoff more expense dollars than lost margin dollars or redeploy some of that activity energy into growing your best accounts

And here's what he says about the approach to take on the sales force:

"Downsize, upgrade, refocus, reinvent and re-pay our sales force? Most distributors who have gone to market with outside sales reps since "the beginning" now have too many reps calling on too many B and C accounts. By putting the very best reps on only A accounts and laying off the least effective reps, a lot of good economic things will happen. When we put our best people on the best target accounts within a niche for which we have the best total service value offering, sales will typically go up more than 20% for the niche within six months! And, with the new, only-A-account territories, there is enough margin dollars to maintain and capture that the company can go to a new compensation plan base on "delta profit" increases rather than some percentage of sales or margin which pays commissions on losing accounts and turns reps against the profit improvement plays."


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