Executive summary: While activity based costing proved to be a successful measurement tool for manufacturers in the 1990s, this article suggests that distributors today should use customer profitability analysis as a more effective means to analyze and manage their ongoing investment in customers.
Although you'd probably rather not just now, please stop and think about your investment portfolio for a moment. Do you pick your stocks, bonds and mutual funds blindly ﾖ without any information about their recent performance or the outlook for future appreciation? Do you hold on to your portfolio investments indefinitely without regard to underlying financial information, value, yield and prospects?
Most successful investors read the Wall Street Journal, watch CNBC and ...
Executive summary: Distributors are caught in a trap. To free themselves, distributors will first need to free their customers. For-fee services will play an important role in helping distributors break out. By avoiding potential barriers, distributors can design a successful fee-for-services strategy to move forward with a plan that benefits their bottom line and the bottom line of their customers.
Every distributor knows the trap. Customers continue to demand high levels of support but are increasingly unwilling to pay for the value added. It gets worse. Products and brands are widely available, so there are plenty of competitive distributors ready to step in if service levels suffer. Finally, new channels have emerged, forcing distributors to fight even harder to ...
One of the best sources of competitive differentiation is a high level of customer focus. Todd Youngblood of The YPS Group, Inc., Acworth, GA, a sales process engineering and sales training firm, created these 25 questions to help think about and determine how customer focused your organization is.
You can also complete this survey online to obtain an index of how customer focused your company is based on your answers, as well as some benchmarking information from the survey. Go to www.ypsgroup.com and click on the link by the question, 'How customer focused are you?' The site also provides similar questions to help determine how effectively you are improving your sales process.
1) To what extent is your company customer focused?
Targeting accounts, sharing information and incorporating a clear, consistent message from headquarters down through to the local salesperson on the street were just some of the key points made by a panel of power transmission product manufacturers who met to discuss joint planning while attending the annual Power Transmission Distributors Association convention in Palm Springs, CA.
Mike Marks, Indian River Consulting Group, mediated the panel of six manufacturers, who shared their strategies going forward as the focus in industrial distribution shifts from being product and sales driven to innovation and solution selling. Now more than ever, as traditional industrial distribution enters a new lifecycle, Marks said, manufacturers and distributors need to work together to achieve ...
One of the primary lessons of the past two years, and particularly this year's endless summer of waiting for a recovery to happen, is that if you are operating the same way you were, you're losing ground or in trouble.
Everyone is vulnerable right now, whether you have the number-one position in your market, or are clawing to gain more share. Executives that aren't admitting that are either in denial or blowing smoke. In fact, competitors who suffer from terminal certainty make especially good targets!
There are fundamental shifts taking place in the economy and industrial markets (If Bruce Merrifield's musings on p. 6 don't scare you, nothing will!). You can argue about the degree, duration and severity, but uncertainty and confusion likely will characterize this environment ...
As a first step to help members improve the levels of planning, communication ad trust in their relationships the Industry Relations Committee of the Power Transmission Distributors Association, Chicago, IL, has published a list of distributor-manufacturer relationship best practices. A work in progress, these best practices are based on research conducted in 2001 by the PTDA Educational & Scholastic Foundation, as well as the PTDA Partnership and Market Planning Guides.
PTDA Distributor-Manufacturer Relationship Best Practices Version 1.1
Executive summary: There are opportunities to improve profitability in every aspect of your pricing system. This article highlights the 'low hanging fruit,' three areas to focus on where your actions can have the biggest impact in the shortest amount of time.
1. The pocket price band
The pocket price band (Chart A) is an exercise designed to create a graphic picture of all your pricing activity during a specified time period on your 'A' items.
Analyzing the pocket price band and taking action based on the results can add as much as two points to your overall margin. The vertical axis in the graph represents the percentage of business sold at the particular margin listed on the horizontal axis. In other words, in the above example, 6.1% of the business ...
Executive summary: How do you protect cash positions while balancing the seemingly contradictory problem of keeping cost of sales under control and your sales force intact while revenues decrease? Compensating sales efforts appropriately is one solution for protecting margins, profit and cash. Solving this issue may take creating a new paradigm for sales representative compensation.
It was a feeding frenzy when business was booming, backlogs were steadily increasing and customers were paying regularly. Just like the stock market, everyone was chirping 'go baby go.' But times have changed; no doubt your business plan has changed too. How we compensate a sales force properly in these market conditions needs to be revisited also.
Executive summary: This article analyzes data compiled for the National Association of Electrical Distributors, from the annual Profitability Assessment Report, compiled by Dr. Bates' firm. The article identifies key areas where high-performance distributors outperform the average and discusses the critical profit variables every company needs to monitor.
By almost any standard that could be applied, 2001 was a difficult year financially. Margins were under attack, sales were often sluggish, and collections became more challenging. Despite these difficulties, some firms continued to produce demonstrably higher levels of profit than the typical firm.
In a trying year, the differences between the typical and high-profit firm become even more critical. In common ...
Executive summary: This article defines price agreement types and a typical rebate structure and cycle. It outlines key administrative expense issues and offers ways to analyze your current system for managing agreements and processing rebates. It also provides tips to avoid pricing agreement pitfalls.
Distributors typically spend a great deal of effort managing receivables, payables, price matrices, and inventory. What about pricing agreements? These often don't get the attention they deserve because it's a tough process to automate ﾖ each agreement is different, and administrative details often get lost to more pressing matters. But managing pricing agreements effectively can significantly help fight margin erosion and improve cash flow. Now that's exciting!