Many sales strategies start and usually end with hiring the best talent for the outside sales team. That's critical. When I was carrying the sales bag and managing a sales team, it was my only strategy – we hire the best people because they know how to find opportunities and they will drive our sales growth.
Then I got hired in my first distributor marketing role. I worked with a leader who introduced me to the concept of using data to help the sales team drive sales growth. “You can make it a lot easier for your sales team if you can help them better understand the individual customer’s potential and the product categories they buy from you,” he said. He introduced me to the concepts of Share of Wallet and Gap Analysis at the customer level.
Distributors that develop strong analytics packages with sales input grow sales quickly and take share from the competition. But there is a lot more to bringing data and analytics into your sales process than hiring a data analyst and cranking out reports. If you send an analytics report out to the sales team that doesn’t account for your unique distribution business factors, don’t expect them to find it useful. In fact, you'll probably have to take cover. Why? The business leaders and sales team may hit the blinking-red launch torpedoes button at your analytics project if you try to lob data at the sales team without true team effort.
The approach we took to build an effective sales analytics program had three key focus areas:
Share of Wallet – Build a customer database. We compiled all our individual customer sales data and appended the data with key outside data sources. The key data points you may need to append are items like number of employees, SIC or NAICS codes and industry-specific demand data from your trade association or an established industry data source – number of trucks in the fleet, number of hospital beds, or consumption data benchmarks for consumables product categories. With this work you can calculate a Share of Wallet estimate by account, salesperson territory and your market. This will help identify individual customer opportunities that can unlock growth.
Gap Analysis – Add the product category data to the customer database. If you have product groupings for your business, combine that data to create a "Customer and Product" database. This puts you in position to see your product category share by customer down to the SKU level. This gap between what your average customer spends in the category versus the individual customer is the definition of Gap Analysis. These gaps show you areas of opportunity to gain share at the product level.
Get buy-in – Avoid the torpedoes. Once you build your foundation of product/customer data and complete your calculations for share of wallet, gaps to attack and customer potential calculations, it’s time to get buy-in and expert input. Your analytics team needs to have a close working partnership with sales to make it successful. It’s critical to build your unique sales and channel factors and data into your analytics model. Most companies don't put enough time and planning into making sure the right managers and sales team members are part of the process.
Here are a few key factors unique to your company and market to consider to avoid the torpedoes:
- How do your customers buy? (Stock vs. Direct sales ratios)
- How do your suppliers affect sales? (Manufacturer special pricing and protection by customer)
- How much negotiated business do you have with customers by product category? (Includes annual blanket pricing and national account agreements)
It’s best to consider additional variables like customer volume, cost-to-serve, profit margin, supplier preference and your franchise agreements. The list of variables goes on and on, as you have many unique factors that drive your distribution business. Once you've seen the impact of a sales analytics program, it's tempting to put the accelerator to the floor. Be careful. The best analytics programs are rolled out with moderation to keep building momentum and not adding a new flavor of the month.
You’ve already made the investment in a core database by creating accounts, setting up credit terms and assigning sales coverage. It's time to get more profitable sales growth from your talented sales team by understanding each customer's potential and identifying the right gaps for them to attack with improved analytics.
(For more on combining team insight with analytics, read this interview from the MDM archives: The Common Sense Test in Analytics)
As always we value your feedback. Feel free to comment below or contact me at john@mdm.com.
