Randy MacLean, President — WayPoint Analytics

•competitive strategy •profit analytics •management strategies •industry perspective •distribution industry trends •business math for distribution

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Wednesday, August 2, 2017—How do you get the most profit from a market or territory? Do you chase after the biggest customers? Do you try to grab all of the smaller ones?

In this video, Randy MacLean discuss a sales strategy that every sales manager and salesperson needs to understand. If you want to be the winner in your territory, in your company, in your market, or in your industry, you need to gain the lion's share of the profit pool within that space.

This is a strategy that allows even small players, ones who lack large market domination, to have profit domination. After all, size doesn't matter when larger competitors don't know the secret!

The first step in this process involves being able to identify the most profitable customers. While many salespeople mistakenly assume that the largest customers are the most profitable ones, this isn't always the case. There are incredibly profitable customers that are one-tenth of the revenue volume of other customers that generate similar profits within a territory. Because these are smaller customers, they're usually below the radar of the competition and therefore much easier to acquire.

What are the traits of the ideal customer? These are the ones who generate the best profit by having the fewest number of orders, fewest number of invoices, and fewest number of picks for the largest amount of gross profit. They're profitable because they're very efficient and therefore don't require a large cost structure.

Once you know what to look for, the next step involves acquiring more of them (while making sure you retain the ones you have!) The reality of the business is that distributors are continually "trading" customers. You win some customers while, at the same time, losing others.

Trading customers is a natural process because you sell the same thing as your competitors.

This can work to your benefit, however. Since you know which customers you want to keep and which customers you want to lose, you can "trade" smarter by focusing all of your attention on the best customers while letting your unprofitable customers – the ones contributing a loss to your bottom line – find their way to the competition.

Engaging in smart trading can give your company superior, permanent sustainable profit gains while potentially crippling competitors with bad customers. Hopefully knowing these secrets will enable you to trade smarter in the future.

For more information about Randy MacLean, visit: www.waypointanalytics.net