Bruce Merrifield, President — Merrifield Consulting •Amazon Supply •competitive strategy •profit analytics •big data •expert interview •management strategies •industry perspective •AmazonSupply.com •Quantum Profit Management (QPM) •distribution industry trends •new opportunities for distribution industry •business math for distribution •business model Wednesday, March 21, 2018—How are you using your company's data? Top companies like Amazon can leverage big data to predict consumer buying habits, but many other organizations struggle with how to put it to work for them. I recently sat down with my friend and partner, Bruce Merrifield, to discuss how wholesale distributors should approach big data and how it can be used to improve their profitability. "It's easy for many distributors to get overwhelmed by data," Bruce explained. "Most distributors have a lot of data, but they aren't necessarily sure how to use it. Companies may intuitively recognize that there's a need to do something unique with that data to achieve a competitive edge – like how Amazon prides itself on knowing the book that you're going to buy tomorrow – but with so much data it can hard even knowing where to get started." "One issue is that not all data is useful," Bruce continued. "There are some things that may be interesting, but it either isn't something actionable or it doesn't necessarily contribute to the bottom line." "What distributors need to look for is unique, actionable wisdom," Bruce said. "You want to find things that are unique to your company – either knowledge only you have or something only you can do – and implement that into your service. You also want to find ways to offer your existing services at a lower cost." "One of the ways you can do this is by figuring out your activity costs and creating a model," Bruce explained. "Most executives are keenly aware that some customers and sales are more profitable than others. By determining the activity cost – your cost-to-serve – you can see when sales are bringing in a net profit and when they're instead draining your bottom line." There are some sales that have a cost structure so large that it's impossible to make a profit. It's not the customer's fault that these sales may be unprofitable. They're just doing the business in the way that your company has allowed. It's not necessarily your fault either because, prior to big data, you had no way of detecting many of these issues. However, now you need to figure out how to ensure that these customers are profitable. "The question is why is this company a big loser?" Bruce asked. "With your data, you may find that the customer is buying small amounts of the same item two or three times a week. He's creating enormous buying and service activity costs with no real benefit to either company." "And if all these small transactions are hurting your company, they're likely hurting your customer as well," Bruce said. "It takes the customer time to process things on their end and there's always the possibility of downtime when they don't have anything. So with your newly found information, you can go directly to the customer and explain (with the numbers to back it up!) how the current ordering practices are hurting both of your businesses." The power of big data is that it allows you to recognize and understand otherwise hidden dynamics that are hurting your profitability. However, that information by itself is worthless unless you make a committed effort to finding ways to improve how you interact and do business with customers. If you're looking for tactics that can be used to addressed these problems, we have a lot of videos on the site covering that subject. Of course, if your company needs help managing and making use of its data, we can help with that, too. Just contact us for a free demo by visiting www.WayPointAnalytics.net/contact-us/ . For more information about Bruce Merrifield, visit: www.merrifieldact2.com |
The 6 Attributes of Super-Profit CompaniesThe 2nd of 3 lists defining the markers of Distribution companies outpacing their peers. The 5 Things Customers Want (brief)The 1st of 3 lists defining the markers of Distribution companies outpacing their peers. An Analytical Boost to Service ExcellenceBruce Merrifield and Randy MacLean discuss the handful of key customers in your business, and how to keep them happy and loyal. Beyond Business IntelligenceRandy MacLean explains the differences in business intelligence systems, and how to know what you're getting with each kind. A Culture of Innovation Starts at the TopSteve Epner and Randy MacLean discuss topics from Steve's book. In this video: How to Innovate. Staying Effective in the Changing World of SalesThe top business know not only how to innovate, but where to spot opportunities where innovation will bring the greatest results. LIPA: Prophet of Customer NeedsSee how implementing LIPA can give you the bandwidth to be more accommodating to your customers with analytics-based service excellence Getting a Deeper Understanding of CostsRandy MacLean and Bruce Merrifield of WayPoint Analytics discuss different levels of cost analysis, and why deeper analytics can bring much greater benefits. Optimizing Salesforce Pay Through Deep Data AnalysisCompanies are developing more and more sophisticated approaches to sales compensation and here Bruce Merrifield and Randy MacLean examine the trends. Webinar: Profit-Based Sales Incentives (part 1)Webinar: Quantum Sales Compensation - How to Create a powerful new kind of sales incentive plan Using Profit Analytics to Manage Your Sales ForceUse profit analytics to help drive radical profit gains by balancing volume, margin and service costs for every account, doubling and tripling territory profits Sales Force SpecializationDiscussion of how the most successful companies are adopting specialized sales functions, achieving superior results. How Distributors Should Rethink Their 2017 Sales Growth PlansWaypoint Analytics uses line item profit analytics to dig deep into the numbers, and Waypoint users learn both bad news and good news about their customers. Managing Product Line ProfitabilityManaging Product Line Profits shows how operations can have a significant impact on net profit and examines Peak Internal Profit, accumulated profit and more 9 Steps to More Profitable RelationshipsDiscussion about a 9-step process aimed at transforming a transactional relationship with an account into a partnership. Profit Value-Based Customer SegmentationRandy MacLean and Bruce Merrifield of WayPoint Analytics discuss profit value-based customer segmentation. Gross Margin Percent: A Poor Indicator of ProfitabilityMany naturally occurring, high gross margin percentage accounts and high gross margin percentage SKUs are operating profit losers. The Advantages of SegmentationA discussion of the benefits of segmentation and how this approach can help distributors achieve far greater levels of profitability. Gross Margin Percent: A Poor Indicator of ProfitabilityMost distributors have naturally occurring, high gross margin percentage accounts and high gross margin percentage (small dollar pick) SKUs. Triage Customers & Set Priorities to Increase PerformanceRandy MacLean and Bruce Merrifield sit down for a talk about the issues and opportunities, tactics and strategies for increasing profit performance. Increase Profits: Rank Customers and Act AccordinglyHere is a case study in which the lowest gross margin percentage niche was the most profitable and the highest gross margin percentage was the loser. Discussing the Enterprise Account Selling Model (#3)Continuance of the Enterprise Account Selling Model video series. Refers to a preceding video. Drawn from Bruce's presentation at APIC on March 1, 2016. Getting Your Salespeople to Negotiate SmarterUsing the negotiation process to achieve CTS savings, allowing you to offer your customers lower prices while leaving the table with a larger profit. Looking at a Customer Whale CurveCustomer whale curves are a great opportunity to view the overall picture of your customer profitability and apply appropriate sales models to each Increase Innovation with a Rule and a ToolBruce Merrifield discusses the Wheel of Learning and how this simple tool can catapult you forward with innovative thinking. Cost-to-Serve Math: Why Gross Margin May Fool You Every TimeThis video by Bruce Merrifield and Randy MacLean describes why you can't rely solely on gross margin to determine profitability. The Changing Face of SalesAn in-depth look at some historical limitations to sales compensation, and why those factors no longer apply with the availability of LIPA. Maximizing Account Potential through SegmentationRandy MacLean discusses the value and utility of segmenting your customer accounts. Working on Your Best AccountsWhat to do with your top accounts. Gross Margin FixationA fixation on gross margin – without looking at cost-to-serve (CTS) – has blinded countless distributors and limited their ability to achieve profitability. Amazon Tactics: Know Your SKU Profit Winners and LosersSee why your most profitable 200+ items are typically popular commodities with lots of picks for lots of customers with a high average sales dollar per pick. A WayPoint Client and Whale Curve Success StoryLearn how this distributor was able to massively ramp up its profitability even as it lost many of its customers. Cost Structures: What Makes for a Good Sale?Learn why distributors can't simply rely on gross margin when determining whether a sale will add to the bottom line. Changing Sales Strategy Using LIPARandy MacLean talks about the emergence of a new sales strategy. Why You Should Sweat the Small DeliveriesA discussion on how little extras can sometimes add up to a lot of infrastructure cost in wholesale distribution companies. Increase Innovation with a Rule and a ToolLearn how to boost your company innovation IQ by adopting the Anti-Nitpick Rule and the Wheel of Learning Tool. How and Why Amazon Drives Change for Catalog OperatorsCatalogs still exist, but they have gone online. In this video, Randy MacLean and Bruce Merrifield outline the changing reality of catalog operators. It's Not Who You Think It IsRandy MacLean discusses key profitability metrics for QPM. Why You Should Be Optimizing InventoryRandy and Bruce explain why it's important to optimize inventory in the same way you optimize personnel and other resources toward the best profit opportunities A Two Step Strategy for Being Number One in DistributionIn this video, Bruce Merrifield turns the tables on Waypoint President Randy MacLean, and asks Randy to strategize on how to beat the competition. Using WayPoint's High Volume Account Report to Increase ProfitRandy discusses the benefits of the extraordinarily valuable High Volume Account Report. Prioritizing Your CustomersA discussion of the perils of a cookie cutter approach when it comes to sales and service in the wholesale distribution industry. How Customer Segmentation Unlocks Hidden ProfitsBruce Merrifield of WayPoint Analytics teaches the importance of customer segmentation and the insights it can offer your distribution company. The Element of PricingIt's not necessary to compete with AmazonSupply on pricing when you've got your ordering and delivery systems, fill rates and customer service at a high level. Quantum Profit ManagementRandy MacLean introduces the core principles of QPM and illustrates how it's the most effective way to run a business. The Benefits of a Cost-to-Serve Math ProgramHave you had trouble conveying the importance of CTS to your team? Learn how this course provides an affordable and convenient educational solution. Why Come to APIC?What is the value of the APIC conference for a business, and why does it stand out above other education programs? Getting Results with a Customer AuditGetting Results with a Customer Audit Making Money by Giving Away ProductBruce Merrifield and Randy MacLean discuss profit strategies for wholesale distributors that will raise their cost-to-serve and profits. Webinar: How to Create a Sales Compensation Plan (pt 2)Webinar: Quantum Sales Compensation Plan Part 2 Webinar: How to Create a Sales Compensation Plan (pt 3)Webinar: Quantum Sales Compensation: Designing Your Plan Webinar: How to Create a Sales Compensation Plan (pt 4)Webinar: Quantum Sales Compensation for the Wholesale Distribution Industry: Launching Your Plan |