Bruce Merrifield, President — Merrifield Consulting
Wednesday, November 01, 2017—In this video, Bruce Merrifield discusses customer profitability analytics and how to use line item profit analysis to recognize enterprise accounts, or profit centers, in your business, as well as targets and profit losers.
It's important to look at the profitability in your company clearly. This means not only looking at the past but having the ability to forecast future potential in order to know how much time and energy to spend on each customer.
This is where line item profit analytics comes in. By examining the net profit or loss for every line item event, you then have the ability to roll that data up to the order level and on to the customer level. Similarly, you could take your analysis to the SKU level by adding up every pick for a given SKU. Essentially, you can create a profit and loss statement for every item in your warehouse, every product group, and every supplier.
These analytics help you to forecast the future potential (or decline) of profit and put your time and energy in the right direction. By recognizing who your breakthrough customers are, you can make plans to better service them and further your own growth.
For instance, in the 1980s Newell figured out how to work with Walmart during its meteoric growth and gained an ever-bigger share of the category by innovating with the customer. By focusing on its super-winner account, Walmart, Newell began growing as fast as Walmart. By recognizing the innovation of Walmart, Newell figured out how to provide exceptional service through factors such as the most up time, the best fill rates, and other methods that made Newell the best solution for Walmart.
You can start this process in your own business by using the Five Five Five program. Using this approach, you identify the five historically profitable core accounts, the five accounts that may not be profitable yet, but are recognized as gazelle accounts and are poised to take off, and the five accounts that are profit losers. Armed with this in-depth knowledge you can then target accounts for growth and learn how to talk to each type of customer using next level proposal pitches and the Nine Step Process.
Profitability analytics is a fast track to learning how to sell supply chain solutions to super-winners, target accounts, and even super-loser accounts.
For more information about Bruce Merrifield, visit: www.merrifieldact2.com