www.quantumprofitmanagement.com Quantum Profit Management
Optimizing Salesforce Pay Through Deep Data Analysis

Bruce Merrifield, President — Merrifield Consulting

•profit analytics •profit strategy •QPM •Quantum Profit Management (QPM) •sales management styles in distribution

Rating: (please click to rate the video)

Optimizing Salesforce Pay Through Deep Data Analysis

How we pay our sales representatives and even what sales means is changing by the day. Companies are developing more and more sophisticated approaches to sales compensation and here Bruce Merrifield and Randy MacLean of Waypoint Analytics examine the most significant trends.

Companies in North America are frequently giving away 50 to 60% of their profits to their sales force. Based on these numbers, the company itself is apparently a junior partner to the sales representative. It is a shocking idea, but the numbers bear it out. Consider your net-before-compensation (NBC). After you've paid for and prepared your product and run it through your operation and infrastructure, the money you have is your NBC. This is the bottom line of the company, including all pay, commissions, and bonuses. Your sales force is a tremendous expense but the rate of pay for your sales force has not kept up with the available technology or the general evolution of the workplace. Many companies are using old models when determining pay.

Instead, sort your sales representatives by their NBC. By doing so, you can identify unprofitable territories and pay that is not commensurate with your profits. Furthermore, you can drill down to the customer level. This level of detail is critical. As Bruce and Randy point out, you should never make business decisions based on averages. Averages tell you what the sum total of everything is together, but individual items will vary from the average by quite a lot. You will always lose when the reality does not match the expectations built on an average.

Digging into your data will show you how to optimize your profitability. This analysis will allow you to ask and answer important questions. Is your top-compensated representative truly the most valuable person on your sales team? You might also identify the five or so customers who have such a high cost-to-serve that they are killing your profits with inefficiency. You need to dig into your data to understand how your sales team operates and drives your profit – your NBC.

Sales has been the last place to embrace specialization, but more and more companies are seeing the value in it. The best companies – the top companies – are building sales models tailored to different kinds of customers and different kinds of businesses. They are increasingly customer-centric. However, this is not an either/or prospect: You can take care of your customer and you can take care of your best salespeople. Your sales team needs to be invested in your success and see the value in efficiency.

The pay of your sales team needs to be based on the company's profitability. By building an internal emphasis on profitability, you motivate and reward your people and draw them together on a common set of values. If everyone in your company is invested in the success of your company, then everyone from the CEO on down to a stock clerk is looking for ways to drive profit.

For more information about Bruce Merrifield, visit: www.merrifieldact2.com

Beyond Business Intelligence

Randy MacLean explains the differences in business intelligence systems, and how to know what you're getting with each kind.

Getting a Deeper Understanding of Costs

Randy MacLean and Bruce Merrifield of WayPoint Analytics discuss different levels of cost analysis, and why deeper analytics can bring much greater benefits.

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 Force

Use 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 Specialization

Discussion of how the most successful companies are adopting specialized sales functions, achieving superior results.

How Distributors Should Rethink Their 2017 Sales Growth Plans

Waypoint 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 Profitability

Managing 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 Relationships

Discussion about a 9-step process aimed at transforming a transactional relationship with an account into a partnership.

Profit Value-Based Customer Segmentation

Randy MacLean and Bruce Merrifield of WayPoint Analytics discuss profit value-based customer segmentation.

Gross Margin Percent: A Poor Indicator of Profitability

Many naturally occurring, high gross margin percentage accounts and high gross margin percentage SKUs are operating profit losers.

The Advantages of Segmentation

A discussion of the benefits of segmentation and how this approach can help distributors achieve far greater levels of profitability.

How to Turn Big Data Into Big Profits!

Top companies like Amazon can leverage big data to predict consumer buying habits. Bruce Merrifield discusses how you can do this too!

Gross Margin Percent: A Poor Indicator of Profitability

Most distributors have naturally occurring, high gross margin percentage accounts and high gross margin percentage (small dollar pick) SKUs.

Triage Customers & Set Priorities to Increase Performance

Randy 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 Accordingly

Here 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 Smarter

Using the negotiation process to achieve CTS savings, allowing you to offer your customers lower prices while leaving the table with a larger profit.

Cost-to-Serve Math: Why Gross Margin May Fool You Every Time

This video by Bruce Merrifield and Randy MacLean describes why you can't rely solely on gross margin to determine profitability.

The Changing Face of Sales

An in-depth look at some historical limitations to sales compensation, and why those factors no longer apply with the availability of LIPA.

Working on Your Best Accounts

What to do with your top accounts.

Gross Margin Fixation

A 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 Losers

See 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 Story

Learn 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 LIPA

Randy MacLean talks about the emergence of a new sales strategy.

Why You Should Sweat the Small Deliveries

A 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 Tool

Learn how to boost your company innovation IQ by adopting the Anti-Nitpick Rule and the Wheel of Learning Tool.

It's Not Who You Think It Is

Randy MacLean discusses key profitability metrics for QPM.

Why You Should Be Optimizing Inventory

Randy 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

Using WayPoint's High Volume Account Report to Increase Profit

Randy discusses the benefits of the extraordinarily valuable High Volume Account Report.

Prioritizing Your Customers

A 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 Profits

Bruce Merrifield of WayPoint Analytics teaches the importance of customer segmentation and the insights it can offer your distribution company.

Quantum Profit Management

Randy 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 Program

Have 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 Audit

Getting Results with a Customer Audit

Making Money by Giving Away Product

Bruce 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 3)

Webinar: Quantum Sales Compensation: Designing Your Plan