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Growing Better Branches: What Needs to Change?

Oct. 10, 2014
Part One: Better Branches Make Better Brands Part Two: A Change Has Got to Come

Better branches are built with better people. So it behooves you to find out what your people know and don’t know by position. Then you will know what to change. That’s why we executed a survey to find out what some distributors thought of their people’s skills and knowledge by position type.

It’s not that hard to come to the following conclusion, even without a survey. Your people may know how to execute the basic mechanics of their positions.  However, they probably don’t understand how the company makes money with regard to competitive market strategy, sales strategy, asset management, pricing strategy and people productivity. They don’t understand why things need to be done a certain way. If they did, we think you would get them to perform at a much higher level.

Here are some generalized examples of what we mean:

Inside salespeople know how to identify products and get them for customers.  They know far less about how to price for profit and ROI, execute tie-in selling, the cost of different types of orders, why non-stock sales need far higher than 20% gross profit and the importance of charging freight up front.

Outside salespeople know how their commission plan works better than anything. They know how to get suppliers to work with them on accounts. They even know how to execute suggestive selling sometimes. They know far less about assessing their product positions at accounts using the company’s ERP system, profiling accounts’ decision makers and issues and assessing competitive positions at accounts.

Branch managers know how to drive good customer service, warehouse management and deliveries. They know far less about how to drive inventory performance, or measure and drive people productivity. And they have a glaring deficiency in assessing their own market position versus competitors. Isn’t the branch position where the rubber meets the road? The place where you actually get market share?

In general, your people don’t understand much about marketing strategy, sales strategy, people productivity and profitability!


Our respondents, 43% of whom were from the CEO level, indicated high agreement on the following issues:

  • It is difficult to find experienced inside salespeople
  • It is difficult to schedule inside salespeople for training and education
  • Online training is not effective for certain topics

So, it’s hard to get people and hard to train them.  We do think we know which topics don’t lend themselves well to online training: Strategy, Productivity and Profitability.

Inside salespeople know how to identify products, source products and enter orders.  They also know how and when to engage a specialist, manager or outside salesperson. For the most part, the responses indicate they are good order service mechanics. But they don’t think about what will make the company money.

Here’s the bad news, and it’s frightening if you really want to make money.

Inside salespeople are perceived to have a poor understanding of distributor profitability, how to get high return on inventory with higher markups on slow-turning items, and how a distributor makes money by maximizing gross profit dollars relative to the transaction costs of an order.

They don’t have a good understanding of how to increase the gross profit on an order with suggestive selling and tie-in selling, either. We think that’s because these topics are not taught by the company or by third parties or at least not effectively. 

We also know from experience that many inside salespeople do not think it is their job to perform tie-in and suggestive selling. They frequently complain about too many incoming calls and the importance of simply getting the customer what they ask for, then moving to the next call. Perhaps we need to coach them how to sense when it’s a good time to perform these valuable techniques and when it is not.

To teach these things well, we think a company needs to teach them internally and coach people individually based on their results.  We don’t think you are going to get these topics all the way across with online courses.

These are the items where inside salespeople were perceived to have the least understanding:

  • The distributor operating statement and net profit
  • Why slower-turning items require higher gross profit
  • How to use the company’s ERP system to get reports on account performance, order history and other information for customer service.
  • How to execute tie-in and suggestive selling
  • Recording and organizing callbacks to promptly follow up with customers
  • The specific costs involved with nonstock transactions and how to price accordingly
  • The costs of different transactions such as direct, stock shipments, non stocks, will call and counter transactions
  • Why it’s critical for total gross profit dollars on an order to exceed transaction costs to fulfill that order


Our respondents thought that outside salespeople knew how the commission plan worked, knew how to work with suppliers to accomplish objectives at accounts, and knew how to execute suggestive selling techniques. That’s the good news.

The bad news is that our respondents don’t think their outside salespeople think strategically about their position at accounts, competitor positions at accounts and how to devise a strategy to penetrate an account more thoroughly. Nor can they use the ERP system to evaluate account performance.  Their key learning needs also include:

  • How to examine account performance overall and by product line
  • How to assess competition and opposing salespeople
  • How to use the company’s ERP system to get information on account performance, order history, and other important account data.
  • The distributor’s operating statement and how a distributor makes money
  • How to devise an account penetration strategy and appropriate actions to develop the account.

So, outside salespeople are perceived to know how they make money, but not how the company makes money. They know how to engage suppliers at an account, but they don’t know how to assess their position against competitors and devise a strategy to win. Think of what you could accomplish with a little change in this area. Outside salespeople are motivated, and they know how to engage suppliers. If we could get them to read their account positions to find great new angles of attack, and teach them how to beat the competition at the account level, they could be superstars.


Branch managers are perceived to be good operations people. They know how to provide and coach good customer service. They know how to run a warehouse and manage deliveries. They don’t know much about how to assess their position in the market or their competitor’s positions. These are keys to developing a marketing and sales strategy and their absence unfortunately goes undetected.

Though they may be good with customer service and warehouse management, branch managers are less knowledgeable about inventory management, cash flow and people productivity by position type. Though they may know how to coach good customer service with the people they have, they are less adept at recruiting, hiring, conducting performance reviews and developing action plans based on performance reviews.

Here’s where branch managers are perceived to fall the shortest. They received less than 2.25 average scores on these topics on a 1-4 scale:

  • How to calculate market share by market segment
  • How to assess competition including market share by segment and product lines by category
  • How to raise productivity by position type
  • Cash flow, days sales outstanding, inventory days, accounts payable days and net cash flow days
  • How to create key account plans and coach salespeople to create and execute them
  • How to measure people productivity by position
  • How to execute an effective personnel training agenda
  • How to recruit, hire, integrate and manage new employees
  • The principles of inventory management and purchasing including turn and earn, GMROI, min max and order point / line point calculations.
  • How to conduct performance reviews and resulting action plans


Today’s workers often have two-earner families. They have different attitudes toward work. The result is that they are less inclined to take training after hours or on weekends. Plus, they have too much to do outside of work to spend time taking training courses. They prefer to attend them on the job during work hours.

Companies seem to have solved the problem of taking too many people off the phones at once by staggering attendance at multiple sessions. But most respondents do not have planned sequences of courses for each position, a plan for each employee and do not enforce completion of required courses.


Most of your people know how to do their basic jobs. They don’t understand how the company makes money, or how to devise market strategy, account strategy and pricing strategy.

They probably will continue this way unless you do two things:

1.            Develop your own agenda of what to teach to whom by position.

2.            Provide incentives for people to execute what you teach

Regarding #1, develop a schedule of how each position can drive productivity and profitability with the decisions they make and the actions they take. Make sure you can measure both the performance and the results of these things.

Regarding #2, share the wealth. If the company makes more money, give the performers a piece of the extra profit. If you don’t, you will get far less out of #1.

Some things you may just have to demand, like key account planning, because the results follow too long after the activity is performed. Our kind of key account planning goes beyond just identifying product positions, projects coming up and who are the sales influencers that you need to see.

It involves understanding how the account makes money by serving its customers and driving its own productivity in addition to mapping the competitors positions and identifying where different decision makers stand on key supplier evaluation criteria. We know some distributor executives who would pay a higher commission to outside sales if these plans were turned in on time and updated regularly.

So what is the grand conclusion to all this? It’s not enough to sit back and say people are not performing. If management finds itself saying this too much, then management is not performing, because it has set no standards, didn’t put in the right education to drive performance to standard, didn’t require completion of courses, and didn’t measure performance.

We recall the words to a popular song: “I’m looking at the man in the mirror. I’m asking him to change his ways.”  So take a good look.

Then feed the branches.             


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