Right order

Know the math! Apply time and energy in the right order. It is simple math of just a few variables, but the value of each variable is determined by a multiple of activity that must be fully understood, and results impacted directly by the manager.

Here are the variables:

S: Total sales volume

Cog: The invoice cost of the product being sold

OpEx: The cost of all the operating expenses

CC: The cost of the cash being used in the business

And the result of the math behind each variable is :

BP: The business profit before taxes.

Just four variables in the equation that creates the value of BP.

(S-Cogs) - ( OpEx + CC) = BP

How you think about this equation, and how you apply your time and business resources to determine each variable is critical to your ability to create consistent profitable share gain in your business.

How should you think about this equation? Well, how do you know if the expenses and effort that underlie the cost side of the minus sign are the correct amount? In other words, how do you know that you have the right amount of cost in people and equipment plus inventory value and accounts receivable dollars (the money you lend to your customers at 0% interest) is right? How do you know if these costs are deployed in the best way to maximize the BP result?

There is only one right answer. You must have a disciplined and well-executed ongoing sales and marketing activity that determines the best use of resources directed at the right customer to grow share and the best customers to maintain. This is how you think about your role as manager. This is how you process everything that confronts you in the business. 

What is going on out there?

Have a passion to acquire new market information. There are the public venues to learn about the activities in your market. You and your competitors read those regularly. You want to find out the things that are not on the public posts. An evergreen stream of small tidbits could provide a picture of a big opportunity.

It is not uncommon for branch managers to be confident they know their market and then settle into a role of managing with what they know. Settling into that quiescence mode will prevent the manager from gaining critical new information about customers and market opportunities that are not in the public posts.

An example of this is the communication with representatives from manufacturers — the reps.

A very common mistake made by branch manager is to sell and tell the rep how strong and dominant their business is in the market. Most often, the rep sees and knows more about the overall market from their sales role calling on end users and other distributors. It is better to be quiet, humble, naïve and smart, and pull information from the rep then to tell and sell all about your perceived strengths.

Having a passion and personal habit for never missing an opportunity to get some tidbits of information is a key element in growing profitable share gain.

AIM

It is most difficult to aim your business, that is direct the efforts and resources of the business if you are not sure of the target. The AIM process is to identify the best targets to achieve an evergreen profitable gain in the business. (AIM, as explained in “Cracking Accounts,” published by Jim Ambrose).

 The business is made of a portfolio of account packages, so it is essential to look into each account package with the salesperson, and discuss and agree on the best customers to crack and the best customers to maintain. 

This is a corroborative effort between the salesperson and manager. This is not the beat up for more sales and a higher margin-performance review process. The AIM process, as explained in the book, will create the culture and habits for an ongoing discussion with the salesperson on the best deployment of their time and effort, and the business as well. This means how best to direct the operating expense side of the business. It is a very essential step and tool for driving profitable share gain.

Employment engagement

The first three steps involve essential and critical business skills of the manager. They are: to have an understanding of the right order of the math for business profits, a passion for finding ways to uncover the hidden market information, and the tools to direct the salesperson’s effort and resources of the business. 

The last two steps involve the critical leadership skills and personal habits of the manager. The execution of the business is through the employees. In our industry, every customer transaction is touched by several employees. For that customer experience to be perfect, every employee must do his/her part perfectly and consistently. For that to happen, each employee must feel motivated to do that. That is only possible when the employee understands and feels part of the overall business, and is given the tools to make adjustments in order to provide that perfect customer experience. 

The importance of communicating the business plan and the manager’s approach to growing profitable share cannot be overemphasized. There are several communication tools I explain in my books and workshops. The one that has dramatic impact is for the salespeople to present to all the employees at a full-house meeting, a review of their account package with the best customers to crack, and the right customers to maintain and what they need from the team to do that. The employees will see data on the customers they only knew from the perspective of their function. As the salespeople present the details of the account package, they will see how it all fits into the business. 

The other very important part of this characteristic is for the manager to create a culture that drives the employees and the team to deal with in-house issues that prevent the perfect customer experience. It is not enough to lecture at a full-house meeting to the team by proclaiming, “We need to improve customer service.” That is just a sound bite. Instead, some structure and process to deal with impediments and issues needs to be implemented in the branch where the “team” can work cross-functionally to fix, change or improve on things that get in the way of providing that perfect customer experience. 

I present the tool I call the “Power of the Mini-Huddle” in workshops that is a step-by-step way to engage employees in that activity. It has a structured, yet simple process to do that. Whatever the manager chooses to do, it should be simple and habit-forming for the employees.

It is all about you

This fifth key characteristic may seem the easiest, but it is the hardest and has the most impact on employee performance in the branch. It is how you conduct yourself in the building. What you say, how you say it and what you do is picked up in every way by employees. The manager’s style and habits of communicating across functions and with individuals impacts how employees feel about working in that branch.  

There are numerous events in the business day where the manager will have some emotional response.  The term emotional intelligence or “EI” refers to how a person manages one’s own emotions as well as the emotion of others. Emotion is a way to say feelings. So, the manager in many day-to-day events will impact an employee’s feelings. How a manager “comes across” to an employee, either directly or in an observed situation, will impact that person’s motivation and enthusiasm for the business. For that reason, this is certainly an important characteristic and leadership skill to learn and apply in the branch.

This is how to achieve continuous  profitable share gain in your market.