Calendar-year distributors: What’s your planning routine for 2020?

Is it forecasts, goal-setting and budgets? To beat last year by trying harder? Plus, what big new-competitive-advantage experiments will you be trying? 

If you aren’t planning something a bit scary, then you are doing the same old stuff in new clothes to get fading results.


New Clothes Case Example

Two years ago, a new client spent big on a better website, boosted search-engine optimization, and had rotating “best-value” specials from “preferred” (bigger rebate) suppliers on the homepage.

The results? They doubled active accounts and increased total margin dollars by 5% on 25% more transactions. They hired more employees to fulfill the explosion of orders, and operational expenses increased faster than margin and rebate dollars to earn lower profits.



  1. Distributors: You don’t have Amazon’s lowest-cost website, warehouse picking and deliveries, nor can you collect and monetize Prime buyer clickstreams in multiple ways.
  2. “More sales and margin dollars at a good margin percentage” ignores both order size and cost-per-order. Trading higher service-cost dollars for lower, margin-dollar orders does not get profitable with increasing volume. Volume is vanity, Profit is sanity!
  3. Most distributors already have accumulated a hidden, small-customer/order problem over the years. Distributors that invest in customer-profitability analytics typically find about 30-50% of the smallest customers generate 4-8% of total margin dollars on 18-25% of total transactions. Always for a net-profit loss.
  4. 95% of these unprofitable minnows are self-employed with zero to declining growth. They do love exchanging retail-sized orders for wholesale services and prices.
  5. This losing, minnow busyness has an “opportunity cost.” There is little time or profit to invest into better-serve value for most net-profitable customers and target accounts. Without net-profit analytics, every customer and margin dollar is good and too equally served.

2020 Breakthrough Idea

Do a simple customer net-profit ranking analysis, or check the best cloud service for distributors. Then, how will you segment customers and reserve them differently? Existing data-free beliefs such as “all customers and margin dollars are good”— die hard. 

For a comprehensive roadmap on how to fix losing minnows, while winning more from best accounts, read my Core Renewal Roadmap, available by emailing me at

This is the first of several “scary 2020 question” columns. Much more to come.