Is Your Wholesale Business Down 20-30%? Remember 80-20…
In tough economic times like these, it is common to see companies cut back on important functions of their business like service and marketing, as well as other aspects. While understandable, it may not be forgivable and could wind up being fatal.
If the old adage of “80% of your business is created by 20%” is true (it is, believe me), concentrate on that 20% wherever it may be. Now it may actually be 70-30, 90-10, but you get the idea: Most of your income is commanded by a smaller percent of another aspect of your business. So we’ll use 80-20 for convenience sake…. 20% of what you might ask? Well, it could be several things:
· 20% of your accounts make up 80% of your income
· 20% of your product offering—in other words, if you have 100 skus to sell, 20 of them make up 80% of your business
· 20% of your sales force write 80% of your sales.
In matters regarding service, from a rep’s standpoint, it’s recommended you don’t sacrifice any aspect of getting orders to whatever customers you have left and whatever new customers you can get. If you can sustain the same level of service, with fewer staff working an extra hour or so, great. If turn time winds up being an extra amount of days, but is still within reason for your industry, try for it but at least notify your account base up front with an open letter expressing apology and regret, but with the promise to strive for the same level as you have had. Whatever you do, avoid surprises and disappointments falling into the customer’s lap.
There can be competitors of yours who will figure ways to tighten up their service during an economic downturn, and if they can, they will. And guess whose business they will try to win over to their side?
When you think about it, “other aspects” mentioned in the first paragraph above could very easily fall into service topics. Things like streamlining your bookkeeping or production, while maybe not as visible to your customers, will increase your efficiency and save you money and time, both of which will make it easier to deal with you from the customer’s standpoint. Making your bookkeeping completely online can allow your company easier notification of shipping and billing to your accounts…and eliminate mailing costs when it comes time to send an invoice to an account. So look for 20% of your service aspects to improve, and it can affect the remaining 80%, yielding greater efficiency.
Now let’s look at your marketing and sales efforts. Any scrimping here is also potentially fatal as marketing is your lifeblood. If you have to adjust the amount of expenditure you allocate for your marketing, so be it, but be careful.
If you have print brochures, catalogs, pamphlets or flyers, why not concentrate on the 20% of goods that bring you your 80% of sales? Be sure to prominently mention your website, which should be a portal to all that you sell, so that if a customer or prospect is reading this marketing material, they understand you have much more to offer. If you’re worried about that huge catalog you have to publish every year and this year it will be expensive to compile, think about how much you can save by whittling it down to 20% of its normal length.
If the expense of contacting your customer base is too high for today’s economy, concentrate on that 20% of your account base. By this, what is recommended is to call on that 20% as if nothing has happened…as if the economy is still roaring. But don’t neglect the remaining 80% of your accounts--treat them to email blasts, calls every other month (instead of monthly) or whatever it takes to keep them informed. You should still try to find new accounts whenever and wherever you can. Never quit here….and if you can still keep in touch with all of your existing accounts regularly, do so…this step described here is only if the actual contact of your accounts is expensive in a way that puts a dent in your budget during tough times.
What about your sales force—whether internal or external, as in using independent sales reps? Here, cutting out 80% in favoring your top 20% producers, is NOT recommended. However, in your honing of your marketing, you may find that the top producers will work more effectively anyway. All of your sales force should be communicated to regularly during good times or bad. And the best thing to communicate to them is by telling them what exactly you are doing during this downturn. Tell them about your truncated release schedule, but that you still have new releases. Tell them about any service changes so they can, in turn, tell your customers. Stress you are available for any sort of input as to how you and the sales professional can best get results together. For example: If you’ve streamlined your print marketing and stressed use of your website…and your salespeople find your website difficult to deal with, that needs to be taken care of.
Once business gets back to normal, hopefully these cost cutting and efficiency measures will help your business emerge stronger than your competition's. These ideas can also help transform your marketing and service aspects to the point that not only will you have kept and added more customers than your competitor, but that you have done so more profitably by eliminating waste and overhead. And profitability never goes out of style, in good times or bad.