1. Driving a Culture of Profitability
Into your Sales Organization
Colin Carroll, Business Consulting

2. Driving a Culture of Profitability Into your Sales
Organization
 How does profit happen?
 The profit planning process
 Enabling sales participation and execution

3. Profit Starts with a Plan…
Pocket
Margin + 0.5 % - 0.8 %
+ 1.4 %
+ 0.8 %
- 0.5%
18% 17.4 %
+ 1.2 %
16%
14.8 %
14%
12%
10%
FY 2012 Price Volume Mix Initiative A Price Volume 2013
Constraints Constraints

4. …..but ends with a negotiation
• Are you comfortable with this bridge?
• GMs/VPs are compensated on margin
• Is this as easy as compensating sales on margin?

5. Sell More at Higher Prices
• Sounds great
• Where do I start?

6. Driving a Culture of Profitability Into your Sales
Organization
 How does profit happen?
 The profit planning process
 Enabling sales participation and execution

7. Delegating the Profit Plan
A Strategy for each Customer and Product Tier Combination
Pocket
Margin + 0.5 % - 0.8 %
+ 1.4 %
+ 0.8 %
- 0.5%
18% 17.4 %
+ 1.2 %
16%
14.8 %
14%
12%
10%
FY 2012 Price Volume Mix Initiative A Price Volume 2013
Constraints Constraints
Price Increases
New customers who
pay more?
On/Off Basket?
Customer Share
Spot vs. Contract
Core vs. specialty
Wins?
New industries
Upsell/cross sell?
Mix within customers

8. Strategy Map
Spanning Customer and Product Tiers
Recover Raw
Retain
Material Inflation
Cover Costs
 Index Pricing
Basic  Dynamic
 Contract Compliance
Guidelines
Product Type
Drive product
and end-user mix
Upgrade
Customer
Upgrade
Mix
Product Mix
 Segment Specific
And Monitor CTS
Specialty Guidelines
 Rebates
Small Customers Large Customers
Distributors
Direct Direct
Type of Customers

9. The Customer Upgrade Quadrant
See Ben Blaney Tuesday at 1.45pm

10. And the Profit Levers
An Actionable Strategy
Retain • Recover Cost Increases
Cover Costs / • Reduce Freight
Maximize Absorption
Basic Margins • Minimize CTS
 Dynamic
Guidelines
Product Type
Upgrade • New Products
• Increase Margins during
Customer Cost Increases
Mix • Optimize prices
 Segment Specific • Cross sell
Specialty Guidelines • On vs. Off Basket
• Pricing Power and Risk
• Reduce Freight
Absorption
Small Customers
Direct

11. Delegating the Profit Plan
Break the Profit Plan down into bite sized pieces
1. BU
2. Territory
3. Customer
4. Deal/transaction

12. Delegating the Profit Plan
Data Driven Territory Evaluation and Planning
1. BU
2. Territory
3. Customer Territory Analysis
Customer Cumm.
4. Deal/transaction
Revenue $ Profits
110%
2,000 100%
1,800 90%
1,600 80%
1,400 70%
1,200 60%
1,000 50%
800 40%
600 30%
400 20%
200 10%

13. Delegating the Profit Plan
Territory as an Aggregation of Customers Impact
• Transactions: 9
• Net Price: $520,000 (12%)
• Net Profit: $125,000 (32%)
1. BU
2. Territory
3. Customer
– Tiered A/B/C/D
– Spot vs. Contract
• Win vs. Upgrade Impact
• Transactions: 4
• Net Price: $215,000 (10%)
– Products within customer • Net Profit: $65,000 (22%)
– End-user mix
4. Deal/transaction

14. Delegating the Profit Plan
Customer: Deal, 1: 1, or 1: Many?
Deal Score Optimization
1. BU Segment
Average
Score Types
• Deal Score
• Customer Score
2. Territory • Cust / Prod Score
3. Customer
4. Deal/transaction
– Where it all comes together
– Customer and product tiers/segments
– Target Prices reflect
• Strategies
• Power and risk
– CTS policies
– Just execute!

15. Driving a Culture of Profitability Into your Sales
Organization
 How does profit happen?
 The profit planning process
 Enabling sales participation and execution

16. The Culture of Profitability
Starts with a Detailed Profit Plan
• Detailed Profit Plan
– Actionable strategies for each customer
• Tools and techniques
• Metrics and measures

17. The Culture of Profitability
Requires Sales (Only) Performance Metrics
• Detailed Profit Plan
– Actionable strategies for each customer
• Tools and techniques
Deal Optimization
• Metrics and measures
– Deal Score
– Target Price Yield
– Price Increase Effectiveness
• Allow for tradeoffs and resourcefulness

18. The Culture of Profitability
Make Sales a Stakeholder in the Profit Process
• Detailed Profit Plan
– Actionable strategies for each customer
• Tools and techniques
• Metrics and measures
– Deal Score
– Target Price Yield
– Price Increase Effectiveness
• Allow for tradeoffs and resourcefulness
• Compensation
– Easier if you have the components in place

19. The Culture of Profitability
Your Sales Team Has the right objectives
Sales 1.0 Sales 2.0 Sales 3.0
Sales As Demand Gen Product Expert Specialist
Price Under-managed  Centralized control Dynamic, segment
lever  Simple guidelines specific guidelines
 Deal Desk supporting strategy
Volume Primary  Simple tradeoff  sophisticated what-if
objective / analysis analysis
metric
Mix Subjective Fuzzy Precisely monitored
Margins  available t + 3  Available with current  Available with future /
months / STD costs projected costs

20. The Culture of Profitability
Partners in the Profit Process

21. Colin Carroll
Colin@vendavo.com