Essentials Magazine Essentials Spring 2018 | Page 23
ADD-ON SALES
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If we can assume that the average cost of processing an order
is $60 - $75, any additional lines we can add will help us
become more net profitable on every transaction.
One of my favorite key perfor-
mance indicators is lines per order.
Although many companies under-
stand the concept, few review this
metric on a regular basis. I highly
recommend that you measure this
every month. Start by creating
your benchmark. In the years that
I have been pushing this measure-
ment to audiences and my private
clients, I have run across a strange
anomaly. When a hard goods
wholesale distributor first runs this
metric, they often fall between 2.3
– 3.3 lines per order. It does not
seem to matter what vertical you
service, the numbers seem to fall
in this range. Judging by the num-
ber of products we stock, this tells
me that we have a lot of upward
potential.
One of the key reasons that we
want to study and improve this
metric is because of the impact on
gross margin dollars coming in the
door. A complimentary measure-
ment is gross margin dollars per
order. As lines are added to the
order, the incremental gross margin
dollars offset the cost of processing
that order through our system. If we
can assume that the average cost of
processing an order is $60 - $75, any
additional lines we can add will help
[
us become more net profitable on
every transaction.
Look at the whole application
As distributors, we love to stock
a breadth of complimentary items.
We feel naked if those shelves aren’t
loaded. One of our strongest value
added services is the ability to fill
a large percentage of the custom-
er’s application needs. This in turn
allows them to make fewer stops or
create fewer purchases to get their
job done. Reducing the pain of our
customers is how distributors remain
a viable part of the supply chain.
When training our customer
Campfire spaces at BISH are designed for sharing thoughts and ideas.
Photo by G. Lyon Photography
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