Essentials Magazine Essentials Spring 2018 - Page 23

ADD-ON SALES [ 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 essentials | www.edmarket.org 23