“There is an epidemic failure” leading us to misjudge our businesses
Baseball Scouts & Sales Reps
Baseball managers & scouts and distributor leaders & sales reps have a lot in common. They both look at thousands of unique products and decide what will get them the best results.
In baseball, the products are high school, college, and minor league players. Baseball scouts approach the research by going to games, looking at their stats, and getting a feel for if they like the player or not.
In beer distributors, the products are the thousands of SKUs a salesperson can choose to sell into an account. Beer salespeople taste, look at marketing, and get paid on placements.
Unfortunately, the way most beer sales reps are taught to sell is rooted in medieval thinking, just like in baseball. And it doesn’t need to be like that anymore.
Moneyball thinking can help beer distributors just as much as it helped baseball—focusing leaders and teams on the stats that really matter to drive results.
Transformation at the top
The way most beer sales teams operate is based on an imperfect understanding of what numbers matter to the bottom line.
How are you evaluating your data?
Are you looking at profitability by individual package? Is your team looking at profitability through the same lens? Are you stuck on only case volumes as your key data point? Or are you feeling warm in your “dollar volume” blanket of security?
Sure, lots of distributor leaders are talking about profits at the very, very top. That is a great start, and the next question is: how do you get profit-focused thinking down to your sales reps?
In the Moneyball movie, Billy Bean the Oakland A’s General Manager is focused on transforming his ball club. Much of that transformation is centered around focusing on where baseball runs come from, a shift from focusing on buying players to buying runs. And it didn’t get off to a great start.
Billy struggled to get his way of thinking to transfer down through his whole team. As you keep watching the arc of the movie, Billy gets his hands dirty and jumps in with players. He starts to teach them how to hunt down good data and analyze it ruthlessly.
As Billy works with his players on their use of data, a transformation starts to take shape—The change Billy has been looking for. The 2002 Oakland A’s were one of the most exciting teams in baseball history, winning 103 games and breaking the American League record for 20 wins in a row.
What happens when you don’t look at the right data
When you don’t focus your salespeople’s incentives on the end result you want (profit), you can create objectives with unintended consequences.
A recent example found by the VXP team happened at a distributor client who was trying to incentivize multiple points of distribution for a specific brand.
Initially, the distributor’s performance looked excellent on the supplier’s scorecard, leading them to believe that they were doing well with this multi-pack distribution drive.
However, after a 13-week tracked buying window, it was discovered that all of the buying accounts had vanished.
Upon further analysis, the distributor realized that their sales reps had simply placed the 4 packages into the accounts, but they had not placed them together. This allowed the reps to quickly earn their $10/placement bonuses, but it also meant that the packages were not creating the “billboard” effect on the shelf, leading to low velocity and few sales. Data showed that when all 4 packages were placed together on a shelf, the velocity of sales increased by 65%.
The unintended result of this objective was that it was completed quickly, but without any long-term success.
The supplier made profits by selling the cases to the distributor, the sales reps made profits through their bonuses, but the distributor was left with low volume and no profits in their bank.
The reps earned $10/placement, but the distributor only made $9 in gross profits, resulting in a loss of $4 for every multipack incentive completed.
This highlights the importance of considering all factors when setting objectives and ensuring that they align with long-term goals. Distributor leaders should carefully consider the potential consequences of their objectives to avoid unintended results like this one.
Creating Your Next Winning Streak
As a distributor leader, you can create your next winning streak just like the 2002 Oakland A’s.
Want expert guidance on how to bring a Moneyball mindset into your operation? Connect with the experts at VXP.
VXP offers 360° consulting on sales transformation, data analysis, and profitable sales incentives. VXP can cut down your learning curve, help you pinpoint your data inefficiencies, and create more profitable results in 60 days.