Moneyball for Distributors
by Jason Bader
During a coaching call with one of my clients, we stumbled across an interesting analogy. We were working through some of his sales reporting in his business intelligence package and I was looking for that pattern that would justify my monthly retainer. (Here’s a little secret. Coaching breakthroughs aren’t always planned. Sometimes, they just happen organically.) Anyhow, we were talking about how data analysis could reshape the way his sales team goes after customer segments and even prospects. It was at this time that my client threw down the little nugget that prompted this article. He said, “Did you ever see the movie Moneyball?”
For those of you who haven’t seen the movie, Moneyball is this great baseball story about how the general manager of the Oakland Athletics finds a recent college graduate in economics. The young man convinces the GM that by using an economic algorithm of player statistics, rather than the purely emotional-based “look good” evaluations from seasoned scouts, they could create a winning ball club from lesser known, budget friendly players. As all good Hollywood stories go, their non-conventional approach leads to a record setting streak of 20 consecutive wins. Although they didn’t win the pennant, the baseball world was forever changed. There is a pivotal moment near the end of the movie (sorry, spoiler alert). After the end of the season, the GM is invited to Boston to sit down with the owner of the Boston Red Sox. The two talk about what happened that season and Oakland’s unconventional approach to building a club. The owner says, “I mean, anybody who’s not tearing their team down right now and rebuilding it using your model, they’re dinosaurs. They’ll be sitting their ass on the sofa in October watching the Boston Red Sox win the World Series.” Data analysis, pioneered by the Oakland Athletics, changed the game forever.
The quote from the owner of the Red Sox is what really stuck with me. If you don’t change, you will become extinct. As distributors, we aren’t going after a title or a pennant but we are striving to gain market share and win the battle of profitability. The analogy is crystal clear in my mind. Data is the answer. If we aren’t tearing down our sales process and rebuilding it using business intelligence, we will go the way of the dinosaurs and we don’t get to rebuild our club next season.
This is not some new epiphany. I have been looking at this challenge for a long time. The way that our sales teams pound the pavement day in and day out must change. With the current pandemic, the change was forced on us. This disruption of the status quo has given us the shove that will allow us to stop and say, “Is there a better way to drive sales?” I think there is.
For years, selling organizations have viewed their employees in one of two ways: hunters or farmers. For those of you unfamiliar with these generalizations, hunters are thought to be salespeople who go after big orders and tend to look for the next big opportunity rather than work an account. On the flip side, the farmer is a cultivator of an account. They don’t tend to make a big splash with an account, but they work on building a long-term relationship with their customer base. The farmer tends to have a steady flow of smaller orders and doesn’t usually go after the big opportunity like the hunter.
Do we really have to be so predictable? Is there room for improvement to the traditional roles?
In my continuing work with clients, I constantly look for ways that data can help the organization become more efficient and serve to drive new opportunities. I have often written about using data analysis to discover new opportunities in existing customers. The opportunities report, as I like to call it, highlights category participation (purchases) by individual customers. Using this data, we can direct our salespeople to strategically ask for opportunities in product categories where there are little to no transactions. If I were to look at this approach using our traditional labels, I could say this new person would be called a “data-driven farmer.” Again, they work with their existing relationships and use data to find ways to strengthen that relationship. Not fancy or flashy, just a smarter farmer.
Where I find business intelligence to be interesting is in the hunter. The hunter tends to be better at opening new relationships and discovering big opportunities. How can we apply data to this approach? In my discussion with my client, we started to analyze the customer types in their database. By zeroing in on a particular customer type and building a profile of the types of products they were most likely to buy, our hunter is now armed with relevant information to close a new prospect.
Product data is just one way to attack this challenge. Can we extract service data or even educational data? It all depends on what we capture up front.
The fact of the matter is that our sales teams cannot go about their business the same way that they did in the past. They can’t stumble into an office and win business solely on their wit and charm. Those days are long gone and, frankly, good riddance. If I have to sit through one more sales call that starts with, “So, tell me what your biggest challenge is?”, I may have to pull the last remaining hair out of my head. Come into the call prepared. Show the customer that you actually know something about their business. Dig deeper than the next peddler who knocks on their door. This is where the new sales battles are won. By combining solid sales tactics with tangible transactional data, distributors can be one step closer to a winning season. Good luck and I am always here to help.
Jason Bader is the principal of The Distribution Team. He is a holistic distribution advisor who is passionate about helping business owners solve challenges, generate wealth and achieve personal goals. He speaks at several industry events throughout the year, provides executive coaching services to private clients and contributes to industry publications. Last year, he launched his first podcast, Distribution Talk. Episodes can be found at www.distributiontalk.com and through most podcast applications. He can be reached at (503) 282-2333 or via email at jason@distributionteam.com.
This article originally appeared in the March/April 2021 issue of Industrial Supply magazine. Copyright 2021, Direct Business Media.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
