Growing Businesses with Mobile Sales, Service

In route sales, direct store delivery (DSD) or any type of sales where you have to go see the customer, more customers isn’t always better. When they walk in your door, the more the better. When you have to drive to see them, there becomes a point when you shouldn’t drive any further. In this case, the 80/20 rule is alive and healthy (The Pareto Principal). Eighty percent of your revenue comes from 20% of your customers. Does it make sense to look at the customer base and optimize your mobile sales operations to maximize the revenue/profit potential rather than just making sure they drive the best route? Traditional “route optimization” may fall somewhat short if you look at it only from a miles driven perspective.

Some of the more innovative players are starting to look at metrics such as “cases per mile” or “dollars per mile.” These are great route performance metrics, but they end up being somewhat attached to the specific route that customer is on that day. What about the customer performance metric? If we go back to Pareto, we can make a couple of interesting observations. If 80% of my sales come from 20% of my customers, then possibly 80% of our loss comes from 20% of the customers. So let’s look at only two groups. The top 20% of the customers and the bottom 20% of the customers. Let’s not change a thing for that middle 60%; we will assume that we serve them correctly and they are basically happy.

What if we were to take that top 20% that provide the bulk of the revenue and change our model so that they are served better? Maybe they will be served more often or by more people. The idea here is over-serve our best customers and partner with them to improve our already thriving and profitable business with them. This might include having an account manager/sales person, a merchandiser and delivery function where it makes sense. We may serve them 7 days a week where other customer may be served 3 or 5 days a week. The idea here is to get better at what we are already good at and build on our strengths.

Maybe we should be looking at serving the bottom 20% less than we do already. It is possible that we can make the same or more money by reducing their service levels down to one or two days a week if we have to drive too far to serve them or they do not buy a minimum level of product? Perhaps service charges are required for customers who do not buy in quantity. Some customer may not be worth having (perish the thought). In our society we sometimes try to “improve on our weaknesses.” We get better at things that we will never be great at and in so doing also make ourselves more attractive to customers that are not in our primary target audience.

So back to the premise, by over-serving customers that we want to attract we then get even better at what we are already good at. We make ourselves less attractive to customers that do not fit the business as well and we end up improving profitability. We can then extend this customer analysis to geographic revenue clusters to figure out of there are areas we should be over-serving above and beyond the individual client. Having fewer but better customers may be a possible reality.