How to Grow a Distribution Business
Highlights
- Business growth recommendations without supporting data are just somebody’s opinion. The Johnny Grow Distribution and Consumer Product Goods Growth Formula is built from research designed to answer the question of how to grow a distribution business. It’s backed with evidence-based best practices and industry specific benchmarks that show what the highest growth firms do differently than their peers, and how they do it.
- The Distributor and CPG Growth Formula draws on industry research to surface and replicate the most influential revenue growth strategies and tactical methods proven by the Best-in-Class companies (e.g., the top 15%.)
- Business growth research findings show the optimal mix of growth strategies, best practices and technology automation to create a repeatable growth model and eliminate speculation and guesswork.
How to Grow a Distribution Business?
Start with a Prescriptive Revenue Growth Framework
We work with Distributors and Consumer Product Goods (CPG) companies to solve a common challenge – how to achieve significant and sustained revenue and profit growth.
The Johnny Grow Distributor and CPG Growth Formula is a proprietary 3-step model that brings simplicity and data-driven direction to systemically grow company revenues.
There are dozens of things you can do to grow revenues and every one of them delivers a different result. Some work and many don't. Executives don't want to experiment over extended periods to figure out what works. They want to quickly know the shortest route to revenue maximization.
The Growth Formula models, forecasts and compares best practices and financial levers to quickly prioritize those that maximize growth. It's a precision approach and alternative to pursuing company growth by investing in wishful explorations and best guess plans.
Here's how it works.
Step 1 applies Predictive Revenue Analytics (PRA). These pro forma financial models are built with company data and industry benchmarks to identify the best practices that will deliver the desired revenue uplift. They forecast, compare and rank the financial impact of revenue growth methods so that the company can select those that deliver the maximum revenue in the least time, cost and risk.
Step 2 is a Revenue Growth Playbook. Plays provide guidance or operational instruction for revenue growth best practices. Many times, they are execution plans with sequenced activities, progress milestones, performance metrics and exit criteria. Other times they are brief but pointed recommendations such as next best action.
Step 3 is the Growth Analytics that measure progress and flag variances in need of swift remediation.
Here's a drill down into the three steps.
Prioritize the Best Practices that Maximize Revenue Impact
Research shows that the highest growth distribution and CPG companies design an all-of-company revenue model whereby every revenue producing department applies data-driven methods that achieve forecasted outcomes.
Revenue goals are broken down by contributing department. For example, the top marketing goals may include distribution best practices to grow the sales pipeline and earned revenues. Top sales goals may include increasing salesforce productivity or maximizing sales win rates. Service goals may include using customer data to deliver differentiated customer experiences or shifting customer service from a cost center to profit center.
The Distribution and CPG Growth Formula saves time by first reviewing the goals and methods that produced the biggest revenue gains for the highest growth companies. When you repeat the actions that most drive company growth for the industry's top performers you can realize similar results.
The goals and their supporting best practices are compared by using predictive revenue analytics to forecast revenue and profit uplift.
A recurring pattern among low growth distributors is that they do not know what methods deliver the biggest financial returns, so they pursue what they know instead of what is most effective. This results in a best-case scenario of incremental and delayed growth, or a much more likely scenario of preserving the status quo.
A smarter approach is to apply data and predictive analytics to calculate the least cost route to a targeted revenue goal. This forecast modeling allows you to compare and rank the best practices by revenue contribution so they can be prioritized. The company can then pursue the biggest revenue uplift opportunities first.
These predictive models also use industry performance benchmarks so management can recognize where the company stands relative to competitors. Managers can also apply What-If analysis or compare different improvement scenarios to see how they deliver varying revenues and profits.
This first step is essentially your growth strategy. It defines what to do.
It advances your strategy from experimenting with unsupported growth initiatives based on best guesses to data-driven methods that calculate outcomes based on research that shows what the industry's top growth firms did; and how they did it.
If you skip this strategy step, your methods become suspect, your execution becomes aimless, and your measure of success is unclear.
Use an Operational Playbook for Repeatable Outcomes
The second step moves from precision planning to prescriptive execution.
The Growth Formula Playbook is a collection of prescriptive plays that make best practices operational.
In the first step we defined the strategy to make sure we are doing the right things. In this step we define the execution to make sure we are doing those things right. Or put another way, where the prior step quantitatively shows what the company should do to deliver the biggest financial impact, the Playbook defines the best ways to do it.
Best Practice plays deliver clear guidance, sequential instruction and contextual recommendations at exactly the point where they can be applied to achieve a slated business outcome. They are not broad or generalized suggestions. They are roadmaps that sequence the necessary tasks to achieve a goal in a predictable way.
Playbook Plays orchestrate repeatable methods to deliver the maximum revenue growth in the minimum time.
The above Playbook Blueprint is an example which shows selected methods to be used by Marketing to increase marketing's revenue contribution to the business. Plays support each targeted revenue goal with evidence-based best practices that include sequential process instruction, distribution CRM software, measurement metrics and forecasted payback.
The metrics are updated in dashboard and use pre-configured alerts for real-time variance notifications.
Apply Growth Analytics to Measure and Adjust
The thing about revenue growth plans is that they seldom go according to plan. That's why growth analytics are essential.
Performance dashboards display the most important key performance indicators in an easy to consume visual interface. They prioritize information for each recipient to show what should be done first, and then next, and so on. They identify variances and trouble spots in real-time so staff can quickly intervene with timely course corrections.
Most distributor and CPG information reporting displays historical data. Better reporting shifts from lagging to leading indicators. And the best reporting enables metrics to be interactive, so staff can perform What-If modeling and scenario planning.
An interesting thing about distributor and CPG performance dashboards is that staff spend less time finding and assembling data and more time applying the insights to make frequent changes to operational execution. That's the sign of successful reporting. If the information is causing operational changes to be made, it's working.
Business Intelligence is one of only four sustainable competitive advantages. It's sustainable because making timely and accurate business decisions never loses its value.
Want to know how to grow a distribution company? See the 3-step company growth formula.
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If you are considering business growth strategies, or just want to know how to grow a distribution business, we have some options to help.
- Increase your knowledge with our Distribution Business Growth Insights
- Accelerate progress using our distribution growth programs
- Accelerate your program results by teaming with a distribution consultant