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The eighth most profitable account, FSC is sold to by both Collam and Dow out of the Eastern Region. Yet the confusion becomes even more pronounced when the most profitable customer is determined. Mack from the Southwest Region and Vans & Wilkie from the Northwest Region all sell to CF. To have just looked at customer profitability purely from a region standpoint would have been to miss the largest customer in terms of profitability. The following short table illustrates how the profits by region and salesman for CF are distributed.
CF Account Profitability The use of tonnage as the primary measure of sales efficiency tends to aggregate variations in product mix further making more precise analysis difficult. There is also a lack of clarity on how margins change over years, which always happens in a process industry that Chemgrow competes in.
Southwest
Macko
$443,726.85
Northwest
Vans
$288,204.00
Northwest
Wilkie
$159,432.00
The entire data set from all four exhibits for each region were grouped into a single database and analyzed to see if there was consolidation of profits that would bring a customer into the top 15 ranking. The results of this analysis are shown below. The consolidation margin figure in Figure 3 is computed using$15.33 and is derived by taking the margins from Ammonia, Phosphates and Potash combined.
Average Gross Margin Per Ton (1998-2000)
Ammonia
$14.00
Phosphates
$12.00
Potash
$20.00
Consolidated Margin
$15.33
Figure 3: Consolidated Margin Analysis
REGION
SALESPERSON
CUSTOMER
Consolidated Margin
Southwest
Macko
CF CONSOLDIATED
$891,362.54
Southwest
Goodie
RGC
$800,854.53
Eastern
Collam
MFS
$654,667.65
Southwest
Goodie
GFF
$643,093.50
Northwest
Wilkie
CI
$620,405.10
Central
Thums
YF
$601,901.79
Central
Block
WDB
$460,927.11
Eastern
Collam
FSC CONSOLIDATED
$457,830.45
Eastern
Collam
MFS
$453,951.96
Southwest
Macko
The computer reports that the management team at Chemgrow need to develop and regularly use include the following. First, profitability analysis by customer that shows what the net profitability contribution is of a given customer based on their mix of products ordered. This report would be the consolidated view of all sales activity and would be run monthly. The second report is sales and profitability analysis by salesman. This would provide management with a short summary of the level of profits generated monthly by salesperson in their key accounts and also show how far they are from their quotas. This report would also be organized into region as well. The third report would be sales effectiveness analysis, and this would be a report showing how each salesperson is distributing their sales across the various products. This would given senior management the insight into guiding members of the sales teams to focus on shifting their selling mix.
References
Larry Goldman. (2005). Driving Toward Action: Marketing & Sales Alignment. DM Review, 15(6), 55.
Vaccaro, Joseph P. (1991). Organizational Issues in Sales Force Decisions. Journal of Professional Services Marketing, 6(2), 69.
Wotruba, Thomas R., & Mangone, Richard. (1979). More Effective Sales Force Reporting. Industrial Marketing Management, 8(3), 236.
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