Before a manager and salesperson can create a strategic plan for the future, they must scrutinize past and present performance through Key Performance Indicators (KPIs). Both year-over-year (YOY) trends and month-over-month (MOM) momentum are essential for accurate analysis.
Understanding the Numbers
- Sales: The Revenue Story
By comparing sales in the same months in different years (YOY), you can draw accurate conclusions despite seasonal fluctuations in consumer behavior. This comparison provides a quick indication of whether the salesperson needs to adjust their selling strategy. For example, do you need to ramp up prospecting efforts or focus more attention on existing accounts?
In contrast, MOM momentum reveals immediate trends within your business or market. MOM signals when it’s time to introduce new products to existing accounts or to pivot your approach.
Review both YOY and Year-to-Date (YTD) sales changes in both dollars and percentage. Each metric tells part of the story.
- Gross Margin: The Profitability Indicator
While sales numbers may fluctuate, businesses ultimately succeed by controlling net profit. Since gross margin is calculated by subtracting the cost of goods sold (COGS) from total sales, the salesperson’s pricing decisions directly impact profitability.
AI tools for the distribution industry are evolving rapidly. With rising costs, supply chain disruptions, and shifting customer expectations, AI-powered pricing tools help maximize profitability amid new challenges. To stay ahead, distributors must embrace innovative pricing strategies, advanced customer segmentation, and digital transformation. A monthly review of gross margin ensures that salespeople are effectively engaging these tools and making smart pricing decisions.
- New Account Margin: The Growth Engine
Monitoring the growth of new account margin is as important as monitoring existing account gross margin. The new account margin ensures reps understand that they are consistently adding new business — the lifeblood of growth — especially in a down economy. Use this KPI review to focus on new account conversions. I strongly recommend incentive plans with aggressive bonuses tied to new account margins to drive this critical behavior.
The bottom line
Reviewing KPIs is important to sales success. While micro tools track daily activities, macro KPIs confirm success. Both are essential for sales growth and profitability.
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