Play the Numbers for Business Success

I like numbers. They make sense to me. I trust them, I believe in them and I'm motivated by them. They speak to me. They inform me of how I'm doing, they update the results of my efforts and they motivate me to do better. Numbers are powerful to me because I understand what they mean and I make decisions based on them. I play the numbers.

Playing the numbers may sound like a gambling term, but it's not. Numbers are a part of everything that we do. Making sense of them, trusting them and allowing them to motivate us is crucial. If we're not playing the numbers, then we are gambling gambling with our business and our future. You should play the numbers, too.
Many find numbers and mathematics to be intimidating. How many of you reading this column mark up your products using a number that someone else gave you because you "aren't very good with numbers?" How many of you rely on one number yearly sales to evaluate your businesses? As a rep, I witness this uneasiness with numbers over and over.

Well, I like numbers, and as a rep, I play the numbers all of the time. The manufacturers that I represent meticulously feed me my numbers. They tell me what my sales are to date; they project them for the year and provide the previous year's numbers to judge my performance and my dealers' performances. I can even break them down by door styles, wood species and cabinet series being sold
These numbers are powerful to me because I both understand them and use them. They allow me to move forward in my business with an understanding of where we've been and where we're going.

I'm not the only one using these numbers; my manufacturers are using them, too. They are using them to motivate me to keep doing better and better. Dealers/distributors should also be collecting the numbers, interpreting them and using them to make decisions.

Software solutions
The most effective tool that I use to interpret the numbers is my spreadsheet software. The data e-mailed to me from my manufacturers can be quickly pasted into the templates that I have already created. These templates allow me to compare my latest numbers to the historical data that I've maintained. I even incorporate very basic concepts such as color coding the data to indicate which numbers, trends and customers are doing well and which ones are not. This system allows me to make quick decisions and to know what areas and customers I need to concentrate on. This type of system can be easily utilized by even the smallest of businesses.

So, what numbers do I interpret? Sales are number one, but I look at much more than just the current sales numbers. Historical sales data is just as important. I keep monthly sales figures in my database for several years. I compare this month to the previous month, this month to the same month from prior years, and this year to previous years. I look at each and every dealer and look for trends such as steady growth. If there is good growth, I need to communicate this with my dealer and make sure that we all work to maintain this trend. If the trend is downward, I need to find out why. If you bought $500,000 from me this year, that sounds great, but if you bought $750,000 from me last year, then there is a problem.

You should be playing these numbers, too. Whether you are a distributor, dealer or a salesperson, you should be comparing current to historical data. Compare this for your salespeople and their accounts. Trends need to be acted upon. Simply listening to the current sales number is a gamble; you need to make sure that your numbers tell you the whole story.

Comparison numbers
I also look at the numbers and compare each dealer's sales to my other dealers. It's easy to rank them by the numbers alone, but I adjust them based on each individual market. A big number in a small market is more impressive than the same number in a large market.

Dealers/distributors can do the same thing. Compare the sales between your salespeople, making adjustments for the market and market size that they service for you. Make sure that you are getting the numbers necessary from each person, and each market.

One of the most important numbers that I track closely is the profitability of my accounts. We maintain a spreadsheet showing us all costs associated with each customer, relate them to total sales and then demonstrate the profitability of each account. I have one manufacturer that e-mails me monthly and color codes the customers as to each one's profitability. This is a number that we must play, because if the account is not profitable, there are critical decisions that need to be made.
Do you pay attention to the profitability numbers? Compare gross profits on jobs. Compare between customers and salespeople. If you sell a million dollars a year to your biggest builder account but you don't make any money, then your time, money and efforts are not being well spent. Let the numbers tell you whether you're on the right track.

Another critical statistic is closing rates. Value needs to be assigned to the amount of quotes and efforts that are expended and the sales that result. You want to persistently track quotes and sales so that you can maximize your efforts. Work the numbers, reduce your efforts and close more sales.

I personally derive great motivation from my numbers. When I view updated numbers, I have an internal drill sergeant that bellows inside of my mind demanding that I do better. I also find that outside motivation is extremely beneficial. When one of my manufactures creates a contest or rewards are setup to reach certain numbers, I find that I'm pushed even more to succeed.

Motivation is another extraordinary use for numbers. Develop contests or reward your salespeople based on numbers such as increased sales or, better yet, increased profitability.

Create an environment where your people are anxious to see and play their numbers. Make it fun for you and your people to be motivated by numbers.


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This article originally appeared in Kitchen and Bath Design News 2/2004

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