High Risk, high return. Low Risk, low return. This show is meant to provoke the thought that DSRs might want to evaluate each account for the amount of RISK that you want to take on. We’re not just talking about the credit risk, but rather all the risks that an account can pose.
AFDR DSR Hall of Famer Corey Young from Jordano’s Foodservice in California and DSR Dave discuss why it’s good for DSRs to have a balanced and blended portfolio of accounts. This is important if the economy or a particular segment goes bad.
Corey had to make a judgement call when reviewing one of his longtime customers if the high risk of their type of business was really in the best interest of him and his company to continue doing business. When they performed a complete analysis of all the numbers (margins, inventory levels, and the operations/human resources needed to provide the fast and furious service levels), they opted out of that business even though the margins were very nice.
Young has since learned and been conditioned to apply that experience to the rest of his accounts, and also when searching for new business. He now takes the approach of balance in his book of business by having both high and low risk accounts.
When Young makes a call on a new account, most customers think that they are interviewing him to see if they want to do business with him but, in reality, Cory is interviewing them to see what kind of risk might be involved. Is this customer a price shopper? Are they organized so that every day is not chaotic and everything an emergency? Do they pay their bills? He even goes to others who have worked with this customer before to see what kind of light they can shed on the possible client. Walking out and not choosing to take that customer on is one of the hardest things to do in street sales.
When looking to build a balanced portfolio, some great segments to have in your portfolio might be, nursing homes, hospitals, k-12 public and private schools, caterers, white table cloth, country clubs, colleges, C-Stores, pizza joints, prisons, hotels, restaurants and bars, family diners, breakfast family diners, and grocery stores with commissaries preparing meals for home. The blended balance is good because when one segment might be lagging, the others could be soaring.
One time after flopping a credit application on his credit manager’s desk, and saying the customer needed an order tomorrow, his credit manager said, “Hey Corey, you want to make some money on this account?” “Sure,” Corey said. “Then don’t sell them a thing, and we’ll make a ton of money,” replied his credit manager. His theory was for Corey to look at the losses they wouldn’t have and the collections that wouldn’t be tagged to him (Young). Something to think about…