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Why is it so hard to get your gross profit where it should be with each customer?
In most cases, DSRs have not taken the time to sit down with their customers to determine what the right price, or what we call the TARGET price should be. Yep, that’s what I said, what is the target price that you should be selling each product for to every customer? It’s simple math.
Think about it, you give prices based on all kinds of factors like what your company suggests that each product or product category should be sold for, or it’s based on what a customer is willing to pay for any given item. In too many circumstances your price is based on a price range they’ve paid for that item when they bought it from your competitors.
When you first got the account, you probably used the order guide that was put together by the DSR you replaced and you never looked back. I see this happen every week when I’m working with DSRs.
Why would you duplicate and use the order guide (road map, I call them) that the DSR who failed in this account, used? In about my third year of being a DSR, I learned that using the competitor’s order guide was a big mistake. Sure, maybe that order guide was sort of working since the last guy was selling quite a bit to that customer, but it must not have helped that customer make money or they probably would not have made the switch to you.
Now back to your gross profit struggles, and also the profit struggles your customers are probably going through not making the money they should be making…
First things first, if you are not the one who made your customer’s current Order Guide, you need to make a NEW ORDER GUIDE for each of your customers. Constructing a complete order guide is the 2nd most important action item for any DSR to be successful in this business. The 1st and most important DSR action item is to have your company’s TOP 200 product list (because you are best in your market with those items) within your grasp at all times, especially when you’re constructing a customer’s order guide.
This order guide should have EVERY item on it that this customer purchases from ANY VENDOR, that’s right, any vendor, because you never know when your company might start stocking it, or buying it weekly from a re-distributor like Dot Foods, G & C Foods, Alpine Foods, Honor Foods, Empire Beef Co. Inc., Foodservice Center Inc., etc. You’ve got to be ready for that when it happens.
Important note about these order guides: Don’t put any item on it that you don’t want them to purchase like duplicate or sub items BECAUSE THEY WILL ORDER IT versus the correct item anytime you don’t take the order.
After you get their Spec Item Order Guide completed, you need to sit down with each customer and figure out what the Target Price should be for each item.
- The target price is basically the price that they should be paying for an item. This price is based on what they’re selling it for on their menu.
- You need to help them work their way backwards from what they’re selling it for. Figure in the profit they need to make, the portion size, other costs associated with the menu item, etc. and you’ll end up with the target price.
- When you get to any menu item that the math is not working out for them or you, then you both should consider sampling a different item or changing the portion sizes. Because if the profit does not work out for both you and the customer, it will not work out for either, long-term.
* For customers who are new and you’re helping them set up their menu, do just the opposite because they can build the model versus reverse engineering it.
By going through this process with each customer, your gross profit struggles will be a thing of the past. Your customers will totally trust you from now until they sell the joint or retire. You’ll be able to help them forecast their profit when markets and prices change because you know what the target price on each item is. This should be an ongoing process because things change. Menu offerings, markets, products, portion sizes, etc. The good news is, I can guarantee that hardly any of your competitors will go through this process, which means you’ll have this account for as long as you continue this process.
DSRs, Be a Resource…and Sell Something!
