Friday, March 23, 2018 | Today's Vending Industry News
Your Best And Worst Locations: Do You Know The Difference?

by Paul Schlossberg
Posted On: 2/28/2018

  • Printer Friendly Version
  • Decrease Text SizeIncrease Text Size
  • PDF

Paul Schlossberg

You're highly focused on the very best locations you serve. You're well aware of your worst accounts. If you cannot readily identify your top and bottom accounts, you've got trouble we cannot address here.

Let's look at this from four dimensions:

1. What changed?

2. How do we identify and measure successes and challenges at our locations?

3. Which locations are more important? How do you differentiate between "the good, the bad and the ugly" accounts?

4. How do we improve performance to increase sales and profits?

What Changed?

USA Today recently featured two photo galleries detailing America's 25 Thriving Industries and America's 25 Dying Industries. The analysis and data were provided by 24/7 Wall Street. They measured and tracked total employment and wages from 2007 to 2016.

You need to go through the details of these two lists. It's easy to see that for our business, we would want to align with and serve the fastest-growing companies in the fastest-growing industries.

There is bad news on the dying list. In many cases, you are painfully aware of the jobs losses and factory shutdowns. This includes textile production and the mills manufacturing clothing, curtains and more. Print publishers, especially newspapers, shed lots of jobs as online news sources changed how we all deal with traditional print media.

There is some good news if you look at the thriving list. One example is healthcare with several related "industries" that show strong employment growth. Are you seeking opportunities in these segments? In your service area, you'll find an increasing number of medical buildings with offices for large and small practices.

Have you walked the hallways? Did you check out their websites to identify the biggest employers? Are these offices providing free coffee and snacks? My bet is that many do. You could learn what they're doing and easily offer to upgrade it.

One interesting industry on the upside is mobile food service – think food trucks. This is not a subject to skim past quickly. Nor is it a service you should automatically consider adding. You've got to study and evaluate it thoroughly.

How many times in the past few months have you had breakfast or lunch at a food truck? Find the best food trucks in your area. Did you know that there are "food truck parks" in many cities? You'll see how busy they are at peak periods. Is there an opportunity for you to offer mobile food service? Maybe yes. Maybe no.

Account Metrics

Think about the best and worst locations you serve. Are the sites with the highest dollar sales your best accounts? Are you selling food at your most profitable sites? The list of questions could be endless.

You need reliable data for each location to be able to sort out the best and worst among your accounts. Let's dig in to what you must be tracking and monitoring:

1. Sales and gross profit by unit and in total dollars. What are the totals by location? They should be plotted on a graph. Do this weekly if you can, but be sure to update it monthly and year-to-date. Are the trends heading up? Why or why not? The adjacent chart is one way to compare locations.

2. Items sold per customer transaction. This is easier to track for micromarkets than for vending sites. It's an issue for convenience stores and fast-food restaurants fostering multi-item purchases. They've learned how to get shoppers to buy three or more items instead of just one.

3. Gross profit per unit (and per transaction, too). It's obviously sales minus product cost to determine gross profit. Make certain to use "penny-profit" and not gross-profit percentage. Why use pennies rather than percentages? It's easy. Your bank allows you deposit money, cash or electronic. They've never accepted a percentage for deposit. Graph that profit, too.

4. Sales by day and daypart (see chart below). Track them by hour too. Each location has unique traffic and purchase activity. The variations over time will guide you in deciding what products might spur sales during those lulls.

While there are many other factors to measure and track, these four will give you a quick radar-screen overview of what's going on by location. It's critical to have a clear and concise data-driven set of measures to manage the business. There are other indicators you can track. A number of these key performance indicators (KPIs) are listed below.

Beyond the things we can measure, there are other issues to consider. You have locations demanding a disproportionate share of time from you and your team. Some accounts are polite, professional and realistic. Others have a different demeanor, making it much more difficult to work with them.

While you are familiar with the facts (and feelings) relating to your accounts, it can be very helpful to maintain a dated record or "red book" for each location. Hotels and restaurants often use a daily "red book" to keep track of incidents and events, both good and bad.

Having this record in writing is much better than relying on memory. Use this log to make note of good things and problems as they occur. These observations and details will help you get past the emotional issues – positive and negative – when dealing with account relationships.

Which locations are most important to manage, the best or the worst?

It's not as easy as you might think to sort out the best and worst accounts from the rest of the pack. Here's one approach:

1. Examine, account by account, "totals" using the list of four measures above. It's a specific comparative data set to sort out and compare the best-worst-rest.

2. Look for trends to determine which accounts are heading up in sales growth and profit growth. Your best account should be growing, hopefully faster than the average of your overall business.

3. Be attentive to the "red book" to make your assessment thorough, beyond just the data. If there are "problems at one of your best, get involved. Don't be surprised later if a small matter, persistently overlooked, becomes a big issue. Reward your team for bringing good and bad news to your attention. Don't shoot the messenger.

4. How much time do these accounts require from you and your team? This is a lot more than on-site service, stocking, etc.

The best sales manager in my past taught me to invest my time with the best sales representatives. Why? Because "if you help them learn how to improve their performance, the results will be much better than if you work on pushing up the lowest performers." That was one of the most important ideas for me. The same principle works with the accounts you serve, the lines of business you manage and the products you sell.

How do we drive sales and profit growth? There are two parts to it:

A. What do you do with your current business?

B. How do you find the best new accounts for the future?

Be prepared to invest most of your time and money in your best accounts. Work hard to keep the accounts you want to retain. Years ago, a presentation by Dr. Leonard A. Schlesinger of Harvard Business School taught an important lesson about customer retention. Paraphrasing here, "Improving the rate of customer retention by 5% is comparable to a 25% (or more) increase in profits."

Retaining accounts in the long term is a serious challenge. Here is what you must do, beginning later today:

1. It is common practice in our industry to place the best and latest equipment and peripherals at our newest locations. That's a good idea. But be certain that you're giving the same attention to your (current) list of best accounts.

2. Do a business review of every account on a regularly scheduled basis. It should be printed out and presented in person each quarter at your best accounts – those that collectively produce half your total sales volume. For smaller accounts, schedule the review every six months. For the bottom tier of your locations, do it annually.

3. Be "present" with the key contacts at your accounts. Stay connected, whether it's by email, in a letter or a personal note.

4. Pay attention to the data and details relating to key accounts and your overall business. Do you see peaks and valleys in sales trends? Keep the peaks high. How can you fill in the valleys? What products should you add for breakfast or late afternoon snacking? How can you promote single items or multiple products to add more dollars to each transaction? How do you offer combination meals?

Leave The Worst Behind

Perhaps most important of all, it's the right moment to "fire" some of your worst accounts. That's right: fire some accounts. You must be in control of all of the details. Are you under contract? If yes, what are the terms governing your termination of service? If the terms are not contractual, what is the right approach for your business and for the location? Think it through carefully. How will you explain it to the account and to your team? What will you do with the physical assets at that location? If you can exit a "bad" account while you add a new one, the transition can be easier.

Seeking new business is obviously critical for future growth. You can identify potential new accounts by subscribing to local business journals and following commercial real estate news and transactions in your area. Be certain that you know how to source the "request for proposal" distribution-lists issued by locations seeking vending, onsite foodservice, coffee service, etc. Pay attention to companies announcing expansion at their offices, warehouses or factories.

Reevaluate your RFP submission process. Do you complete a location analysis as part of your planning? This is not only about the location and the equipment, products and services required on the "inside." It's about the "outside" as well.

You need to perform the same sort of analysis done by convenience stores and fast-food restaurants. Identify the nearby competitive outlets hunting for the same dollars you're pursuing. Which companies and brands? How far are they from the main employee entry-point? What is the travel time to/from each one – whether by car or on-foot? Consider that a 15-minute travel radius makes competitors relevant.

Odds are that this part of site analysis is new to you. The more you understand  the local competition, the better you will be at managing the products you offer, pricing, promotional offers and merchandising.

Are you seeing signs of economic growth in your area? You must be sure that your assets and people are serving the best possible locations to maximize sales, profits and return on investment. Doing that, as demonstrated in this column, is not a simple task.

Get to work tracking and monitoring sales and gross profit at all your sites. Compare performance from best to worst.

Do not relax. Push on the marginal locations you're serving. How about raising prices or offering new categories or adding new products? Look at the bottom tier of accounts. Is there is little likelihood of improving results? If not, how can you exit the relationship?

Most of the solutions to these challenges lead to increasing sales. You've got to sell more stuff. We will be discussing more ideas relating to selling more stuff in the months ahead.

When was the last time you sat down for breakfast, lunch or a snack at one of your best or worst locations? You need to see and taste what you sell from the same perspective as the people who are your daily shoppers.

Make it a priority to be even more focused than ever before on your best accounts.

Paul Schlossberg is the president of D/FW Consulting, working with clients to merchandise and market products in impulse-intense selling environments, such as vending, onsite foodservice and convenience stores. Based in the Austin, TX area, he can be reached at or (972) 877-2972 or