Download White Paper: Improve Sales Force Effectiveness Using Multi-Variable Customer Ranking


For effective sales, companies need to differentiate how they allocate their limited sales resources among existing customers, customer service and new business development (prospects).  When ranking Customers and Prospects, the common metric is usually either sales or profits.  This paper will show how you can blend multiple desirable sales characteristics including Sales Growth, Close Rate, Payment History, Unit Volume, Repeat Business, along with Sales and Profit, to create an “Overall Performance Factor” for each Customer or Prospect.  This Overall Performance Factor can easily be sorted to create an objective ranking of best to lowest performance in which you can prioritize and assign the appropriate Sales resources to meet the company’s objectives.


  • Sales Process / Performance Improvement Project
  • Customer Ranking – Shortcomings of the 80/20 Rule
  • Multi-Measure Approach Needed
    • Multi-Variable Pareto
  • Created a New Customer Ranking System

Supply Velocity was engaged to help our Client, a Property & Casualty Insurance company, evaluate their Sales Process.  While they were profitable, this publicly traded company had flat earnings for 3 years.

Part of our analysis led us to evaluate their Independent Sales Force.  They sold insurance through independent agencies.  These could be sole proprietors who sell one company’s insurance products exclusively or larger multi-agent firms that sell multiple, and even competing lines.  At the time of this project they had about 2400 independent insurance agencies.  These agencies were their “business-to-business” customers.

Ranking their independent agencies based on Sales (traditional method) quickly showed itself as being an incomplete view.  Our client was concerned about multiple measures including Sales Growth, Consumer Retention and Profitability.  They needed to do great in all of these measures, plus Sales/Revenue, to meet the earnings growth expectations their investors were demanding.

Supply Velocity created a Multi-Pareto calculation tool to develop a single customer (or independent agency) ranking.  This tool used the principles of Pareto Analysis but allowed us to calculate an Overall Performance Indicator based on multiple performance factors.

Multi-Variable Pareto Method

  • Overview of Pareto Charts
    • 80/20 Principle
  • Description of Multi-Variable Pareto Calculation
    • Measures
    • Weighting
    • Force Ranking
    • Overall Performance Factor
    • Customer Ranking based on Overall Performance Factor

Pareto Charts were developed in the late 1800’s by an Italian Economist, Vilfredo Pareto.  He used this analysis to determine that wealth was skewed to a small portion of the population.  In his time, 80% of the land in Italy was owned by 20% of the families in Italy.  From Vilfredo we derived the Pareto Principal or 80/20 rule.  This is commonly used in sales, with 80% of sales generated by only 20% of customers.

Pareto Analysis is a great business tool, but there is more to increasing profit than focusing on just sales, or even just profit.  There are leading and lagging indicators of profit growth from the customer base.


The first step was to determine what measures defined great customers (or great independent agencies).  To do this we engaged a cross functional team representing Sales Executives, Sales Representatives, Marketing, Finance and Operations.

At the Insurance Company we defined great agencies as having:

  • High Sales $
  • High Gross Profit %
    • Based on Sales $ minus actual payouts to that agents consumer base
  • High Consumer Retention
    • Consumers renew policies
  • High Sales Growth
    • Year over year


The teams then had to weight these measures so we could apply an “importance-weight” to each of the measures.  The total weighting had to equal 100%.

The Insurance Company weighted their measures as follows:

  • Sales $ = 30%
  • Sales Growth = 30%
  • Gross Profit % = 25%
  • Consumer Retention = 15%

There was very healthy debate about these decisions.  The weighting had significant impact on how the Sales Force spent its time and even what types of customers and/or customer-segments became the focus of its business development activities.

For the Insurance Company, by defining Sales Growth as important a measure as Sales $ they were signaling to their Account Executives that focusing on smaller but growing agencies was just as important as focusing on larger, low growth agencies.  As you will see in the data below, many high-sales agencies had flat to declining sales.

Forced Ranking

Force Ranking mathematically allows us to make all these different measures equal for the overall calculation.  This process simply makes the largest number equal to a 10.  Then all other customers are proportioned with respect to the largest.  This Factor is used in our Overall Performance calculation.

Overall Performance Factor

To calculate the Overall Performance Factor we simply multiply the weighting %for each measure by that measures’ factor.

The last step is to sort the customer list based on the Overall Performance Factor.  Then you can make prioritization decisions.

  • Green Customers – Get the most focus, time and service
  • Yellow Customers – Average customers, how can we move them up
  • Red Customers – Can use multiple strategies such as using an inside customer service rep versus field rep to service this customer, or remediate them
    • Remediate can include firing this customer or increasing profitability

The results are show below.

Insurance Company – Customer (Independent Agency) Ranking

Customer Differentiators

The next step was to determine what characteristics statistically differentiated the best customers from all others.  The team brainstormed all possible ways we could segment customers.  There were 72 different possible classifications.

The 3 characteristics that were common (based on statistical testing) amongst the best were:

Did not already sell insurance – These are called “scratch” agents.  The best agents for my Client were people that didn’t sell insurance for other companies.  There were therefore trained specifically to sell for my Client and were loyal to them.

Had a Business Plan – The old adage “Fail to Plan, Plan to Fail” worked for insurance agencies.  The best agencies operated as businesses and had business plans that they followed.

Were in business for 5 – 10 years – We discovered the “sweet” spot for sales revenue, sales growth, retention and profitability were agencies that had 5 – 10 years of experience.  This was the high growth time for most agencies.


Instead of treating all customers equally, or rewarding sales agencies with high sales, but no growth, this company differentiated how they allocated sales resources to existing customers and prospects.

Sales strategies were developed based on the Green-Yellow-Red designations.  The different color designations required different action plans to achieve improvement.  Following the analysis, they recruited insurance agencies that were similar to the high performers, trained them to match the business techniques that were used by the high performers and provided marketing support that was most highly utilized by the high performers.

For the Insurance Company, six months following the implementation of this project, earnings grew by over 26%.

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Mark Holdinghausen, VP of Operations, DEMA Engineering
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Gabe Szabo, Vice President, Product Development, Closure Medical – A Division of Johnson & Johnson
“We used Supply Velocity to rethink our sales process. By analyzing the entire process we found wasted time in our Sales, Admin and Operations departments. Streamlining this process created extra time for each Sales Rep, allowing them to spend more time with Customers and increase the value we add. Gross profit margins are up 40%!

We are now using Supply Velocity to help us rethink our entire Strategic Plan.”

Jeff Reitz, Vice President, Central States Bus
“In 2015 we began working with Dr. Mitch Millstein to optimize our inventory locations supporting e-commerce and in-store inventory needs. From this work we developed a new omni-channel warehousing and inventory plan that entirely redefined our approach to warehousing, inventory management, store distribution and fulfillment. As a result of the analyses by Dr. Millstein we have begun the move to an improved omni-channel design by reassigning MSAs to new warehouses, greater leveraging of in-store inventories to satisfy e-commerce demands, and exploring acquisitions of new warehousing space in strategic locations. We have already seen an improvement of $300,000 from both more efficient shipping strategies due to better inventory management.”
Rob Bowers, Vice President of Strategy, Total Hockey
“Supply Velocity has provided the technical expertise and political capital to move our project forward. They have just the right amount of push and the right amount of support. Supply Velocity has helped us make real changes to improve efficiencies in logistics without jeopardizing our performance. We’re happy and our customers are happy.”
David Walters, President, Hy-C
“In thirty years of hiring consultants, Supply Velocity, Inc. was the first to tell me what they were going to do, set a price they stuck to and substantially exceed my expectations. I have recommended them to friends and acquaintances. They were true partners in assisting with the turnaround of an acquisition we had been struggling with for two years.

Their math-based technology, solid down-to-earth facilitation skills, and positive, patient and enthusiastic attitude combined to make our implementation of Lean a very rewarding experience.

We increased our production by 50% in the first month of implementation and continue to see improvements. Improvements have not only been realized in productivity, but also in quality and morale. We have increased profitability by $2M on flat sales of $10M.

Based on Supply Velocity, Inc.’s integrity and our results, I will continue to refer them to others and utilize them in the future as we expand our company through acquisitions.”

Bill Gilbert, President, Fusion Coatings
“Supply Velocity has helped Clean succeed in a number of ways. First, they provided the education that kicked off our Lean Process Improvement journey. They also facilitated a number of large supply chain and process improvement projects including: 1) building quality into our direct-labor productivity incentive program, 2) designing the layout of our garment warehouse, and 3) streamlining our route service process.

We have integrated the methods that Supply Velocity taught us into our management and strategic planning. In the process our quality measurement has improved 22% from 2013 to 2015, we have reduced required annual labor by 2200 hours from the garment facility layout project and we’ve seen 50% decrease in error rate. Obviously the numbers speak for themselves, but just as important, Supply Velocity has been fun to work and have become true partners. They have “taught us how to fish” so our internal teams are able to implement change on their own, with the skills we learned from Supply Velocity. This relationship has been invaluable.”

Jeff Lazaroff, Senior Vice President, Clean Uniform
“The role of the Erie Insurance Marketing Department has been evolving over the past several years – from a support role to a more critical role of driving growth in our organization. Because of our increased workload and desire to prioritize the most critical projects, we hired Supply Velocity to teach us the skills of Lean Six Sigma.

Participants included the Promotions, Market Research and Agency Licensing sections of the Marketing Department.

We learned valuable tools to help us to prioritize based on the voice of the customer.

I firmly believe these skills made a difference in how we work every day. We are moving new projects forward, eliminating or changing ineffective processes, and we are a much stronger department. We continue to use the tools to help us with our highly-complex and time-consuming projects. Supply Velocity helped us to accomplish our goals.”

Karen Rugare, Director of Marketing, Erie Insurance
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Put simply, we got everything we paid for and in addition to more in depth analysis, we got specific tasks that were immediately actionable. Our local management team found Ray to be engaging, highly credible and insightful based on his wide experience. In other words the cultural differences and lack of specific industry knowledge weren’t impediments to things we could implement immediately and on our own. In a nutshell it was money well spent and will pay itself back many times over.”

Lee Hartwell CPA, Plant Manager, Myerson Tooth
“Our experience with Supply Velocity was one of the best values we have ever had from a consulting project. Cyril Narishkin brought a structured lean methodology, invaluable experience and engaging facilitation skills to help us streamline a very complex and disjointed sales order process. Just as importantly, our team now has the knowledge and process competencies to address other business improvement opportunities going forward.”
Mike Howard, CEO, Aspeq
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Rich Lavosky, General Manager, Anheuser-Busch Precision Printing
“Supply Velocity is driving instrumental change in our inventory management processes. This is critical for us to be competitive in a supply chain environment with numerous disruptions. They are making change happen, which can be challenging in a 182 year old organization.”
Jim Carroll, Executive Vice President Operations, Schaeffer Manufacturing
“In the spring of 2003, the St. Louis Area Chapter of the American Red Cross engaged Supply Velocity, Inc. to perform a study and make recommendations to streamline office processes, maximize cash flow in purchasing and warehousing and restructure and enhance our maintenance department. Supply Velocity, Inc.’s process was methodical, flexible, staff-oriented, inclusive and, above all, trackable.

In the last six months, our Chapter has realized expense savings of over $380,000 annually, and significant improvement in intra-company service levels has been attained. Supply Velocity, Inc. will return to the Chapter periodically throughout the next 18 months to audit our newly implemented processes. We have been pleased with our results and Supply Velocity, Inc.’s professionalism.”

Joe White, CEO, American Red Cross – Saint Louis Chapter
“For several years we have worked with Supply Velocity to support us with their expertise on Lean Operations and Supply Chain Management. Supply Velocity has helped us implement Lean, improve our inventory systems, and educate our people. They are professionals who are always available to help us as needed.”
Lorenza Pasetti, CEO, Volpi Foods

“Supply Velocity gave us the tools to analyze our business and processes based on the facts and numbers versus our perceptions. Our common quote was “Let the numbers lead us”. The key for our organization was how quickly we moved from classroom to actual project initiation. We were able to jump in, start using the tools and see a difference right away.

The get-into-action approach was good for our culture.”

Ned Lane, President, CeeKay Supply
“C&R was struggling with labor productivity. The construction crews were often missing materials that they needed to do their work. This caused significant idle time. Supply Velocity, Inc. and C&R used value stream mapping and visual management tools to make dramatic improvements in operations. Most importantly, two years later C&R is sustaining and improving on the implementation. C&R’s return on investment was 11:1. C&R had a record year last year in both sales and profits and would not have been able to pull it off without the changes Supply Velocity, Inc. helped us make.”
Tom Kuthe, V.P. Construction Operations, C&R Mechanical

“In a time of volatile supply chain disruption, Supply Velocity is helping us develop Demand and Supply Planning processes to proactively tackle these new challenges. They are genuine partners, working with our team, facilitating and teaching.”

Jane Thrasher, Vice President of Supply Chain, Horizon Hobby
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This has enabled us to not only make more money but also to expand our commercial reach and serve more, and larger customers. I would recommend Supply Velocity to any company that wants to make improvement in supply chain and operations.”

Geoff Gross, President, Gross Mechanical
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Terry Etter, Vice President of Operations , Essex Medical Systems
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Haris Tokalic, President, Grand Rock, Inc.

“Your process encourages this group to work together, better communicate and have fun doing it.”

George Edinger, President, C&R Mechanical
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The project turned out to be very significant to the company and most importantly, our customers. We reduced our customer wait times by 40%, and cut in half the labor cost to fulfill customer orders.

Some results are not able to be measured. However, as a result of this project, we have started to build a Lean mindset and culture, which is part of our strategic mission to save our customers money. Supply Velocity has been a valued partner in this mission.”

Dionne Dumitru, COO, Weekends Only
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Mark Kelso, Director of Process Improvement, Save-A-Lot
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Mark A. Presker, General Manager, Architectural Millwork of St. Louis
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Rachel Andreasson, Executive Vice President – Marketing, Wallis Companies

“I am thrilled to provide this testimonial for Supply Velocity and their outstanding work in implementing Lean Warehouses and processes at Crescent Parts & Equipment through the COVID pandemic. With their data-first focus and Mitch’s exceptional coaching and experience, they transformed our business into a more supply chain-oriented organization, enabling us to grow while prioritizing employee safety and creating a better work environment. Supply Velocity’s expertise in Lean methodologies and their comprehensive evaluation of our customers have been instrumental in optimizing our operations and increasing customer satisfaction. We highly recommend Supply Velocity to any company seeking to implement Lean processes and enhance their supply chain efficiency.”

Josh Cole, Director of Supply Chain, Crescent Parts & Equipment

“Supply Velocity created visibility within our Assurance Services Group… visibility of performance, Client-service, employee satisfaction and processing time. Using the Supply Velocity System, Audit Report Cycle time is down over 50%. We are using his strategies to create greater Client loyalty.”

Fred Kostecki, Partner-In-Charge, Assurance Services, Rubin Brown