One of our clients describes the shift from “sales-in” to “sales-out” reporting as not just an accounting or operational change … but a “company-wide culture shift”. Sales teams focused on “sales-in” tend to drive up inventory levels and do not have a true understanding of underlying demand patterns. A “sales-in” culture is insulated from the true customer and refers to the channel as the customer. “Who’s your customer?” is always my first test in understanding the culture. If the distributor is a “customer” instead of a “partner” then the culture is nearly always “sales-in”.
The adoption of “sales-out”, or SISO (matching sales-in transactions to sales-out transactions) revenue recognition, provides a powerful accounting mechanism to improve the management of your channel operation. Executed properly, a SISO strategy will allow your organization to reduce inventory levels and improve demand forecasting. But … a shift to SISO does not mean you’ve arrived at a “sales-out” culture; by itself, it does not truly provide visibility to the demand trends in your business. Understanding the end-customer is the critical shift in moving to a real “sales-out” culture.
A real “sales-out” culture embraces the true customer, the end-customer. A “sales-out” culture strives to understand the buying patterns of end-customers, understands the top performing and fastest growing customers, and segments its customers and their purchasing patterns. Identifying the end-customer enables improved forecasting, better inventory management and more effective use of marketing spend.
So, if you want the right answer to the question… “who’s your customer?”, you’d better be “Sales-Out”!
