Last month, we offered you the chance to test yourself and your employees in the area of business literacy as it applies to wholesale distribution. How did you fare? If you missed it, visit www.asa.net and click on “Training Tools & Resources” under the Education tab. There you’ll see a link to the quiz, as well as to the correct answers. The ten question quiz is a fun way to test your knowledge about the wholesale business model, and what makes the difference between a profitable sale and an unprofitable one.

Now here’s another quick quiz, aimed specifically at those of you whose primary job is in sales…Do you think you have a good handle on this stuff? Answer these questions:

1.         The most serious drawback to competitive pricing is that it tends to erode gross margins.
___ True  ___ False


2.         If a distributor is making 2% net profit on sales, and a mistake wipes out that profit, it takes twice the cost of the mistake in new sales to make up for it.
___ True ___ False


3.         The term “gross margin” is defined as the sale price of the transaction, minus the cost of goods sold.
___ True  ___ False


4.         If your company records $15 million in annual sales with a gross margin of 25%, the company generates $3.75 million in gross margin dollars.
___ True  ___ False


5.         If a distributor increases gross margin by 5 percentage points, the net profit on an individual sale increases by 600%.
___ True  ___ False


6.         If a distributor’s desired gross margin is 75% on a product that costs $100, the selling price must be $200.
___ True  ___ False


7.         The “plus” in “cost-plus pricing” stands for extra value perceived by the customer.
___ True  ___ False


8.         One of the best ways for a distributor to increase profits is to increase the number of add-on items to sales orders.
___ True  ___ False


9.         The first step in handling an upset customer is to admit that your company is at fault.
___ True  ___ False


10.       Effective sales professionals do more talking than listening.
___ True  ___ False

For answers to these questions, visit www.asa.net and click on “education.” If you didn’t get 100% on the quiz, consider beefing up your skills so that you can be a top performer in your company. Look at the “Essentials of Profitable Inside Sales” certificate course offered by the Education Foundation. It’s a 240-page treasure trove of skill-building instruction specifically written for the plumbing and industrial PVF industries.