These segments show less variance than what the supplier data is showing. There are some outliers ($25 million-$50 million at 27% and $1 million-$10 million at 38%), but Brungart finds it interesting that the segment of smallest companies lines up so closely with the PPAI 100 overall. “No matter big or small, it all equals out in the end,” Brungart says. Note: Not enough distributors making above $250 million reported data for this question to be accurately scored for that segment. TABLE 4 Average Order Size PPAI 100 Distributors 2,018 Distributors $250M+ 2,077 Distributors $50M-$250M 2,339 Distributors $25M-$50M 1,807 Distributors $10M-$25M 1,957 Distributors $1M-$10M 1,765 Distributors Under $1M 678 It may not be surprising that larger firms, which often have the resources to service the largest national and multinational clients, would be more likely to run a higher average for the amount of products in a given order. TABLE 5 Revenue From Top Three Clients PPAI 100 Distributors 16% Distributors $250M+ 4% Distributors $50M-$250M 14% Distributors $25M-$50M 26% Distributors $10M-$25M 26% Distributors $1M-$10M 24% Distributors Under $1M 53% While all segments have been generating a healthy amount of revenue from new clients (as noted above), smaller companies are more reliant on their top clients than the industry’s largest companies. This is a potential example of imbalance in the industry, as such a high percentage (45%) for companies generating under $1 million in revenue puts those companies at greater risk of being affected by outside circumstances. While it suggests that companies in those segments form strong relationships with their clients, it could create difficulties if any of those top clients are impacted by future economic conditions. “Loss of a large client can be detrimental to the smaller distributor, which only enhances the need for increased efficiencies, top level customer service and continued education to keep this group at the top of their game,” says Kara Keister, MAS, co-owner of distributor Social Good Promotions. TABLE 6 Revenue From Top 10% Of Sales Reps PPAI 100 Distributors 28% Distributors $250M+ 30% Distributors $50M-$250M 36% Distributors $25M-$50M 26% Distributors $10M-$25M 32% Distributors $1M-$10M 39% Distributors Under $1M 83% As you will see below, distributors under $1 million in revenue are averaging only two full-time sales reps. With a smaller pool of sales reps to draw from, it stands to reason that the top performers – often the owner-operator – would account for most sales. TABLE 7 Average Full-time Sales Reps PPAI 100 Distributors 149 Distributors $250M+ 491 Distributors $50M-$250M 78 Distributors $25M-$50M 16 Distributors $10M-$25M 23 Distributors $1M-$10M 5 Distributors Under $1M 2 Kara Keister, MAS TABLE 3 Gross Profit Margin PPAI 100 Distributors 34% Distributors $250M+ N/A Distributors $50M-$250M 34% Distributors $25M-$50M 27% Distributors $10M-$25M 33% Distributors $1M-$10M 38% Distributors Under $1M 32% The State of Growth 2023 | Must Read PPAI • DECEMBER 2023 • 77
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