While most distributors learned long ago to avoid managing for top-line sales revenue as a measure of results, many of today’s distribution businesses still believe that managing by gross margin is effective. In particular, sales compensation is typically rewarded based on gross margin for a particular deal. However, studies have shown that there is absolutely no correlation between gross margin and operating margin. This may be due to many factors such as the cost to serve, logistics costs, the costs of order processing, and hidden support costs, among others.