Thoughtful Thursdays – Maintaining margins
I hear on a regular basis that it is becoming more difficult to maintain sales margins let alone grow them. Customers are well informed, competition is keen and there is always someone willing to drop price.
Today’s sales thought is about ways to maintain and grow sales margins.
Margins grow when prices increase or costs decrease. It can be lethal for a business if prices erode while costs increase.
Margin maintenance and growth involves the entire business, not just sales. As such, conversations must take place with all stakeholders to develop a plan that will meet business expectations. A combination of cost reduction and price increase is what we all strive for.
From the sales side, always be aware of the value that your products and services bring. Up sell and cross sell wherever possible and take nothing for granted. Consider the consequences of letting your low margin customers go. It may be the best business decision in the long run. Minimize customer loss by having and executing a customer retention plan. Make a habit of first saying “no” to price drop requests.
Operationally, review material, labour and freight costs on a regular basis. Analyze inventory movement and minimize stock levels. Explore potential economies of scale. Are there savings to be realized for higher production volumes? Make a habit of mappin, analyzing and improving your processes.
Everyone can contribute to maintaining and growing margins.
Good selling,
Richard
Have a question about sales? Contact Sakanashi and Associates Inc. and I will respond.
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