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Long Live Profit Sellling
Written by: Harvey SchillerArticle Overview: Successful enterprises will focus on their bottom line through a combination of profit selling and cost cutting while relentlessly driving extraordinary value to selected customers.
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Long Live Profit Sellling
In a typical management meeting, the first item on the agenda is
usually sales performance. Much time is allotted to discussing sales
increase or decrease over the prior period, achievement of quotas or
targets, and improvement in market shares. After all nothing happens
until a sale is made and sales solves a lot of problems.
However, two strong forces have taken the luster off the devotion to
revenue selling. First, globalization with worldwide suppliers
competing for the same customer has eliminated control of price
management. No longer can profit margin be maintained, never mind
grown, through the execution of price increases. As a young product
manager learning my trade through the 80’s I was able to achieve
desired results through the blind and reflexive execution of annual
price increases. The company was fat and happy and there were little
or no market repercussions. But today, the market simply won’t allow
it. There are too any options available to customers and meaningful,
substantial product differentiation rarely exist. The lack of
innovation and poor value delivery to customers has led to the primary
competitive mode of price competition.
Second, customers, be they consumers or businesses, are becoming
increasingly sophisticated and aggressive in their purchasing. As
suppliers strive to secure “life-of-customer revenue”, customers today
are less loyal than ever before. Customers have become more
knowledgeable and have through technology, such as the Internet,
greater options readily available to them. Customers want it when they
want it, how they want it and at the price they want it and if you are
not innovative, flexible or adaptable to respond you will lose those
customers. Customers do not act as if suppliers deserve a profit.
These two forces combined with the advent of the internet, an
incredibly effective tool for seeking out alternative sources of
supply, have created the perfect storm for driving down prices.
The impact of these forces is to remove the known, the comfort of
past experiences and introduces new paradigms, new operating practices
and the constant challenge of change. In order to respond to these
forces and the new volatile playing field, companies today need to
transition from:
a. Revenue selling to profit selling. Companies will have
to manage to the bottom line rather than the top line. Volume for the
sake of volume is not sustainable without the corresponding profit and
cash flow. This may very well mean picking and choosing, and even
firing, customers.
b. Price management to cost cutting. Companies will have to constantly
lower costs in order to accommodate rising customer expectations. A
lean mentality focused on continuous improvement for cost effective
processes will be fundamental to survival.
c. Good Basic Value to Superior Premium Value.
Companies can no longer assume that good is good enough. They will no
longer be able compromise on value, service, and product quality and
capabilities. Customers will demand premium service and value and
will raise their standards continuously.
Successful enterprises will focus on their bottom line through a
combination of profit selling and cost cutting while relentlessly
driving extraordinary value to selected customers.
Article Tags: advent of the internet, customer revenue, desired results, devotion, execution, globalization, luster, management meeting, market shares, price competition, price increases, price management, product differentiation, quotas, repercussions, rsquo, sales performance, substantial product, value delivery, worldwide suppliers
Referred by: http://www.marshallnorthcott.com
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About the Author: Harvey Schiller RSS for Harvey's articles - Visit Harvey's website Harvey Schiller is founder and president of Corporate Kinetics, an advisory and management consulting firm that since 2002 has contributed to single owner/operated companies and multinationals in delivering extraordinary value, generating breakthrough performance and quantifiable improvement. As a speaker, Harvey has delivered many invited presentations and seminars to diverse audiences. As an academic, he has a Honors Bachelor of Science and a MBA. He has also instructed at the university and college levels. As a writer, his articles have appeared in national publications on topics such as lean manufacturing, organizational performance, improvement processes and change management. As a volunteer, he has served on the board of directors for professional and non-profit organizations. Harvey Schiller hschiller@corporatekinetics.ca http://www.corporatekinetics.ca Click here to visit Harvey's website DO SOMETHING The Yeah But Syndrome THE TRAINING GAP 5S Applied to the CEO Role Try is a Weasel Word |
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