When sales are slow, it can feel like the walls are closing in. But no amount of staring at your spreadsheets and willing your profit margin to increase will do the trick. It’s time to roll up your sleeves and be proactive.
In this blog post, we’re going to set you three very simple tasks. Tasks you could undertake today to counter those disappointing sales and enhance your chances of boosting profits.
Ready? Let’s get started.
Task One: Examine Your Customer Invoices
The secret to increasing your profits could be staring you in the face. That is, if you take the time to examine your customer invoices. You see, it’s all too easy to fall into a routine of sending the same invoices with the same terms to the same customers every month.
Instead, set aside some time and actually take a look at what you’re charging; you might be surprised to find that smaller customers have – at some point in the past – been offered the same terms as your larger customers.
Make a quick note of these customers, and then move onto task two.
Task Two: Review Your Customer Discounts
The next biggest offender when it comes to eating into your bottom line when sales are slow is discounts. For instance, you may have offered prospects a few perks to encourage them to sign on the dotted line, or rewarded the loyalty of a long-term business relationship with money off bulk purchases.
However, being too cavalier with your discounts only serves to establish the discounted price as the norm, while eroding your profit margin. This may even be the reason why your smaller customers are signed up to the same terms as their larger counterparts.
Identify those customers whose terms need to be revisited, and make sure you communicate with your sales staff with regards to offering discounts in the future. You don’t need to place an all-out ban on discounting, but they need to make sense from a sales perspective.
Now you have a handle on which customers are paying too little for your product or service, you can move onto task three.
Task Three: Raise Your Prices!
When sales are slow, the most effective move you can make is to leverage your existing customer base. You might feel uneasy about this, worried that increasing prices will impact your competitive advantage and lose your business customers. And the truth is, it might do the latter (you shouldn’t be competing on price in the first place!).
But even a small turnover of customers will be offset by the increase in revenue by those who remain. What’s more, some customers just don’t deliver the same level of value – such as those signed up on less-than-desirable terms or receiving crazy discounts. By removing these customers, you could see a positive effect where your bottom line is concerned.
Run the numbers and see for yourself what a small price increase will do for your operating profits.
Or better yet…
Let us help you increase profits
As part of our Super 6 services, we can offer support as you work through these tasks. We’ll help you pinpoint the customers who aren’t delivering value and figure out a new price point to Increase Profits.
Speak with one of our friendly advisors to find out more. Contact us today