The frustrated cry of the MD when we were looking at how profitable sales of the recent contracts had been and how his sales team had performed.
The pattern was clear – the profit margins were consistently higher where the product sold was the standard product that the company sells.
However, in all the cases where the sales guy had tried to offer something slightly off-piste, not quite the standard product – the margins dropped!
A sprat to catch a mackerel
The time-honoured phrase which the sales guy uses to justify why he’s done a deal with a client that sits well outside the company’s standard products and services.
“It’ll be great, the customer will love it and come back for more. They’ll be a great customer!”
Reader, more often than not this isn’t how it works out. What we end up with is a sprat to catch a plankton!
Not only does the great new customer rarely come on board, it’s often the case with these off-piste deals that there’s a great deal of extra administration, tweaks are required to contracts and to product / service literature and – perhaps worst of all – payment terms may be stretched.
All of which, should they sign up for more, the great new customer will expect to see as the norm.
What’s wrong with selling what the company sells?
Which takes us back to the frustrated MD.
He can see:
- the time wasted
- the profit margin lost
- the extra administration
- the frustration across the rest of his business
And he can see that he has to do something about it!
Get the sales team back on track, selling what the company sells and making more money for everyone.
Profitable sales
Underlying this situation, the MD had the financial information he needed both to identify and to rectify the problem.
This information could be in a CRM system, such as Salesforce, or in the bookkeeping system.
In either case, the correct sales and costs data needs to be input in the right way to ensure the business gets a useful flow of profitability information coming out.
Are your systems up to that?
Michael – @bluedotmichael
Related links:
Client profitability analysis – make more money from every sale you make
