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A New Look For Business In The Future
Multilevel Marketing, commonly called MLM, Network Marketing or direct sales is one of the highest potential income sources anywhere, but particularly on the Internet. It has been claimed that in the last 10 years more people have become...
Bankers in Denial
Denial is a ubiquitous psychological defense mechanism. It involves the repression of bad news, unpleasant information, and anxiety-inducing experiences. Judging by the German press, the country is in a state of denial regarding the waning...
Doing Business Online � Private B2B Exchanges
Business processes are the building blocks of an enterprise. If one of these processes fails to live up to its expectation, business starts to flounder. How to minimize the risks, get a better monitoring of the processes and, at the same time,...
Part 1 of 5 On The Home Business Set-Up Guide
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Sales Commission - What Return Should You Expect On Your Sales Compensation Investment?
This article answers the following questions:
* How do most companies look at return on investment (ROI) for their sales compensation expense?
* What portion of sales compensation expense do companies allocate to managing existing accounts...
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Astute Pricing By Sales Representatives Can Expand Profit
One surefire way to grow profit is to deploy sales resources that masterfully price your company�s products and services. The right price can boost profit more than improvements in the cost-of goods sold or reductions in SG&A. For example, a 1% improvement in price expands operating profit by about 12% whereas a 1% improvement in cost-of-goods sold (COGS) or selling, general and administrative expense (SG&A) only yields an operating increase of about 8% or lightly more than 2%, respectively. (1)
Inappropriate discounting dramatically shrinks profits. TopMark�s analysis revealed that price cuts of .5%, 1% and 3% reduced gross profit by about 2%, 3% and 10% respectively. (1)
Pricing discretion should be delegated to appropriately trained sales representatives who have demonstrated an ability to sell on total delivered value. That is, those who effectively appeal to customers� needs for lowered product-life operating costs or other financial benefits. Under this sales approach, product price is a function of return on investment rather than a cost.
Selling on total delivered value requires sales representatives to know their customers� businesses and profit making formulas. Supplementing this information should be a knowledge of: 1) customer-specific costs and price data (including won and loss quotes) and 2) competitors� price levels and value propositions. Thus armed, sales representatives will be able to:
> Identify those customers whose business costs or profits can be improved significantly through the product/service solution they�re offering;
> Quote the best price indicated by the relationship between market prices, their current price positions
at the customer and the price targets management wants the sales representative to achieves; and;
> Avoid �leaving money on the table.�
Typically, different functions � each with their own buying criteria � have input into a purchasing decision. It is important, therefore, that a sales representative understand the buying criteria of each decision maker or influencer in order to tailor the extent a sales message emphasizes product performance and economics, warranty, parts availability, service, etc.
Finally, price acceptance is highly dependent upon how effectively a sales representative structures and communicates the deal. How a price is structured is as important as the price tag. Such off-invoice items as volume discounts, year-end rebates, payment terms, discounts and freight can influence the customer�s price perceptions.
(1) Results are based on TopMark�s analytical sampling of manufacturing-dominated, publicly-traded companies.
About the Author: John F. Tallitsch is the founder of TopMark, a consulting boutique specializing in sales effectiveness and sales compensation. TopMark helps companies create finely-tuned, results-oriented sales capabilities through solutions encompassing: customer segmentation and targeting; sales strategies; sales force and territory design; performance-driven sales incentives; and talent strategies. You can contact John at 440-963-1240 or visit http://www.top-mark.com for more information.
Source: www.isnare.com
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