Here everything seems to be fine: the company operates in normal mode, there are customers that have orders. The staff is full of professionals. But the increase in profits does not. A familiar situation? Suspect Yes. So here are a few tips and cases to solve. Looking for the root of “evil”
Of course, the most important thing is to identify the causes of the situation. And there may be many. As practice shows, the stagnation of profits in the company typically calls not one or two, but a whole range of factors, elimination of which requires a systematic approach. Often to blame are the errors made at different stages of the sales over a long period of time. It is very important to identify them and to eliminate, otherwise, the growth will remain only a dream.
But remember: to discover the roots of “evil”, you need to spend the time and effort. Sometimes this process requires the suspension of operation of certain departments of the company, which in turn will affect the current sales. In order to avoid unwanted difficulties suggest to assess risk and prescribe an action plan for the compensation amount and further development of sales. Cases to help
As already mentioned, the reasons for low profitability can be many. But some in the companies occur most frequently. This is about them and their solutions we now discuss, for greater clarity, using real cases from our clients.
Reason # 1: the use of economically viable sales tools
One of the clients asked to evaluate the economic efficiency of enterprises. The audit revealed a number of serious errors in his work. It turned out that client for a long time adheres to the disadvantageous strategy of product promotion. For example, he: develops completely ineffective promotional events. They not only did not bring profit, but demanded excessively high costs. So, the cost of organizing one of the latest promos exceeded the amount of regular sales in 8 times; uses non-profitable assortment strategies, paying insufficient attention to their higher margin products. not developed a unified approach to cooperation with customers.
In such a situation to speak about growth of profit is not necessary, as the company spends too much of its resources not on what really need.
How to solve these problems?
The solution requires the adoption of comprehensive measures. First, you need to perform range and remove from it everything that is sold is bad — these products can come to grips later, if you wish. Try to do everything at once-it is better to concentrate on what is already well sold out.
Secondly, it is necessary to perform the quality of work of sales personnel. If he adheres to the rules of layout of the goods, and whether all the requirements on minimum balances, etc.
Thirdly to implement the ROI to calculate the effectiveness of marketing and trade marketing activities. This will solve the problem of excessive expenses for promotion, etc.
It is also important to develop and implement monitoring tools to work with distribution channels to maintain the required balance of sales, as well as to develop KPI for debts. All this is necessary in order to ensure efficient work of all participants at all levels of sales and to avoid any deviation and delays.
Reason # 2: inefficient distributors
This is a very common problem faced by many. For example, one who turned to us for help companies showed a complete lack of a unified system of discounts to distributors. The discounts were distributed randomly and without reference to the quality of work of intermediary. It has also created opportunities for abuse by sales managers. The latter illegally appointed unnecessarily large bonuses to distributors, some of which then simply took away. The losses of the company for the year amounted to almost 4 million UAH.
How to solve the problem?
Of course, you first need to check their entire distribution network and its performance. Some intermediaries may have to give, with others, on the contrary — to establish closer cooperation. Do not interfere, and to develop a new strategy for cooperation with distributors, prescribe a scheme of cooperation between them and the company in all sales stages.
Finally, to conduct an audit of the sales Department and to identify dishonest employees also need. But it must be done carefully so as not to harm corporate spirit and not to sow discord in the state. Conclusion
To the solution of problems to increase the profits must be approached comprehensively, as evidenced by our case studies. Addressing only one or two problems will not improve the situation, and then did not get any benefit.
On the other hand, companies do not always have the necessary resources and expertise to solve such kind of problems. In this case, it is advisable to contact the experts who will quickly help to identify and correct processes that interfere with your business to develop effectively.