The Margin Squeeze
In the vast majority of markets we work in things remain challenging as businesses battle for market share in markets that, in many cases, are flat or in decline. We have covered the need to improve sales techniques in such situations in a number of articles and indeed have helped many businesses turn things around. Many more could move forward positively and profitably with the right sort of advice.
The symptom that often emanates from weak sales technique is dilution of margin. Typically spotted by the Finance Director and relayed to the Management team – ‘what can we do’? We would firstly suggest that you establish clearly and objectively the cause of the problem. There could be a number of factors:-
- Increased raw material/ component costs
- Negative FX scenarios
- Increased labour costs (even when sourced from outside Europe)
- Increased logistical costs
These are all very real but, the comfort you have is that, most likely, your competitors have the same problem – the difference will be how you deal with it!
The front line challenge (i.e. Sales challenge) is to sell the product, service or offer at a price that makes adequate margin and sustains your business in the face of competition. Where your competition may have an advantage is in the selling of the proposition. If they are skilled and professional and you are not the ‘pain’ will most definitely be felt by you either in loss of business or reduced margin as you will trade on a price proposition and nothing else. Buyer tactics are quite overt and also pretty transparent to the experienced/ skilled eye – ‘we can get this a lot cheaper from your competitor’ is a standard opening gambit on many occasions and the skill is in how to respond to this and keep the discussion on track to success – without conceding!
We recommend that you focus your Sales efforts on ways to hold off buyer price pressure and thereby negotiate better deals that provide win/ win positions for you and your clients/ customers.
‘Everybody can negotiate if they ‘GIVE AWAY’ enough’
Is absolutely true and from what we see many Sales teams ‘give away’ discounts, allowances and reductions with little or often nothing in return creating the inevitable win/ lose. Adding vital skills in this area will protect your business and your margins.
Investing in such input could be a business saver and any investment will be repaid many times over in additional business and profits if the right advice is sought - as our clients testify.
Tinderbox introduces tools and techniques that help clients implement dramatic changes of fortune in these areas and also works with the client to ensure that these improvements are implemented correctly thereby adding long term value to the business.
For a free/ no obligation meeting or discussion contact us at email@example.com or on 0774 7023610.
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