Vistage Speaker Doug Butdorf from Boost Profits grabbed my groups’ total attention when he said “revenue is for vanity, profit is for sanity”. Then, he gave us strategy, and execution to be more profitable. Wow! How about this: do you have regularly scheduled meetings to discuss pricing? 2 hands went up. Do you have regular sales meetings? All hands went up. Regular operations meetings? All hands went up.
Let’s get serious here. Sales are starting to slow down for many producers especially for B2C products. (Business to consumer). We aren’t buying to decorate the home we are stuck in – we are going out to dinner or traveling. This may be your last opportunity to raise prices in this business cycle. Should you wait?
As tedious or difficult as it may seem if you have to do this manually, you should segment your customers. First sort could be gross margin versus volume. If you color code by sales person you might find that the low volume, low margin customers might all belong to one sales person.
And, what do you do with those low volume low margin customers? RAISE THEIR PRICES. They will either become profitable customers or fire themselves. Either way you win!!!
And, btw, are your sales people rewarded for increasing gross margin or are their commissions tied only to revenue? There is an old saying “you get what you measure.” It is important to align your incentives around your mission, values and goals. You may need to reassess your incentives as part of your quarterly pricing meetings.
When inflation was running along below 2% for more than a decade, many of us got lazy in our thinking about price. None of our competitors were raising theirs. That time is long gone.
This week get going. Review your pricing and make some profit decisions. You’ve got all the tools you need.
If you are not a subscriber to BIZPIE blog, you can subscribe here.
Image courtesy of Doug Butdorf, Boost Profits, Inc.
When these 2 guys met at age 14 in math class, it was on the other side of the country, and a long time ago. Who would have thought that they would be retired and sharing a beer, looking at the Pacific over 50 years later? Who would have thought about retirement then? And, who should be, but is NOT thinking of it now? >
When you are speaking to your team and you want them to remember a point and actualize the behavior required, do you paint the picture? >
I had my yearly physical this week and my doctor said there were just 3 things I should focus on: sleep, exercise and eating healthy. These are the levers for a long and healthy life. Easy. Just 3 things. >
Friday, Vistage launched a one hour interview by Sam Reese, Vistage’s CEO, with Alan Mulally who led Boeing for many profitable years and then turned around Ford Motor Company. Watch it today if you are in the Vistage community. Mulally is Magic. >
Happy Independence Day!
It seems like another commodity is in short supply. Due to lack of materials and labor shortages, many communities have cancelled their fireworks shows or have moved from fireworks to drones. Yay ingenuity! >
This weekend, about 85 Vistage Chairs with over 10 years of mastery got together in Boulder or on zoom to nourish our souls and fan the flame of the work we do at Keepers of the Flame. Wow! >
The acupuncturist pushed her thumbs into the side of my hip and I yelped in pain. Acute, sharp pain. As she worked that area it was excruciating. When I went home I felt it open up and I was able to stretch it out. Three weeks later she did it again. How could I feel so normal when my hip was tied in knots? >
I was asked recently why I called my company BIZPIE. As I paused to compose a response, a swirl of thoughts, memories and long held opinions jumbled up in my head. Like a fog that suddenly cleared, it came to me – because running a business is so darn hard. >
In Vistage, we commonly use the start, stop, continue exercise for feedback – from our peers in the peer group meetings or with our teams as a way to gain awareness of behaviors that make us easier/harder to work with. >