What is the foremost goal of a successful business? To make a profit. Now, this may seem obvious, but in working across industries, it seems to me that many businesses need a reminder. I see this time and time again, clients getting so mired in details and day-to-day fire drills they lose focus. The ultimate objective: stop worrying about revenue and volume, and focus on profit.
Recently we performed a pricing outlier analysis for one of our clients. Like any good pricing analyst would do, the team started with identifying customers receiving heavy discounts, or what we call “low hanging fruit." We realized that after addressing the low-hanging fruit and creating visibility via a dashboard, we needed to turn the organization’s attention to the high-paying, loyal, Relationship-buying outliers also. Why?
Topics: Pricing with Confidence
All pricers think there can be improvements in getting the right price. Recently, I experienced a situation with the right pricing, product, and negotiating strategy. The story starts with my wireless provider. I had issues of dropped calls and, in frustration, I called their customer service. The agent told me that there was a scheduled maintenance going on at the cell tower which would make my experience better in the future. They apologized for the issue and told me that it would be fixed within 24 hours. Having done this a couple of times, I was trained to know that this could get me a price discount. So, I told the agent that I would be leaving their service. As soon as the agent heard that, he transferred my call to the Save Team. I knew I had them now. The Save Team would offer me great discounts not to discontinue the service.
As a pricing professional, I always love to quote the study that a 1% improvement in price leads to 11% in operating profit, whereas a 1% increase in volume sold improves only by 3.3%. If the business case for managing and improving price is so apparent, why don’t more companies do it?
When we train people on Negotiating with Backbone, every now and then we get the question, “Can a buyer type change at different times?” The answer we give is, “Yes, it depends on the situation.” Today I want to share a situation I went through while getting an oil change for my car.
Every company that we have worked with wants to grow. They set growth targets and communicate it to their shareholders. Achieving these targets can mean make or break for the organization. At times, we see companies become overwhelmed with options in their pursuit of growth and while under immense pressure from shareholders, seem to be standing still versus moving forward. If you are in a company in a mature industry, chances are there aren’t many green fields left to grow. Faced with this situation, what can a company do? How can a company exceed market expectations and drive shareholder value?
Topics: Uncovering your Value