Using sales information to drive profitability
By Jeff Semple | Revenue
Taking a look at your customers isn’t merely a matter of figuring out how much you have sold to them. It’s also a barometer you can use to help manage cash flow, drive management decisions and improve profitability.
Review the profitability of each of your business’s customers and of sales by product line and ask yourself these key questions.
- Does the customer require special pricing and terms?
- Does the customer pay within the required terms of the contract, or is it habitually late?
- Does the customer require sales support and service that is above and beyond what you are compensated for?
- How does the product line sold to the customer compare to other products available, and does the gross margin make a positive contribution to the overall business gross margin?
- What is the sales and product mix that will provide the best gross margins, as well as make the best use of inventory and manufacturing capacity?
- What’s it cost to acquire a customer?
- What’s my customer retention rate?
With the answers to those questions, you will be able to look at sales in a different way to more effectively drive management-level decisions regarding where to focus effort and resources, and how to improve the profitability of each customer and product.
For more about using sales information to drive profitability, call 330-412-5872.