Share

A-   A+

Regularly (monthly, quarterly)  analyze all of your customers’ net profit dollars and percentages, line them up high to low by percentages and then look to address your problem ‘dogs’ at the bottom of the list.  Analyze your customers running negative profit margins. If the numbers are correct and you have no other reasons not to (contractual obligations, related parties, other profitable products tied in), go ahead and raise their prices starting today. Hand out the customer names and assign their representatives to go announce the price increases.  The next group of customers that have recorded sales but low profit margins should be discussed.  Depending upon the size of the company, talk about product mix and what extraordinary costs or lower pricing is screwing up these customers’ profit margins.  After discussing which will and which will not get price increases, notify those respective sales representatives and give them a deadline to send the notifications to their customers.  Remember, whether or not your losing customers accept your price increase or not, you will make money eliminating the losses. Instruct your sales people that they now have more time to go find more profitable customers to replace the efforts that these losing customers required. Always have another list of potential customers ready for them to start on.

Log In to continue reading our in-depth analysis of this idea  GPI 020 - Financial Statistics...