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Three Steps to Smarter Planning

steps to smarter strategic plannning

Annual budgeting is the roadmap for strategic planning, and analyzing results is how you track progress toward these goals. When results differ from plan, you find yourself asking why. Month after month you may equate these discrepancies to the hearsay you get from the field — or as market-based — and move on, never truly knowing the why. Then the cycle starts again: new year, new plan, new expectations.

But for every business there is a concrete reason for the gap, and there is a way to remove it: companies need more detailed plans they can accurately measure against.

So, how do you get there?

Use the 80/20 Rule to Manage Pricing Exceptions

It’s a common knee-jerk reaction for salespeople to focus on increasing volume by offering discounts on every sale – even if it means sacrificing margins. One way to mitigate the risk of excessive discounting is to establish a pricing system that balances volume incentives with well-defined boundaries that sales staff must operate within.

Ideally, in an effective pricing system, the framework should provide guidance for as many as 80 percent of sales. This guidance should consider a comprehensive range of factors, including the type and size of the customer, the market and the nature of the opportunity. The direction should be clear and unequivocal, providing sales staff with “guardrails” that establish minimum and maximum prices or margins. Sales staff can bounce between these guardrails as appropriate, but they should not be allowed to go above or below the established boundaries.

Grow Your Wallet Share…Grow Your Business

You’ve most likely seen the commercials asking consumers, “What’s in your wallet?” Yet, from a business perspective, finding out what you have in your wallet isn’t nearly as important as finding out what you’re missing. That missing link is known as wallet share; and understanding what’s NOT in your wallet can lead to tremendous opportunities in terms of your business’ ability to generate profitable growth.

Are You Ready for Raw Material Inflation?

The Federal Open Market Committee released their most recent inflation forecast for 2017 and beyond. And while inflation remains historically low, it’s also on the rise, with 1.9% projected in 2017 and 2% for 2018. We have already seen raw material inflation edging up the costs of metal, rubber and other industrial commodities. To quote a recent Bloomberg article, these prices have been “on a tear” since the second half of 2016.

When you run a business, talk of inflation typically translates into fear and angst. Here’s how we suggest you prepare for what’s coming…

Improve your Quoting Process...and Win Rate!

Getting to the "right" price for your customer can be difficult and time consuming. How do you know you are pricing correctly? How do you create consistency across your organization? And more importantly, how do you maximize your profitability without losing business? 

Navigating your way through these challenges usually requires taking a step back to level-set your current processes. So, where do you start?

Knowing your PI Score is the First Step to Profit Improvement

Striking the right balance between effective pricing strategies and company performance is often an issue because there are so many factors involved. With price being the most important lever impacting your bottom line, one major pricing mistake could risk your company’s profit potential.

Sustainable Pricing Starts with Your Sales Force

Achieving significant pricing gains can feel like a long, hard-fought battle. This makes it all the more satisfying when the numbers start to roll in, validating your efforts and proving without a doubt that profitability is attainable.

The thought of losing those gains may keep you up at night. What safeguards can you put in place to protect the gains you’ve achieved and prevent your company from sliding back into past poor pricing habits?

It all starts with building a confident sales force.

50 Most Common Price Leaks [INFOGRAPHIC]

Whether it’s from pricing, freight, rebates, or payment terms, price leaks can have a detrimental effect on your company’s profitability. In the infographic below, we’ve outlined the 50 most common price leaks across multiple business areas.

4 Common Price Leaks, Explained [VIDEO]

We interviewed pricing expert Keith Hohman about the four most common price leaks facing B2B companies today. Watch as he explains the underlying causes behind—and ways to fix—price leaks like freight costs, payment terms, expedited delivery, and rebates.

How Capacity Utilization Can & Should Drive Pricing Decisions

Whether you’re a manufacturer, distributor, or service provider, you likely face some form of capacity constraint.

For manufacturers, it might be machinery throughput. For distributors, it might be truck capacity; for service providers, staffing.

It’s critical that you understand how these constraints impact your profitability.

Typically, businesses focus on optimizing cost structures to maximize margin per unit. But we repeatedly find that margin per constraint is a more accurate profitability metric. We call this capacity utilization, and optimizing capacity utilization should drive your overall pricing strategy.

Profit Insights | Insight2Profit