As an organization in the business of making money, your executive meetings, at some point, ponder the million (or possibly even billion) dollar question: How can we achieve profit growth?
With profitability as the end goal in mind, you've likely explored the obvious solutions:
But what about the not-so-obvious? Let's be realistic; these ideas are not nuanced and often require hefty investment without guaranteeing you'll get the results you want.
So what if you can achieve profit margin expansion without increasing the number of sales or having to make the tough decision on what goes on the chopping block? The opportunities could be right in front of you, hidden in your data.
The magic word for distributors and manufacturers is margin.
Grow margin, prevent margin erosion - it’s all about the margin.
What if you could expand margins without increasing sales or making a tough decision about what goes on the chopping block? The opportunities could be right in front of you, hidden in your data.
Here’s how businesses can leverage data and better technology to expand their margins.
Use your data to achieve price equilibrium: highest possible price, lowest churn, and maximum margin expansion.
In many cases, historical sales data, customer demographics, purchasing behavior, market demand fluctuations, competitor pricing, and economic data may exist in silos in the organization. You need to get a full picture by integrating your WMS, CRM, and ERP data into a single data warehouse where you can perform analysis.
For example, the ProfitOptics Margin Express tool is a pricing optimization tool that lets you run transactional, dynamic pricing scenarios. You can find and set (virtually unnoticed) increases that boost your margin while minimizing the number of customers who leave you — adding millions to your bottom line without much risk or effort.
Case in point: A plumbing and HVAC company identified optimal price-change opportunities that increase profits by 1.2% using the ProfitOptics price manager software modules. (Read the full story)
Today, only 31% of businesses have leveraged automation to change one key operational function. That leaves us with too many manual processes that waste time and money.
Relying on people to take sales orders, generate quotes, track commissions, or calculate convoluted add-ons by hand increases the risk of making costly errors. System-supported workflows geared to your operation are a game-changer to improving the bottom line.
Companies know errors and time eat away at the profit, but applying new technology is risky when unsure of the ROI. However, consider how many quotes you lose because it takes three days to generate a response. Or, how common is it for a sales rep to miss a cost update and miscalculate a quote? Every manual task costs money in added labor and errors. Purpose-built automation tools reduce manual tasks across your business while freeing up existing staff to do what you hired them for.
We know 70% of businesses want to become more data-driven. The problem is 88% of us don’t have the right tools to do the job. Out-of-sync data leaves us guessing about the most critical decisions affecting margin growth. Optimized operations require true visibility to identify where you’re losing margin.
For example, optimizing sales activities reveals hidden growth opportunities. You’ll see customers at risk of churn. You’ll identify new lucrative channels for market expansion. CSRs will have insight into opportunities for upselling and cross-selling. You can see where pricing inconsistencies lie, and where frequent errors occur in common workflows.
To grow, you must first retain.
It costs more to attract new customers than to retain current ones. Better technologies enable better customer care, which lessens churn. Paul Reilly writes in Industrial Distribution that 83% of customers will pay a higher price for a higher value. In other words, it’s not about price but the human connections that build valued customer and staff relationships. Customer experience is critical to growth.
A great customer experience starts with the right technology and data. For example, purchases from your order processing system should sync to your inventory management software to keep track of fast-selling items. That means no out-of-stock products and, thus, happier customers.
Managing and leveraging your data enables day-to-day and critical insights to improve decisions and, ultimately, the customer experience.
We spend on CRM and other software to enable our sales teams to sell more. But because these tools operate as separate systems, they hinder the visibility you need to grow strategically – with the right, most profitable customers.
You can identify new sales opportunities when you have complete visibility of your data, processes, and systems. You can also automate repetitive, time-consuming tasks to increase efficiency and give your sales team time to focus on closing new sales and growing existing customer relationships.
Learn more: Maximize Your Margins: A Sales Operations Optimization Guide
Do you know if you’re getting all the money from your business through rebates? If you’re a manufacturer, are you managing rebates efficiently across the board so you’re not overpaying – or underpaying your partners?
The problem is rebate management is largely a by-hand process that uses a combination of ERP, Excel, and emails. Any time there are manual processes involved, mistakes are inevitable. Given distributors attribute up to 60% of their bottom line to rebates, it’s sobering to think that such a critical part of profit isn’t as data-driven as it should be.
ProfitOptics has the tools to fix this. Our Rebate Optimization tool automates tracking of these critical programs for distributors and manufacturers, aligning the backend ERP, CRM, and other platforms for a transparent flow of information.
While chargebacks are the key to many healthcare manufacturers’ and distributors’ profitability, they are often managed as an afterthought. Their complexity has prevented organizations from adopting best practice standards, and as a result, chargeback administration is still largely manual.
The problem has always been how disparate and legacy technologies transmit data between these organizations, requiring intensive human oversight. Today, these processes can be automated and integrated.
ProfitOptics SmartMatch solution integrates data sources between organizations, streamlining communications and standardizing formats. The solution saves internal teams countless hours verifying chargebacks. Now, you can chase the few exceptions and let technology handle the rest. You’ll gain greater margins thanks to increased accuracy, improved pricing accuracy, increased eligibility evaluation accuracy, reduced disputes, better partner relationships, and reduced team member time spent on chargebacks.
If your teams spend more time typing than they do supporting your customers, you’re leaving money on the table. If technology silos create manual workarounds, you’re probably not gleaning actionable insights that should flow from all the data you capture.Talk with our team today about our solutions to help you grow your bottom line.
Pricing optimization and granular rebate management allow you to grow your profit margin through insights hidden in your data without generating a new customer or selling another unit of product.
Schedule a P3 discovery call today to pinpoint the obstacles preventing you from executing your revenue strategy to achieve margin expansion. We help you get clarity on how to transform your profitability through our proprietary tools and a clear plan of action.
