by Rick Kroetsch
You’re getting pressure from all sides. Your operating costs are going up, product price increases keep coming due to the exchange rate or raw material costs, and the customer wants to pay less—not more. Your options seem limited but you are hesitant to raise the selling price because you don’t want to face a potential sales decrease.
Before you do anything, maybe it’s time to do some data digging and look at your existing margins and see if there is an opportunity to make some changes.
Test your assumptions
What and where are the highest-margin products in various product lines? Sometimes the facts in front of us differ from our perceptions or beliefs. You might be surprised by what you find—there might be hidden nuggets of potential profit already in your business that are currently hidden or ignored.
Store or shelf layout
Review the visuals in your company. Is the real estate set up not only for customer convenience and ease but also for prime selling space dedicated to prime margin products? Small spacing adjustments can have a big impact on your bottom line. Don’t be afraid to mix it up; change can be good, and profitable.
Staff training
Does your team know the latest focus they should be showcasing, highlighting, selling, and paying attention to? Communication is key—let them know what is happening and what you are trying to accomplish without raising prices to the customer. Watch as they embrace the concept to help both the company and their customers.
Suggestion selling and promotions
Don’t leave this to chance. Put together a concentrated plan to determine what higher-margin products should be suggested to customers while they are shopping. Don’t confuse this with high-pressure selling.
You are not pushing the products on the customers. You are letting them know that if they are looking for one product, then perhaps they might want to think about this other complimentary product. The customer will appreciate the effort, as they may not have thought about it nor had the time to research what they really need. Not everyone will buy, but giving ideas and suggestions will result in more sales and bottom-line profit.
Get in the habit of doing it at least twice a year
Products change, customer purchasing habits change, and seasons change. What you are focusing on today to boost profits may not be the same in a few months. Don’t just do this once and forget about it. Getting closer to what is truly going on and making thoughtful changes and plans is a great step that should be ongoing.
Understanding where potential profit is currently underutilized can create a strong bottom line without incurring any additional expenses. It’s all about focusing, not ignoring and forgetting.
Rick Kroetsch is the vice-president and associate publisher of Alive Publishing Group