Profit Is The Goal In Tough Times

Added February 25th, 2009

To paraphrase a former president’s campaign mantra, “It’s the profit, stupid.”

In tough times, the pressure to cut your prices can be overwhelming. You’re feeling pressure from customers to cut price and you need the order. Management has told you not to lose any business. What’s a salesperson to do?

What if you changed your strategy for dealing with price resistance from not discounting to profit retention? Is the real goal to protect your profit or defend your price? It may sound redundant or that I’m splitting hairs. I’m not. It’s profit that you take to the bank, not price. Would that change how you would deal with price objections?

The goal is profit retention. Making prudent pricing decisions in one way to do this. Defending price is generally how we do this. What if you enlarged your strategy to include other ways to protect your profit? This could be the topic of your next sales meeting: “How many ways can we protect our profit on a sale beyond not discounting?”

This means scrutinizing every opportunity for ways to maximize profitability. A few examples include: enforcing payment terms, charging for delivery, re-packaging, modifying call frequency, implementing value-based pricing that enables you participate in profit growth with customers, consolidating orders or combining customer shipments to take advantage of bulk purchasing. It’s asking questions like: Is there a more efficient way to solve this problem or get this to the customer? Are there value-added services we can bundle into the solution to maximize the profit opportunity?

For most salespeople, protecting profit means holding the line on prices, and you know my position on that. Profit retention is a broader concept and opens the door to other possibilities to keep the doors open. It’s all about the profit.