Using All the Profit Levers
•getting started •profit strategy •seven profit leversWednesday, July 15, 2015—Are you doing everything you can to improve your company's profitability?
Many companies don't realize that there are seven levers that affect profitability and sales performance. Consequently, most distributors only work on two of the levers, which means that they're losing out on a tremendous opportunity to improve their bottom line.
The seven levers are:
• Gross Margin Percentage
• Add-ons (Delivery charges, re-stocking fees, etc)
• The number of orders you have to handle
• The number of invoices you have to write
• The number of warehouse picks
• The number of deliveries
If all seven levers are engaged in your interactions with customers, you can achieve and maintain a significant advantage over competitors who only focus on controlling margin and volume. It can help to improve your profitable business even further while giving you some idea of what to look for in other customers.
Using these levers can also help to turn your money-losing accounts profitable. There's only so much you can do with the margin and some accounts may never have enough volume to overcome your transactional costs. These sales can be enhanced by add-ons and through combining orders.
While you can get a lot of mileage from using just a few of these levers, you need to work on all seven to truly maximize your company's profitability.
For more information about Randy MacLean, visit: www.waypointanalytics.net
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