In today’s age we all want to know how to leverage ourselves to get the edge on our competitors. We want to know what can we use that has not been used yet or how can we analyze old data that might give us new insights. Let me introduce to cost data. This data has been part of your organization before it started or was formed. The problem that is that we never really looked at as a leverage point or something we could use as a point of negation with our customers. There are five things that can help us leverage our sales and if we do this we can start to see new insights into future of your sales and your company.
1. Manufacturing or Product costs – This is a very big one for anybody that makes their products. One of the biggest problems that we run into is that sales reps do not know or understand how the cost of their products affects their sales and their ability to continually give them to customers. If the Sales reps was to understand how the cost affected them they could play with the margins and give them power at the negotiation table.
2. Overhead Costs – This is also a very big one that we need to understand because the better we understand or organizational structure. The better we will understand where we as sales reps can cut corners or trim off of the quote process to help us get that sale. These are things like payroll, office space, marketing, and etc. Things that the administration would use. If you run a lean company that is a very good and probably have some room to work with on your margins. If you are not a lean company well there is always room for improvement.
3. Research and Development costs – All of you probably already understand this very well and really know what is going on in your R&D Departments. If you do not well this might be area that you need to spend some time because this is the future of your products and is what you will be selling. So as you understand what it takes to make these products and the process you went through to get the products. This is very critical to your success as a sales rep because without knowing where you are going you might just be out of a job sooner rather than later.
4. The next one is one that I call the customer cost – This is what your customer is willing to pay or what they see as a value. Does the benefit outweigh the cost? Can we go somewhere else to get it cheaper and better? What does the vendor provide us and are they meeting our expectations? If we took our designs somewhere else would they go there over a small margin? These are questions you need to be asking yourself because if any of the answers are yes. What are you going to do to save that customer. You need to be ready to use all the tools in your bag to save that deal and that is what we are talking about here is using those cost tools to not only save the deal but have a lifelong customer.
5. The last one is probably one of the most important to me. It is a combination of all of the ones above. As your organization or your customer organization decides the cost needs to be cut and we need to find better vendors and we all need a better and faster source. We have to look at the risk costs of the products and how viable we are going to stay in business and what are we doing today to eliminate that risk. What are we doing today with our customers to ensure that we are both meeting organizations goal. Are we creating a win win situation or are we creating a lose lose? I think if we have any other the loses might turn and back fire on us. So again how are you with the risk cost of your products and can you afford to lose 1 or 2 customers in your 20 %?
So now that we know 5 ways that cost can be a leverage for us and how we can use it to our benefit. Now it is up to us to do something with that information. I would be happy to talk to any of you about this and discuss it further. Let us all have win win situations and not a lose lose.