Customer Knowledge & Long Term Profit

If you are the incumbent in an account, you need to get ahead of these big volume purchases and position yourself for a profit-healthy year.

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Even the best salespeople can be faced with profit pressures in their incumbent accounts. The pressure can be even stronger if the product is recognized as a commodity. There are times when no matter how well you have sold the value of your product and your company, your client will feel the need to test the market.

Let’s face it; volume purchases are great for revenue attainment. But at the same time they can be profit target killers. If you are paid on both revenue and profit you need a way to manage these deals.

The good news is many large accounts are fairly predictable. An enterprise of significant size requires major planning when it comes to buying. As the incumbent you should be able to find out what the buying cycle will look like during the next twelve months.

To do this you need customer knowledge specific to their purchase forecast. They will have a forecast for the current and upcoming year. Talk to your customer and understand the indicators leading to their purchases.

Often, corporate initiatives and internal projects can drive significant purchases. You need to understand how these will impact the client’s buying cycle.

Many large accounts will purchase products throughout the year (i.e. computers, office furniture, office supplies, fleet vehicles, etc.). But at the end of their fiscal cycle, many clients will make a significant volume purchase. This is what can be tough on your gross profit if they are pressuring you for a serious discount.

The dilemma is often “risking the account by not giving into the discount demands” versus “risking your business by going beneath comfortable profit zones”.

You can lessen the profit impact of these scenarios by managing your profits during the course of the year. Because you did your homework and understand the customer’s forecast, you can anticipate when their volume purchase will happen. And because you are a shrewd business person who wants to protect their gross profit, you were able to sell your “run rate” products during the course of the year at a higher profit level.

The key is to get ahead of your profit targets early and keep them there. Customer knowledge is a key element to a healthy business and a good payoff for you as a salesperson.

Understand your account. Know when they will buy. Drive healthy profits for your organization. It will be good for your pocketbook.

Thanks for reading.

Good selling.

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