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Losing Margin? Put your business software to work for you

Losing Marginby – Darren Gray, Sales Consultant, Intact Software

With the economy getting back on track and an increase in customer footfall, many businesses still struggle to maintain the level of sales margin they require to make their business profitable.

In periods of growth it is very easy for margins to be neglected and for managers to lack the time and resources necessary to implement improvements to effectively handle the increased workload.

Having the right business software in place is key to helping you closely monitor and track all aspects of your business. It is also crucial for proactively assisting you in maintaining or improving margin levels at all times.

We’ve outlined below just some of the things you should consider when looking to improve your bottom-line…

Role Based Access Levels and Controls

Where multiple sales people are processing transactions, it is not possible for a manager to monitor each and every sale.  When you set a maximum discount amount and a maximum discount percentage you can effectively control the scope users have to reduce pricing at an acceptable level for the relevant roles within your business. Responsibility levels are different for your users and so should the capability to give away margin.

Product Setup

When setting up products you can stipulate the maximum discount allowed and the minimum acceptable margin. Whichever threshold is reached first will block the user from progressing with the transaction. This can be set to warn, stop, get confirmation or require authorisation. For ease of maintenance we recommend using derived pricing so that any change in cost is carried through your pricing. This can ensure there is no creep in reduced margin in the event you have price increases.

Improved Controls at POS

Everyone loves a discount – except the retailer! In order to protect your margin, you can prevent users from changing prices or restrict the maximum discount allowed per user or product as above, but reality bites. In the real world you may want to make informed decisions and allow senior operators to override the rule. This can be setup as password controlled or require an authorisation routine. The user, depending on priority, can have easy access to the relevant information to facilitate fast and effective negotiations and customer service without leaving point of sale.

Be Cost Aware

Depending on the nature of the products you’re selling and the potential fluctuations of cost, currency, freight or duty, you may need to pay closer attention to your costs and what information is available or displayed to the end user. As well as the controls above, you may also wish to profile your users and restrict the ability to see true costs. This can be achieved by utilising a selling cost start price that can be buffered by either amount or percentage. This can also be role or product based and is a true margin protection method.

Purchasing

A key feature to margin is how well you manage purchasing. Are you utilising the information that your system is generating to ensure you maximise the margin attainable by buying well? Being competitive often means you have to effectively ensure purchasing at the most competitive price. This can range from system recommended purchase orders including alternate suppliers or cheapest price to managing your rebates so that you know the true cost of a product. Buy well and the controls above will take care of the front of house.

Alternative Products

For your customer-facing staff you can highlight products that make more margin and set prompts for them to sell those items rather than similar products with less margin.

Special Offers and Pricing

Use of floor space for promotion and customer-facing hotspots is part of the intelligent way to utilise your premises in order to entice customers. Key to their experience is how the transaction is carried out when they have made the important choice to purchase. Having your system reflect the offers is critical to a smooth transaction. You don’t want to have operators out with calculators to work out how they can process the transaction. Whether it is pricing or setting trigger conditions to inform the operator of an offer, it is essential that you control this from within the system, dictating a start and end date of the offer.

Effective Reporting

For maximum margins to be attained effective reporting can highlight low margin sales. Reports are important but tend to focus on the events that have happened. Your system should have an audit trail so that combined with reports you also have the ability to see who has done what, where and when. Whether it is a price change or the chain of custody of a transaction, a simple right click should allow the relevant user access to related items, or an audit trail. You may have controls on products and users but you may also want to highlight the performance of staff. Does someone’s maximum discount need to be reduced to end the culture of always going to the maximum discount?

Reduce the need to negotiate

Minimise the user’s requirement to amend prices and retain customer specific pricing. If the discount culture becomes instilled in your business it has the knock on effect of changing how you operate to accommodate this standard practice of giving away margin. When implementing a price list for customers, the price agreed should be retained when entering a transaction. In the event a senior member of staff changes the price you should, at the click of a mouse, have the ability to update the customer price list. This facilitates locking down less senior staff from giving away margin using the tools detailed above.

Empower your field based sales reps

The above features relate to all transactions processed through your business but what about your field based reps? Do they always have the correct information to hand? Are they representing you correctly or is the customer able to catch him or her off guard? With a fully integrated sales rep app you can operate both online and off-line depending on connectivity and all pricing is per the customer’s price list. You rep is fully self-sufficient and no longer relying on the office for confirmation of orders or information on availability etc. Again, this adds to your customer service, pricing controls and reduces your reps reliance on office staff.

Outperform the competition

This overlaps between having the system to complement your business and putting the best practice in place to ensure every transaction is a smooth and pleasant process for the customer. Being cheapest for everything is not the answer. We all have skilled staff and utilising this resource combined with the information and processes available in our business management system means you can aim to deliver a superior customer experience every time. People buy from people and your IT should be an addition to the sales process rather than a hindrance. From the tools above to effective CRM and stock management, to proactive credit control and the correct management tools, you can retain margin whilst also assisting growth.

For most businesses the easiest way to increase profitability is to reduce costs and tighten controls.  But by introducing some of these capabilities to your business, you’ll begin to realise improvements in your bottom-line profitability.

About Intact Software

Intact Software is a progressive software company based in Dundalk with offices in Omagh, Cork and Wicklow. Using the latest .Net technology, we develop innovative accounting, business management and ERP software to satisfy the needs of the wholesale, distribution, service and retail industries.

Our latest business software, Intact iQ, enables you to streamline your business processes from sales lead management to sales invoicing to stock control to management information all in a single system. A powerful, flexible and customisable package, Intact iQ will integrate seamlessly across all areas of your business.

Intact Software is sold, implemented and supported through a network of fully trained, accredited channel partners across Ireland, the UK, Europe, Australasia and Canada.  Find out more at www.intactsoftware.com