For as long as I have been in this industry, I have watched the companies I worked for battle with the sales vs. margin dilemma. On one hand, you want to grow your market share, take as much as you can from your competition and drive the top line. On the other hand, you can back off that a little and work on getting better margin at the cost of sales. To get both at the same time is very hard to do.
I understand the benefit to both sides and depending on where your company is, one will make a lot more sense than the other. So the million-dollar question is, how do you get both? If you look at the guys accomplishing this today, one thing seems to be pretty consistent: They deliver a hell of a lot of value in the marketplace. Either they have significant brand strength with the consumer, which creates an incredible pull on the product, OR they deliver some kind of other value-add that is so demonstrable that people have to have it. There are many examples of it today, with the most obvious being Apple. More in our own backyard, though, is Tempur-Pedic. You don’t have to have a big brand to make that happen. How can you create value so compelling that it is a MUST to those buying it? Do you invent something that has some strong intellectual property tied to it, or just do something so much better than everybody else that makes your product CLEARLY worth the price you are asking?
One thing I do know is that you need to be sensitive to your employees when you change direction. There is nothing more frustrating to a sales force than to be told one year to go out and GET THE BUSINESS no matter what, then have the next year roll around and be getting beaten up from how aggressive they were on pricing. They may have gotten those deals they were told to get, but your margin has taken a hit as a result. Changing direction is fine, but don’t tell your people that you want it all and then fail to give them the tools to accomplish your wish. If you are not creating that incredible value proposition, then you can’t expect to have your cake and eat it, too!
What am I missing here? What are you thinking?
DISCLAIMER: The views and opinions expressed in this blog are mine and mine alone. They do not represent the thinking of the company I work for, or anyone else with whom I am affiliated. Except my wife of course, who is good at telling me what not to say.