In the pursuit of profit, increasing your net sales value is your most thrilling and direct route to success.

 

But how do you turn ambitious revenue targets into tangible results?

 

The answer lies in mastering the components of revenue: your average net price and your total sales volume.

 

Each element harbors complex challenges, but also immense opportunities.

 

Your average net price is influenced by product list prices, discounts, price leakages, and the diversity of your product portfolio.

 

Meanwhile, sales volume hinges on your ability to spot opportunities, the prowess of your sales team, and the effectiveness of your marketing strategies.

 

Let’s explore seven powerful strategies to optimize both price and volume, driving your revenue growth to new heights:

 

• Elevate Your List Price: Increasing list prices doesn’t just add to revenue – it creates a compounding effect on profit. Even a small price increase can mean a massive boost to the bottom line if handled strategically. For a company with a 10% EBITDA margin, a mere 1% price increase can translate to a 10% rise in profit.

 

• Streamline Discounts: Minimizing unnecessary discounts lets you capture more revenue per sale without dramatically changing your list prices. By carefully adjusting discount policies, you maintain customer loyalty and capture more of each transaction’s value.

 

• Minimize Price Leakages: Addressing price leaks (e.g., rebates and surcharges) means fewer lost opportunities and more profit realized. Tighten the terms on rebates and surcharges to ensure you’re capturing the intended value for every transaction.

 

• Enhance Product Mix Margin: Leverage a balanced product mix by focusing on high-margin items, helping to increase overall profitability without needing a direct price increase.

 

• Accelerate Volume Growth: Use targeted campaigns to drive quick sales. By creating urgency, applying strategic promotions, and timing them well, you boost revenue in a rapid timeframe.

 

• Empower Your Sales Teams: A well-trained, technology-equipped sales team is critical. Their efficiency in closing deals and serving customers directly impacts your revenue, so invest in tools and skills that make them faster and more effective.

 

• Maximize Marketing ROI: Every marketing dollar should deliver a substantial return, and by optimizing your marketing spend, you drive sustainable revenue growth. Focus on campaigns that enhance brand value and create meaningful connections with customers.

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Way #1: Elevate List Price

 

Increasing prices (i.e., improving product pricing) is one of the most powerful levers to amplify profit.

 

Any price increase goes straight to the bottom line (EBITDA).

 

Even a slight price increase (e.g., 1-3%) can make a big impact. For example, if you have a 10% EBITDA margin, then any 1% increase in price is a 10% increase in profit.

 

Many companies are reluctant to increase prices because they fear losing volume.

 

Business managers often overestimate the demand elasticity of their customers.

 

Fortunately, smart and carefully managed price increases rarely create a significant volume drop – especially when your business has other differentiations besides the price.

 

 

Strategic Objectives:

 

1. Increase the profit level.

2. Capture the customers’ willingness-to-pay.

3. Realize the fair value of the products.

 

 

Execution Steps:

 

First, you immediately execute the low-hanging fruit of product pricing optimization:

• Interfere with scheduled price increases: make it larger, more deleveraged, and less risky.

• Increase prices on products with volatile input factors (especially when the input costs have risen). The increase in raw material prices is a good excuse for the product price increase (and don't forget to add a small percentage on top).

• Increase prices on long-tail products (i.e., slow-moving products with lower buying frequency).

• Increase prices on side products (i.e., non-traffic drivers). Customers are usually less sensitive to the prices of side products.

• Increase prices on end-of-lifecycle products to:

  • encourage migration of customers to newer, higher margin products;

  • reap the willingness-to-pay of late adopters.

• Increase prices on products with a competitive edge and sound value proposition – especially if it is a unique product that customers cannot get elsewhere.

• Unbundle product combinations that do not stimulate additional sales (i.e., reducing bundling discount).

 

Then, you find longer-term price-up opportunities.

• Gather detailed transaction data (SKU by SKU, customer by customer, from GSV to NSV, including all rebates, discounts, and promotion details).

• Internally benchmark price setting by product, geography, sales representative, and customer to find price increase opportunities.

• Build pricing models to identify new profit areas and improve mix management.

 

After that, you can create price increase scenarios, model the scenarios, and simulate the product price increase.

 

Then, based on the impact, choose the best option and set price increase targets.

 

Once you have done so, you can prepare detailed action plans. Don't forget to include price increase communication in your action plans.

• Develop customer price increase stories and communication materials.

• Train the sales team to deliver the stories.

• Equip them with the communication materials.

 

Finally, execute the plans.

 

 

Expert Tips:

 

A price increase is a short-term solution to boost your profit as it does not guarantee a long-term competitive advantage.

 

Once you get additional breathing room from a price increase, pay attention to your differentiation and market positioning.

 

Ensure your pricing strategy aligns with your overall growth strategy to sustain a long-term profit boost.

 

 

Way #2: Streamline Discounts

 

Reducing discounts (i.e., improving customer pricing) is essentially increasing prices.

 

However, it is usually easier to reduce discounts than to raise prices.

 

Different customers have different willingness-to-pay.

 

This is often true not only for B2C customers but also for B2B customers (i.e., some companies are less price-sensitive than others).

 

Therefore, if you can reduce the non-needed discounts, you capture more value for your company.

 

 

Strategic Objectives:

 

1. Improve short-term profit.

2. Differentiate prices customer by customer to capture their willingness-to-pay.

3. Use discounts to generate more profit (not more volume).

 

 

Execution Steps:

 

First, you start by immediately capturing the low-hanging fruit of customer pricing optimization:

• Immediately scrutinize all pricing decisions/deals, especially in the B2B context, and stop bad deals.

• Stop non-compliant discounting practices. For example, when the customer’s order volume is below the threshold.

• Update the discount policy.

• Remove unneeded discounts, which are not stimulating enough sales.

• Change the oversimplified and not granular enough discounts (e.g., move from arbitrary percentage steps to continuous percentage formula, make the steps smaller).

• Lower discounts for small, transactional accounts/customers.

• Change unconditional elements to conditional (i.e., pay-for-performance) discounting.

• Develop a discount calculator and apply it rigorously (e.g., model discounts based on volumes, margin, and mix objectives)

• Renegotiate problematic, large contracts. Eliminate over-discounting.

• Invest in strategic customers with immediate growth potential. Use discounts to generate big profits (e.g., winning new customers).

 

Then, you can find longer-term opportunities.

• Collect data and identify options.

• Gather detailed transaction data (SKU by SKU, customer by customer, from GSV to NSV, including all rebates, discounts, and promotion details).

• Review contracts and other possible factors that restrict your capability to reduce discounts.

• Segment customers and assess pricing per customer.

• Price realization by customer. To see the lowest margin customers.

• Price-to-margin-waterfall by customer. To see where you lose value.

• Simulate customer price increase options, evaluate risk and mitigation options, and set targets.

• Create discounting calculator to be implemented. Use advanced analytics to build: Discount models, Price elasticity curves, Sales quotation apps, etc.

 

Once you have done so, you can prepare detailed action plans.

 

Don't forget to include price increase communication in your action plans.

• Develop customer price increase stories and communication materials.

• Train the sales team to deliver the stories.

• Equip them with the communication materials.

 

Finally, execute the plans.

 

 

Expert Tips:

 

Be careful not to annoy your strategic customers. Depending on your strategy and positioning, sometimes you want to develop a strategic partnership, instead of a transactional relationship with your customers.

 

 

Way #3: Minimize Price Leakages

 

Sometimes the prices your company realizes are not the same as the prices you aim for. This is because of many unseen leakages in price realization.

 

Removing price leakages (i.e., optimizing rebates and surcharges) essentially increases your price realization and profit.

 

 

Strategic Objectives:

 

1. Monitor price realization.

2. Enforce contract compliance (e.g., ensure the increased prices are realized and the given rebates are well-deserved).

3. Reallocate trade investments (e.g., promos, discounts, offers).

4. Start charging for value-added services (i.e., introduce surcharges).

 

 

Execution Steps:

 

First, you take immediate actions to reduce price leakages/improve price realization:

• Apply contract terms rigorously (e.g., conditions for cash discount, minimum order quantities), both standard and customer-specific terms.

• Enforce compliance with discounting rules (especially on pay-for-performance elements).

• Cut non-performing trade investments (promo spend) and discounts.

• Spend more promo where the highest returns are achieved.

• Charge for Value Added Services given away for free (especially relevant for product firms offering a wide array of services (e.g., speedy delivery, small orders, unique customization, repair, maintenance, data service, integration service, technical service).

• Enforce surcharges for Value Added Services for all non-key customers.

• Improve product mix by upgrading customers to higher-margin products.

 

Then, you can find longer-term opportunities.

• Collect data and identify options.

• Gather detailed transaction data (SKU by SKU, customer by customer, from GSV to NSV, including all rebates, discounts, and promotion details).

• Review contracts and other possible factors that restrict your capability to reduce discounts.

• Assess the implementation of:

  • Contract terms by customer.

  • Surcharge pricing by customer.

• Build a mathematical model to optimize promo effectiveness, including simulating promo cuts and re-distribution.

• Simulate the impact of contract terms execution, charging for services, and customer price increase options. Then, you can set targets.

 

Once you have done so, you can prepare detailed action plans.

 

Don't forget to include price increase communication in your action plans.

• Develop customer price increase stories and communication materials.

• Train the sales team to deliver the stories.

• Equip them with the communication materials.

 

Finally, execute the plans.

 

 

Expert Tips:

 

Ensure your surcharges and rebates policy align with your overall strategy and positioning. Sometimes, not charging for surcharges is the right thing to do. At other times, charging is what you need to do.

 

 

Way #4: Enhance Product Mix Margin

 

An alternative to price increase: you can improve your product mix margin instead.

 

You can do this by shifting customers to the higher margin products (up-selling), getting customers to buy other products (cross-selling), killing your non-profitable or low-margin products (product rationalization), and tweaking your product to increase the margin (value engineering).

 

 

Strategic Objectives:

 

1. Improve total margin from each customer (without direct price increase).

2. Sell more profitable products.

3. Eliminate complexity and costs by killing the long tail of non-profitable products.

 

 

Execution Steps:

 

First, you start by immediately capturing the low-hanging fruit:

• Tweak your product to increase margin, e.g., smaller size, cheaper packaging, fewer features, etc. Most of the time, there are many non-essential features in your products.

• Eliminate negative gross margin SKUs – unless there is a strategic reason behind it. Remember, from the economic point of view, anything with a negative variable cost is not worth selling (the more you sell, the more you lose, not even enough to cover the overheads). Make sure you challenge the reasons hard.

 

Then, you can find longer-term opportunities:

• Review opportunities by customer/sales channel.

• Prioritize opportunities.

• Set improvement targets.

 

Finally, prepare detailed action plans and execute them.

• Raise the intensity of the upselling effort.

• Track progress.

 

 

Way #5: Accelerate Volume Growth

 

Increasing your sales volume (selling more) is one of the interesting levers.

 

The possibilities are vast for creative people.

 

You can sell more of the existing products to the existing customers, sell the existing products to new customers, sell a new product to the existing customers, or sell a new product to new customers.

 

You can introduce new services, enter new countries, move into new value chains, or enter a new industry.

 

 

Strategic Objectives:

 

1. Capture short-term sales opportunities in all products, customers, channels, or regions.

2. Sell as much as possible while maintaining similar discounts and cost levels.

 

 

Execution Steps:

 

First, you quickly boost short-term sales opportunities.

• Raise the intensity of outbound sales calls to increase sales.

• Push sales via distributors.

• Increase product coverage on all channels/platforms. Ensure listing on all relevant channels/platforms.

 

Then, you can review opportunities by sales channel for longer-term sales push.

• Inside sales: Review pipeline, prioritize leads, and revisit targets.

• Direct sales: Analyze product group penetration for large accounts, determine who to target by how much, and revisit sales targets.

• Distributor: Benchmark distributor performance and define priority actions.

• eCommerce: Identify priority gaps in platform listings, review new platform listings, increase product coverage on platforms, and launch short-term marketing push.

 

Afterward, prepare detailed action plans, set sales targets, and tracking.

 

Finally, execute the plans.

 

 

Way #6: Empower the Sales Teams

 

You will need to create a high-performing sales team to enable a longer-term sales increase.

 

A good sales team generates higher sales, accelerates growth, and improves customer satisfaction.

 

 

Strategic Objectives:

 

1. Optimize sales costs.

2. Reduce the cost-to-serve in all channels.

 

 

Execution Steps:

 

First, you should take immediate action to increase sales effectiveness.

• Remove non-performing sales representatives. It will reduce costs and stimulate sales performance.

• Increase sales incentive target levels.

• Adjust the incentive scheme to be gross-margin-driven, not only volume-driven.

• Temporarily shift field salespeople to do inside sales while you review key products and customer groups.

 

Then, you can find longer-term opportunities:

• Gather data.

  • The number of sales representatives and cost per sales representative by customer and channel.

  • Full-Time-Employees and costs by sales representative, by channel, by customer.

  • Incentive schemes for each sales representative.

  • Performance by each sales representative.

  • Other relevant data.

• Assess sales performance.

  • External benchmarking, e.g., cost per sales representative, total cost, number of sales representatives by channel.

  • Internal benchmarking: performance between various sales representatives.

  • Incentive model analysis: are the incentives effective?

• Interviews to calibrate findings and workshops to agree on issues.

• Identify opportunities and define targets.

  • Identify opportunities for short-term cost improvement by channel/customers through workshops.

  • Define targets for selected opportunities.

 

Afterward, you can create detailed action plans for execution.

 

Finally, you execute the plans.

 

 

Expert Tips:

 

External benchmarks are very useful in pushing the sales team out of their comfort zone. It serves as the anchor during the performance benchmark. You can quickly get the benchmark from various providers online. Alternatively, you can do a cost-effective online survey or speak to experts in your industry.

 

 

Way #7. Maximize Marketing ROI

 

To increase profit, you must eliminate ineffective marketing while investing more in effective marketing.

 

Effective marketing can boost your profit quickly (it is one of the most powerful levers of Profit Breakthrough), but you need to understand the rate of return from your marketing operations.

 

 

Strategic Objectives:

 

1. Review and improve marketing operations to drive growth in revenues.

2. Reduce cost per acquisition.

3. Reduce media and agency fees while improving/maintaining visibility.

 

 

Execution Steps:

 

First, you quickly reduce marketing costs.

• Media/promotion spending.

  • Eliminate brand marketing spending (wait until you understand the effectiveness of the marketing spend).

  • Eliminate communication spending.

  • Eliminate sponsorships.

• Review performance marketing/ consumer promotions and ensure cost-of-acquisition is higher than customer lifetime value.

• Agency spending.

  • Realign rates to market without changing talent/mix.

  • Eliminate overhead FTE charges. Often, a quick renegotiation can eliminate many ‘silly’ charges.

  • Ensure no double charges for the same agency resources.

 

Then, you can find longer-term opportunities:

• Analyze marketing performance in detail.

  • Spend and budget by categories: media, promotions, agencies, etc.

  • Break down by channel, country, product, campaign, etc.

  • Calculate the return on marketing investment, both for the short-term and long-term.

  • Standardized KPIs, tools, and definitions.

  • Organizational structure, skills, and culture.

  • Marketing tools, planning processes, and decision-making processes.

• Benchmark internally and externally.

  • Direct marketing operational costs.

  • Marketing overheads.

• Identify short-term opportunities and define long-term impacts.

• Determine areas for increasing efficiency (achieving the same impact with less costly marketing) and effectiveness (putting more investment to generate a much higher impact).

• Assess the impact of the identified initiatives.

 

Afterward, you prepare detailed action plans.

 

Finally, you can execute the plans.

 

 

Expert Tips:

 

Use the return on marketing investment as the central driver of your marketing organization/operations.

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