{"id":769,"date":"2022-03-30T19:30:00","date_gmt":"2022-03-15T12:00:00","guid":{"rendered":"https:\/\/primaressource.enconstruction.website\/en-5-strategies-b2b-companies-can-use-to-maintain-margins-when-inflation-is-high\/"},"modified":"2023-04-18T13:11:55","modified_gmt":"2023-04-18T17:11:55","slug":"5-strategies-b2b-companies-can-use-to-maintain-margins-when-inflation-is-high","status":"publish","type":"post","link":"https:\/\/blog.primaressource.com\/en\/5-strategies-b2b-companies-can-use-to-maintain-margins-when-inflation-is-high\/","title":{"rendered":"5 Strategies B2B Companies Can Use to Maintain Margins When Inflation Is High"},"content":{"rendered":"

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The post-pandemic rise in inflation is something that businesses haven\u2019t seen in almost forty years. Many are ill-equipped to handle this change. Even as sales are increasing, margins are shrinking, which puts companies in a difficult position.<\/span><\/p>\n

COVID has created a lot of inflation because of problems and delays in the supply chain. This makes it difficult for companies to meet client expectations.<\/span><\/p>\n

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Clients also see their production costs increasing, and almost all companies are struggling to maintain profitability in their business<\/strong>. In particular, what has been dubbed The Great Resignation also has an impact. Employees are quitting in droves or moving around more quickly between companies. Their expectations are going up, and salaries are following suit. It makes it harder for companies to keep employees<\/strong>, and this affects inflation as well.<\/span><\/p>\n

Companies are always looking for ways to protect their margins, but sales reps don\u2019t always make it easy. Many will easily grant a price reduction or will offer very little pushback when a client requests a discount<\/strong> or something that reduces margins. They will accept right away because they want to sign a client or keep an existing one.<\/span><\/p>\n

But in the current business environment, sales representatives need to sell their value more than ever.<\/strong><\/span><\/p>\n

In this article, we will look at five strategies to help you maintain margins even when inflation is on the rise.<\/span><\/p>\n

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  1. Strategy 1: Match sales goals with your margins<\/span><\/a><\/li>\n
  2. Strategy 2: Review accounts to determine price increases<\/span><\/a><\/li>\n
  3. Strategy 3: Define a process to increase pricing<\/span><\/a><\/li>\n
  4. Strategy 4: Offer extra value<\/span><\/a><\/li>\n
  5. Strategy 5: Maintain healthy negotiation principles<\/span><\/a><\/li>\n
  6. What about new clients?<\/span><\/a><\/li>\n
  7. Your next step<\/span><\/a><\/li>\n<\/ol>\n

    <\/a><\/p>\n

    Strategy 1: Match sales goals with your margins<\/span><\/h2>\n

    As a sales leader, you should define sales objectives so margins are always top of mind for sales representatives<\/strong>. You must ensure that their compensation has a component related to profitability, otherwise, sales reps won\u2019t take it into account. You can adapt margins according to product lines, clients, sectors, segments, or territory.<\/span><\/p>\n

    Many salespeople don\u2019t know if the sale they make is profitable or not.<\/span><\/strong> They should be keenly aware of their profitability margins. However, you can\u2019t reach a margin goal without compensating sales reps properly, so their compensation <\/a>should be adapted accordingly. This means that their employment contract needs to reflect that expectation. Take the time to review current contracts to make sure that monthly or yearly commissions are based on the profitability of sales.<\/span><\/p>\n

    <\/a><\/p>\n

    Strategy 2: Review accounts to determine price increases<\/span><\/h2>\n

    At the start of the year (calendar or fiscal) your sales team should take time to review all their accounts to see which ones should see a price increase. This review should also look at critical accounts, where profitability has dropped in recent months.<\/span><\/p>\n

    Each sales rep should have a clear picture of the profitability of their respective accounts <\/span><\/strong>based on certain criteria (territory, industry, etc.). Having a clear view allows salespeople to better gauge whether they will meet margin goals established.<\/span><\/p>\n

    <\/a><\/p>\n

    Strategy 3: Define a process to increase pricing<\/span><\/h2>\n

    As part of an effective sales management system, you need to have a clear process that allows your sales team to raise prices. This process should allow each sales rep to communicate, negotiate, or give feedback on each account in terms of their profitability. <\/span><\/p>\n

    To define and implement such a process, you first need criteria that will allow each salesperson to identify accounts that require an increase in profitability. Criteria can be, for example, the average margin over the last five years, or accounts that deal with a specific product line. Those criteria help sales representatives quickly identify the accounts that require a discussion about price increases. <\/span><\/p>\n

    As a sales leader, you should prepare your representatives to have that discussion. Some of the topics to address with account representatives are:<\/span><\/p>\n