As I detailed in MYPRODUCT36 anti-parasitic products mark between April and June the strongest sales peak, who miss this period have great chances to miss their annual targets. That is why in March-June are concentrated the majority part of the commercial and marketing activities for this product segment.
As each player was trying to stock as many goods as possible at clients, during this period our sales team had to face a commercial assault of competition offers, one more attractive that the other, with 30% discount, 40% discount or even 50% discount.
As commercial manager, how do you react when sales agents come from the field and tell you that there are competition offers in the market that customers simply cannot refuse?
In MYPRODUCT39 I detailed how as Commercial Director in Veteco I implemented three distinct areas of action to support the commercial team to be able to cope with the commercial war in regards with prices and discounts.
In this context I invented The Price-Discount Model, a working tool that sales agents used intensively to convince customers that by working with our products and offers they reach superior results including financial results vs competitive products and offers.
This model challenges sales rep and customers (cabinets and veterinary pharmacies) to analyse and answer to few simple questions:
-what is the customer’s profit?
-promo 10 + 1 free is better than 10 + 3 free?
-how can the customer increase the profit by 5%? 10%?
-how many clients need a cabinet to get 10000 profit?
-how long takes to get this 10,000 profit into cabinet’s account?
The Price-Discount Model is a xls instrument that is easy to use and generates in few seconds comparisons between promotional offers (value, units), profit, number of clients and number of days in which the profit is reached, break even rate etc.
See below the Price-Discount Model.
Note: Information, numbers are random, used for exemplifying purposes.
Using this tool, sales rep was able to instantly prove to the customer:
-an offer 10 + 1 free from Merial generates a 1330 profit. To get the same 1330 profit, the competitive offer must reach 10 + 5 free!!!! Any offer under 10 + 5 free from competition generates a lower profit than the 10 + 1 Merial offer.
-profit per pipette is 41% higher if cabinet accesses the offer 10 + 1 vs 10 + 5!!
-to get 5% higher profit, vet cabinet needs to convince only 2 animal owners to use Merial product instead of competitors
-to get 10,000 profit from anti-parasitic products, working with competitor products needs 41% more pet owners than working with Merial portfolio
-to reach 10,000 profit, a cabinet needs 41 days by working with Merial portfolio vs 58 days by working with competition (for a daily average of 2 pet owners buying anti-parasitic products).
The Price-Discount Model was one of the most powerful, versatile and professional tools the sales team used to address the commercial war on prices and discounts.
As sales manager, sales rep it is necessary to invent your own tools, speeches, approaches to combat direct price and discount objections, because even if understand the benefits of your portfolio customers deliberately will compare offers just in terms of figures, without being aware that a 10% discount from your part can generate more profit than a competitive offer with a 30% discount.
Notification: MYPRODUCT reflects my real professional experience and expertise as well as my subjectivity. I do have a profound respect for all the companies I collaborated to and for all the people I worked with. It is not my intention to approach any sensitive, confidential or offending information related to companies, projects or people. If you the reader deduct or recognise companies, projects or people in my examples, I kindly ask you to respect MYPRODUCT and my professional and ethic approach and to not share any detail, information, situation, name, company.