Sales : And how crooked can it get

The only part of the business that yields revenue is sales, rest all is a detail. Each and every sales personnel is busy getting numbers.  More sales more revenue more profit. All strategies have to convert to sales. The new era is Marketing Linked Sales Activity. Robust sales happen and then a stage comes when no matter how hard you try the sales does not grow.

Through my experience in the market with both established brands and establishing brands, I have gone through this period. My exposure to both side of the spectrum enables me to see things a little more clearly.

Let me state an example. There is this chocolate company, they has been in business since long. They are available in every possible distribution format, you name it – Traditional format, Modern Format, Chemist, Sweet Shops and almost all the other places where it can be placed.. It has grown phenomenally and now reached a possible maturity stage. But the pressure to get growth is always there. Now what this pressure does is that it build up lot of unrest in the team and that is where the crime stats. Dumping!!

There is a very common question in the sales business, what is the primary. All sales growth is calculated in primary and it must, as this is the most reliable way to calculate sales. But these primary numbers are a trap in itself. And if it is startup, it is criminal. Actually, it will kill the baby before it can stand on its own.

Primary in line with secondary and closing is all right. But most of the top companies build up the primary on the distributor. The top companies get top distributor with no issues with investment.  And, if they get a distributor who has good money with him and lacks understanding of business then it’s a gold mine. However, if the distributor knows about the business and understands that he is loosing money at the end, he will never stick. Therefore most of the companies that build up the business on primary looses in the long run. Attrition of distributor is now a major concern.

The definition of secondary has also changed a lot. You have to get sales, keep low stocks at distributor points, so what you do is increase the secondary. While the sales and stock statement of the distributor is healthy for some time, eventually it comes down. In this case what a clever salesman does is, he builds up stocks at the outlet though his relation. Eg, an outlet has a sale of Rs 10 lacs. You have pumped a sales of 15 lacs in the outlet for month1 and then 15 lacs in month2, so by the time you have reached the month 3rd you already have one month stock lying. So the outlet does not give order for Month 3 and the sales drop, so does the primary and what happens

You have done all in the sales front, now what, what to do to get the profit.

The Production Team already is working with optimum utilization of resources. But still, the pressure move to the them to lower the cost. In doing so a lot of combination is the products change. Eg if you are in the RTD category  and say in the instant mixes tea/coffee and you have to increase profit, just increase the sugar content, lower the tea/coffee extract, the cost will come doing. If you are a small brand you may loose customer, but if you are giant MNC, once consignment does not harm much. Other industry has other modes of reducing the cost. Clever companies know how to this very nicely. They maintain the quality though out the year. But towards the year end the change the combination to increase the profits.

There are other ways also to increase the profits – reduce people, consolidate assets and so on.

No matter what, in some way or the other all product reach a point beyond which sales become difficult. But growth is important and must happen.  And it is not complicate, a cool head and a cool approach, will solve the problem. Some of the points to ponder are:-

  • Do in need to move into new area
  • Do I need to create more SKU
  • Have I reached the potential of the store
  • Do I have to take more Share of the Space

(each of these needs a lot of detail understanding)

 

While most of us say, sales is the game of number, I think it is beyond this. Sale is game of the customer acquisition. In fact sales is a function of customers. The more the customer you have got, the more the opportunity to sales. When you have one, then all you need to do is to add the range, create the excitement. Sales numbers will follow.

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