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Pricing is the most powerful profit lever a company can use, but it is also the most under-utilized one. Pricing decisions are among the most important a company makes due to their direct and immediate impact on profits. Yet most prices are a result of ad hoc decisions based on anecdotal evidence, producing inconsistent outcomes in terms of margins and profitability.
According to several industry studies, a 1% increase in realized price delivers a healthy 7% - 10% increase in operating profits. Despite this power, few companies have effectively taken advantage of pricing to improve profitability. ClearProfit’s Price Optimization approach enables our clients to excel at all the pricing competencies:
- Price segmentation
- Price analysis
- Price setting
- Price execution
ClearProfit’s Price Optimization services use a data driven approach that requires specialized applications and processes based upon advanced pricing sciences. By adopting this approach, our customers can achieve the best pricing on every transaction.
Effective Profitability Management can deliver exceptional financial performance for companies who know how to leverage the right strategies, processes, technologies, pricing methods, and analytical models needed to succeed in this critical business area. Unfortunately, the data that is required is frequently missing or isolated in legacy applications crossing several operational departments. ClearProfit’s approach to Profitability Management focuses on four (4) sources of profitability:
- Customer profitability
- Product profitability
- Vendor profitability
- Channel profitability
Typically, a small percentage of each of these sources will produce the largest portion of your company’s profitability. Our approach leverages the right combination of strategy focus, process improvement, technology integration, price management, and analytical modeling to improve profitability from each source. By improving your company’s profitability management, your company will benefit from knowing exactly which profitability sources create profit, and which sources destroy profit and the reasons why.
Whether using direct sales, wholesale distributors, resellers, specialists, dealers, third-party catalogs, or some combination thereof, too many companies overlook the role of distribution channels in driving profitability while effectively and efficiently meeting customer needs. The challenges and opportunities in Channel Management will continue to multiply in the future because of accelerating channel evolution.
ClearProfit’s approach can help develop effective Channel Management capabilities that address key business objectives:
- Effectively target customer segments
- Maximize channel revenues
- Minimize channel costs
- Reduce channel conflicts
- Enhance brand consistency
- Maximize channel profitability
- Increase customer loyalty
The contracts that define your company’s economic business relationships and the commitments they govern, have a profound influence on your company’s profitability. Contracts are the cornerstone of customer, partner, and supplier relationships, and directly affect your financial performance and risk exposure. Without visibility to these contracts, consistency of their application, compliance of financial transactions, and a way to track their performance, a company will typically lose sales revenues and profits, over spend on supplies and materials, and greatly increase a company’s risk exposure.
ClearProfit’s approach to Contract Management focuses on the entire Contract Management Lifecycle process by improving the following:
- Contract creation and standardization
- Contract review and approval
- Contract execution and accounting
- Contract compliance and control
- Contract performance and reporting
ClearProfit’s Contract Management services also leverage advances in technologies that provide for maximizing the effectiveness of your company’s Contract Management processes and performance while optimizing the lifetime value of the business relationships.
Finding a way to consistently execute your business strategy is the key to growing the value of your company, no matter what other challenges you’re experiencing. Poor execution of your strategic plans will ultimately deteriorate margins and profitability. Our approach to building a Strategy Execution program is straight forward and includes the following critical elements:
- An entire company commitment to strategy and execution
- A common method for strategy communication
- A proven, repeatable strategy development and execution methodology
- A consistent, and ongoing external support and coaching system
- A system that aligns daily activities to strategy execution
- A set of processes and policies that motivates execution and enforces accountability
- A shared learning and feedback environment
Companies that excel at strategy execution have historically been the market leaders in their industries. ClearProfit’s experts will help you in developing your Strategy Execution program which will help your company in achieve it's strategic goals.
