Blog 13: Preventing Margin Leakage During the Sales Process

Are you aiming to maximize your net profit after sales by minimizing costs? Then, this blog is for you! Every organization seeks to optimize its potential margins. But how do you achieve this?

The sales process as a source of margin leakage

In the process of selling a product or service, incurring costs is inevitable. Naturally, you’d want to keep these costs as low as possible. Have you ever considered the costs associated with the sales process? It can sometimes be a sensitive topic, but these costs can escalate enormously and unnecessarily. Here’s how it typically unfolds…

Imagine a pipeline where the potential margin sits at the top. Throughout the sales process in many organizations, various things can go wrong, causing margin leakage along the way. And every drop you lose impacts your final margin. How does this leakage occur? We often identify the following structural causes:

Generating expensive quotes that may lead to incorrect orders

  • Poor (or no) communication between sales and technical teams. Sales may occasionally try to sell something that’s not technically feasible, leading to proposal revisions after technical consultations.
  • Selling through dealer channels or portals with incorrect data or prices.
  • Having multiple sales tools with different information within the company.
  • Missing opportunities for cross- or up-selling.
  • Lack of control over discounts or compliance.
  • Delays in generating quotes, prompting customers to look elsewhere.

Each of the above factors contributes to lower realised margins. But it doesn’t just affect margin; customer satisfaction suffers too, or worse, deals are lost, leaving no sales to capture any margin.

A leak-free pipeline

At CPQ Belgium, our mission is to help every company achieve maximum potential margins. We assist by providing a tool that encourages salespeople to quickly, easily, and above all, accurately generate price quotes or proposals. By capturing all knowledge in our developed configuration tool, Merkato, there’s a way to plug the leaks in the pipeline we described and realize that optimal potential margin.

Merkato compels every user/salesperson/dealer/agent to work through a protocol, ensuring:

  • It’s no longer possible to offer products that are not technically feasible.
  • Use of the most recent prices and information by, for example, integrating with your ERP and/or CRM system (bi-directionally).
  • Optimizing collaboration between sales and technical teams, eliminating internal frustrations.
  • Automatic cross- and up-selling using mandatory fields.
  • Control over offered discounts.
  • Incorporation of regulatory standards to comply with regulations or mandatory standards.
  • Prompt delivery of a correct proposal to the (potential) customer.

Does your company also aim to optimize realised margins, and do you suspect that “margin drops” are leaking during the sales process? Feel free to contact us. We’d love to discuss your situation and demonstrate how Merkato works and can add value to your operations.