Maintaining and increasing revenue is one of the most important and challenging tasks that CFOs face. We often think that the only way to improve business profitability is to increase sales or reduce costs. However, increasing the profitability of our existing customers is an emerging business trend that we should pay more attention to.
When we think about our customer revenue, we tend to focus on the amount of sales and assume that dealing with customer profitability is a task for the sales and marketing departments alone. However, CFOs play a key role in this, as managing the costs and benefits of those sales has a major impact on a company's profitability.
To increase sales revenue or customer profitability, companies often invest in consumer data integration technologies, such as CRM, to support the sales department. However, there are specific technology solutions to optimise customer profitability and improve business financials related to customer relationships. Such tools can be of great help to a CFO.
Are you a CFO? Do you want to know how to increase the profitability of your sales revenue? If so, our 'CFO's Guide: Boost your sales profit' is what you need!
No doubt channelling client productivity is a tough task, but with the support of the right tool, a CFO can significantly contribute to enhancing the profitability of this business area.
According to the latest report by Interactive Advertising Bureau (IAB), today's businesses face a tricky dichotomy between financial strategies that increase capital flow in the immediate or short term and long-term strategies, as they often clash with each other. According to IAB, long-term strategies end up being more profitable and customer-centric actions can make a major difference in a company's profitability.
How can a CFO boost sales profit?
One of the basic principles to better manage sales revenue is to thoroughly analyse the profitability of our existing customers. According to Forbes, "countless organizations have found that roughly 80% of their customers deliver 20% of their revenue or profits. Yet rarely is that same ratio correlated to expenses. Take just a moment to think of how much time and expenses are stolen by customers who deliver a small percentage of your profit." In other words, when we evaluate the financial profitability of consumers, we should not only consider the revenue they bring in, but also the costs associated with that revenue.
In this respect, CFOs are responsible for redirecting resources to the most profitable customers in order to avoid financial mismanagement of customer relationships and poor use of resources.
The right technology can guide a CFO in identifying which customers —or customer segments and channels— are worth focusing costs on to increase margins and/or profits. Moreover, with an effective tool, the team can free itself from unnecessary tasks and focus on building binding relationships with the most important customers, rather than spending countless hours on unprofitable customer segments that do not justify the investment.
At the same time, an effective solution will have a direct impact on return on investment and will help CFOs decide when it is worth investing in short or long term projects based on their ROI and the company's cash flow or financial status.
Increase your sales revenue with ABC Client Analysis
Bismart ABC Client Analysis is the ideal technology to identify which customers or customer segments provide a greater contribution margin to the company and to be able to decide which strategies or projects we should invest in at all times, avoiding overexertion in the collection and search for large amounts of data (Big Data).
ABC Client Analysis segments your client portfolio based on customers contribution to revenue and profitability, providing CFO with the information they need to make investment or expense reallocation decisions. It also allows them to classify clients according to their contribution to gross margin and total revenue, discover which clients are profitable and which are loss-making, understand client portfolio concentration and diversification, and identify high-risk, strategic and target clients.
How do we do it? You will find everything you need to know in our "CFO's Guide: Boost Your Sales Profit".
On the other hand, the solution also supports the sales and marketing department, which, with the right information, can optimise sales strategies and focus them on those customers who generate the highest profits.
Carrying out an ABC segmentation usually involves a lot of work and time.
Referring to Pareto's law, we spend 80% of our time collecting data and only 20% on data analytics. With ABC Client Analysis we turn these percentages around, managing to invest our time in analysis and decision making (data-driven decisions). With ABC Client Analysis, ABC segmentation is easy, fast and automatic. The solution avoids errors and inaccuracies and promotes the implementation of more effective commercial and financial strategies.
Want to see how it works? We tell you all about it in our webinar: ABC Client Analysis.