Surprising Results from Vendavo’s latest Enterprise Profitability Survey

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Achieving profitability is still more art than science at many companies – 59% say salespeople set pricing independently.

This survey shows that this lack of real-time information really affects profitability

Vendavo’s Enterprise Profitability Survey, published today, finds that setting and monitoring profitable pricing is one of the biggest challenges faced by enterprises. The survey reported that prices are based on a published price list in only 43% of cases.

Most sales reps define their own pricing for most transactions. The survey reports that, because only 20% of sales people are compensated on profitability, they are not incentivized to quote prices that reflect the full cost of doing business.

“Many of the costs that have a big impact on the bottom line are hidden,” said Neil Lustig, Vendavo CEO. “These costs, which can include freight, support and maintenance levels and loyalty discounts, can only be surfaced through in-depth analytics which are often unavailable to the frontline sales person. This survey shows that this lack of real-time information really affects profitability.”

According to the survey there is a significant gap between sales executives and their front-line sales force in terms of the executives’ ability to impact sales profitability on a deal-by-deal basis. Fewer than 5% of those surveyed declared they had “complete control over deal profitability”. Sales leaders are increasingly required to focus on overall profitability – in fact around 50% of sales executives surveyed were compensated on profit - but they lack the tools to define, identify and drive the profitability of each deal.

The objective is to re-align the complete sales team to focus on profitable transactions. To do that, sales managers need tools that provide clear, actionable and defensible pricing guidance. Ultimately the front line requires this guidance in a useable format at the “Moment of Truth”.

Respondents to the survey came from 48 US corporations, employing a sales force of from 100 to 5000. While over 70% of these organizations stated that they used price-quoting tools, these tools were only one input to a salesperson’s ultimate quote. The survey showed that discounts were – in over 60% of cases – given purely on the basis of volume, rather than profitability.

The survey is available at http://www.vendavo.com/company/news-press/

About Vendavo

Vendavo’s front-line profit optimization solutions help customers sell more profitably by empowering salespeople to negotiate confidently at the “Moment of Truth,” delivering 10-30% incremental profit, while increasing front line effectiveness, agility and responsiveness.
Vendavo is the enterprise profitability solution of choice for more than 300 company divisions at some of the world's biggest names in Chemicals and Process Industries, Consumer Packaged Goods, Wholesale Distribution, Energy and Utilities, Technology, Industrial Manufacturing, and Medical Devices and Consumables.

SAP, a worldwide leading provider of enterprise application software, also offers the Vendavo solution as the SAP® Price and Margin Management application by Vendavo. To learn more, or to request information contact http://www.Vendavo.com

ENDS

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Frank O'Mahony
Vendavo
505-699 3985
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