To identify profitability potential, we must first analyze the causes of unprofitability. Sometimes most unprofitable business segments are such because the supplier is investing too much in the relationship in proportion to the revenue derived from it. Untypical activities may create large costs, too.
Pricing is a complex issue which is partly determined by the competitive situation, but which in surprisingly many cases includes unspoken signals coming from the company itself. A quick analysis often proves that converters lack of a significantly appreciable cash flow for continuous investments. Even if volume in itself is not a good indicator of relationship value, it is clear that customers with greater volume are more interesting from the profitability point of view because they constitute the backbone of suppliers' net cash flow and enable future developments of the business.
The key word is therefore investment while the strategic step forward is to reach a business compromise with clients to agree to a deliberate economical support which in the end will pay the clients who have been enthusiastically using our products.
As we have said it many times: "Quality does not cost: A lack of quality does". See relevant flash publication dated 30 July 2013.
Giorgio Gastaldello
Sales & Marketing Manager
