What to do when revenues begin to plummet. Why sales growth can kill profits and the entire business

First of all, it should be noted that revenue represents money received by the enterprise as a result of the sale of products, goods or services. A decrease in revenue is characterized by a decrease in cash flow, received by the enterprise from the sale of products (goods, services), which can be caused by a number of objective or subjective reasons.

Revenue is very important for an economic entity, as it is one of the main sources of financing activities. In this regard, the management of the organization must regularly monitor any changes in this indicator and respond to them in a timely manner.

REFERENCE. There are situations when the management of a company deliberately reduces sales revenue (for example, in order to conquer new markets, the price of a particular product is reduced, which subsequently affects the amount of revenue).

What factors influence this indicator?

It should be noted that the amount of revenue is influenced by many different factors, which can be divided into two large groups:

Reasons why the fall occurs

The following are the most common reasons for a decrease in revenue:

1. Product obsolescence– sooner or later the market becomes saturated with a certain type of product, which causes a decrease in sales volumes and revenue.

   IMPORTANT. An entrepreneur should promptly update the range of products produced, giving it new quality characteristics or creating another product.

2. Seasonal drop in demand– there are specific types of goods, the demand for which fluctuates depending on the time of year. For example, swimsuits will be sold much more actively in the summer. However, in winter the demand for them drops sharply.
3. Increase in cost– for example, an increase in the price of raw materials and materials can significantly increase the cost of manufactured products. At the same time, it is not always possible for a commodity producer to raise the price, as this can reduce the competitiveness of the product. As a result, there is a decrease in sales revenue.
4. Weak advertising and marketing policy– today active advertising is one of the main factors contributing to an increase in sales.
5. Decrease in production volumes– for example, during a crisis, many enterprises significantly reduce production volumes, which ultimately affects the amount of revenue, etc.

For clarity, let’s look at the reasons for the decline in revenue using the example of a construction company and a store. In construction, revenue may fall for the following reasons:

If revenue has fallen in a store, this may be due to the following reasons:

• incompetence and rude treatment of sellers;
• weak promotional activities;
• lack of “tasty” offers, various discounts, promotions and bonuses;
• narrow range of products;
• unreasonably inflated prices (in this case we are talking about stores designed for a wide range of consumers), etc.

Step-by-step instructions: what to do if your income level has decreased?

So, if revenue falls, the following steps should be taken:

1. First, it is necessary to analyze the current state of revenue at the enterprise, as well as identify the degree of deviation of its actual indicators from the planned ones.
2. It is necessary to understand the main reasons that caused the decrease in revenue. This stage is very important, since timely identified causes of failures in the enterprise’s activities will allow the necessary measures to be quickly taken to eliminate them.
3. Having identified the main reasons for the decline in revenue, you should begin to select specific ways to increase it.

   The following ways to increase sales income can be identified:

   • reduction of production costs;
   • increase in production volumes;
   • conducting an effective advertising policy;
   • entering new markets;
   • expansion of the range of goods, etc.
4. Implementation of specific measures to increase revenue. This stage involves:
   • setting specific goals;
   • control over the implementation of assigned tasks;
   • analysis of the results obtained.

What not to do?

It should be noted that there are a number of prohibited techniques that are not recommended to be used when revenue is falling. Otherwise, the situation can only get worse. So, let's look at them in more detail:

To summarize, systematic decline in revenue is a serious cause for concern. At the same time, you should not make hasty decisions. First, you need to carefully analyze and weigh everything, and only then take specific actions.

It can be caused by various circumstances: crises in the economy, an ill-conceived company management system, problems in production and sales, seasonality or unfavorable weather conditions.

Reasons for the decrease in profit of a business entity

The following reasons are identified that lead to a decrease in the revenue of an economic entity:

• General economic. Rising inflation, depreciation of the national currency, which makes it more difficult for a company to pay for goods and services of foreign partners. The category of general economic factors includes crisis phenomena in the financial system, leading to a reduction in consumer income, unemployment, and a slowdown in the flow of funds of an economic entity.
• State. Reluctance (inability) of the state to timely pay private firms for work performed or services provided. The establishment of administrative barriers that lead to downtime for companies (for example, a long period of time for obtaining permits to start business activities), increased taxes and fees that increase the costs of business structures, corruption, unsatisfactory work of the courts, due to which disputes between counterparties take months to be resolved.
• Market. A decrease in a company's profit is a consequence of increased competition in the market and the emergence of cheaper and (or) high-quality alternatives to its product. Financial indicators may worsen due to the lack of government support for domestic producers and the influx of analogue goods from abroad. Errors in supply planning contribute to a decrease in profits, leading to the presence of a large number of intermediaries in the chain who charge a commission. Other reasons include instability in stock markets and problems in the banking system.
• Force majeure. The company's profit decreases sharply when emergency circumstances occur. These include a fire in a warehouse or office, natural disasters, declaration of martial law in the country, theft of valuables or disclosure of confidential information.
• Operating rooms. The company loses a significant portion of its income if it does not effectively use the fixed assets at its disposal.
• Financial. The decline in profits is caused by a large share of loans and advances in the company's capital, inefficient use of credit resources, ill-conceived pricing policies, a significant amount of costs in the cost structure (for example, renting an unreasonably expensive office), and overdue accounts receivable from large buyers.

Other factors that reduce profits include seasonality, ill-conceived marketing policies, unfavorable weather conditions (important for agricultural producers), and lack of motivation among managers and ordinary employees.

Life is like a zebra: a black stripe replaces a white one. And for business, this could not be more true: either a decrease in revenue or an increase. Surely every business person has experienced times when his company experienced a decrease in revenue due to a decrease in sales volume. The main thing here is not to panic and not to mess things up in a hurry. Some businessmen in such a situation immediately decide to get rid of one assortment of goods and purchase another, reshuffle personnel, or even completely change a long-established team. Will the decline in revenue stop after this?

You will learn:

• What factors influence the level of revenue.
• What are the reasons for the decrease in sales revenue?
• How to analyze the decline in revenue at an enterprise.

Why a decrease in revenue is dangerous for an enterprise

First, let's define revenue itself. This is the amount of cash receipts from the sale of goods of the enterprise, which is at the same time the main source of financing the activities of this organization. The total revenue of a company is a combination of three main areas of activity:

• revenue from the sale of goods and services provided. By and large, this is the main task of the enterprise;
• revenue from investors through the placement of their shares and bonds;
• investment proceeds: monetary gains resulting from the sale of securities and non-current assets.

As already mentioned, these types of activities form the total revenue, its decrease or increase. However, one of them is the main one, namely the main activity of the enterprise, the reason for which it actually exists - the production and sale of certain products for the sake of revenue.

In general, product sales are the last stage of the company’s work cycle, which is also of primary importance. Because without revenue it is impossible to start a new production cycle, it is impossible to maintain the circulation of funds. Decrease in income – production downtime. What is product sales? These are goods purchased by the consumer at retail or taken out of the warehouse in bulk, and already paid for in full. It is important to remember that various types of indirect taxes are not included in revenue; there is a separate accounting column for them.

What determines the decrease or increase in your company's revenue? Is it decreasing or increasing? Many different factors play a role here, such as: the range of goods sold, its quality and quantity, settlement and payment discipline and, of course, the company’s pricing policy.

The total quantity of goods sold, and, accordingly, revenue is directly related to its production, as well as to the remnants of products from the previous production cycle, “carrying over” from month to month, from quarter to quarter, or even from year to year.

The conclusion is simple: revenue from products and services provided is the main material component of an enterprise’s well-being. Because without its own resources, which are constantly in circulation and replenished, not a single company will stay afloat for long.

Factors reducing revenue

Factors that influence the amount of sales revenue can be divided into two types: those that are related to the operation of the enterprise itself, and those that are not.

Factors on which the amount of increase or decrease in a company’s revenue depends:

• range of manufactured goods;
• volume of production;
• the quality of goods, as well as their ability to compete with others similar on the market;
• the company's pricing policy;
• what methods can you pay for the goods (the more possible forms of payment, the better);
• shipment of products (a variety of shipping methods is a priority);
• stability and cyclical operation of the enterprise;
• completeness of the goods;
• and, of course, one of the main factors is demand for products.

Now about force majeure factors, which are in no way connected with the activities of the enterprise and its increased or decreased revenue. This:

• problems with the bank (for example, delays in settlements);
• difficulties with transport (lateness, breakdown, etc.);
• delay or refusal to pay for goods by buyers (for a variety of reasons).

Sales techniques that will protect you from revenue decline

Are you already using additional and cross-selling, regularly holding promotions, offering “locomotive” products, but your revenue is still decreasing? Try to implement non-trivial techniques from the editors of the “Commercial Director” magazine, which will attract the attention of even indifferent customers and motivate them to purchase.

Possible reasons for the decrease in sales revenue

• Seasonal drop in demand

The demand for many consumer goods is in one way or another tied to the season, and nothing can be done about it. Who needs skis in the summer, unless, of course, you live in the Far North? But there is good news: certain businesses have long adapted to the seasonal decline in revenue and have calculated all their steps “from” to “to”. So, a decrease in seasonal revenue does not have much impact on the annual financial results of established enterprises. If you are planning to enter completely new markets, then you should definitely pay attention to their specifics in this regard. For example, a decrease in revenue in the summer in southern Europe. Who hasn't heard of a siesta in hot Spain? Sellers work less during the day, and customers are less likely to be seen in stores. That's why revenue is declining. So “shopping” siestas may well continue for a couple of months due to the same unbearable heat.

• Loss of popularity of the product

Remember the phrase: “Nothing lasts forever under the sun”? Another reason for the decline in revenue is completely banal. The client simply lost interest in the goods produced by the company. Why suddenly? There can be many reasons. Or your products are outdated. Or competitors have a product of comparable quality, only much cheaper. Or, finally, fashion has simply changed, which, as you know, is a capricious lady. The result is a decrease in revenue.

• Customers leaving for competitors

Competition is a blessing for consumers and an eternal irritant for business representatives. A decrease in revenue can happen literally at any moment, and the worst thing is that sometimes nothing depends on you. A strong competing company appears on the market - that’s it, revenue immediately decreases. Competitors began to sell goods at dumping prices - again a decrease in revenue. And it’s impossible to play it safe here. If you accept the game of lowering prices - one way or another, you will lose even more, fight with a “heavyweight” competitor - you may end up without any revenue at all.

• Fall in demand during a crisis

“Crisis”, a decrease in production, is one of the most terrible concepts for entrepreneurs. A crisis always means a decrease in the purchasing power of the population. And as a result - a decrease in revenue. By the way, people often don’t spend money not because they don’t have it. They simply save money in a trivial way: “What if something happens?”, “How long will this trouble last?”, “It’s better to wait until everything settles down...”. In the event of a crisis, goods of considerable value (cars, apartments), as well as those that “can be done without for now,” suffer the most from “lack of attention.” And again there is a decrease in revenue.

• Excess of loans issued to the population

According to many experts, often the cause of crises (and as a consequence, a decrease in enterprise revenue) is loans issued left and right. This is exactly the same double-edged sword. It seems that thanks to the availability of free money among the population (thanks to bank loans) and the ability to buy expensive things “on credit,” the company is increasing its declining revenue, which is good news. But money tends to run out quickly. And then what? And then there is a decline in revenue. Because a significant part of the average family’s monthly income goes precisely to repaying these same loans. But you also have to pay for utilities and repay the debt to the bank, and food products have recently become more and more expensive. As a result, there is simply no money left for “optional” purchases, and many firms and enterprises are saddened to note a decrease in revenue.

• Unbalanced assortment

From the subtitle it is clear that the organization’s assortment should be as balanced as possible in order to avoid a decrease in revenue. To do this, it is better to produce goods both for earnings and for turnover. The second type of product, however, always has competitors, but there is also constant demand for it. Let's take a simple example. Recently, thermal printing has become fashionable among the population - transferring drawings to anything, from cups and saucers to gift decanters with a photo of the birthday person. As they say, whoever has enough imagination for what. So, thermal printing equipment is not that expensive due to high competition. But there are more than enough people who want to “translate” a funny design onto their favorite T-shirt or T-shirt! This means that the demand for equipment does not fade. And there is no decline in revenue. Based on these realities, the policy of a company operating in this area should be quite flexible. This means that in a certain situation, the sale of thermal printing equipment will account for approximately half of the total revenue received by the company. Moreover, we are not even talking about a decrease in profits.

• Incompetence and passivity of the organization's employees

Everything here is more or less clear: the staff is often to blame for the decline in revenue. What can you do here? First of all, analyze the work of the company’s employees, in particular, sales managers. You are wasting your money if:

• They offer customers something that is easier to sell to them.. A decrease in revenue usually occurs due to a lack of incentives for staff to perform well. Instead of selling products that bring the most profit to the company, managers advise customers what they like because it is easier. And leads to an inevitable decrease in revenue.
• Sales specialist working in a hurry precisely in order to avoid a decrease in profits. But it has long been known: if you rush, you will make people laugh. In this particular case, you will leave people without a choice, since the assortment on the shelves is not complete. Haste breeds inattention; as a result, popular goods are not delivered from the warehouse on time. The result is a decrease in revenue without any crisis.

How to determine the reasons for a decrease in revenue

There is nothing super complicated here. Just try to think about the following:

1. What was your revenue last year during the same time period? Maybe this is a normal seasonal decline, and a decrease in revenue is normal?
2. Continuing to talk about the season, is the assortment on the shelves suitable for it? The wider the range, the greater the revenue. Well, or at least less reduction in profits.
3. It also happens: almost or exactly the same amount of goods were sold as last year, but a decrease in revenue is a fact. This most likely has to do with the company's pricing policy.
4. If the decrease in revenue is not due to a seasonal decline, not because of the range or because of prices, think carefully about what changes have occurred in the company over the past year? Two or three years? The “incubation period” of some financial “diseases” can be quite long. And the financial “disease” is an inevitable decrease in revenue.
5. Perhaps the reason is something you did? Or, more precisely, inaction? Maybe they started saving on advertising? The consequences of minimizing advertising, or even completely abandoning it, also do not appear immediately and often lead to a decrease in revenue.
6. How are things going inside the company, or more precisely, with its employees? Of course, you shouldn’t suspect every second person, but it happens that a decrease in a company’s revenue is a consequence of banal theft.
7. And finally, if all parameters are normal, everything is exactly the same as a year or two ago, then the problem is not in your company. And the reduction in revenue is not up to you. Isn't it time to think about your competitors? If they did not loudly declare themselves, this does not mean at all that people are inactive. They are clearly doing something and taking part of your income for themselves. You have a decrease in revenue, on the contrary, they have an increase.

How to conduct a detailed analysis of the decline in revenue at an enterprise

Where should you start analyzing? You shouldn’t immediately study the decrease or increase in revenue throughout the company; focus first on its structural divisions. Calculate the contribution of all individual organizational units to the business of the entire enterprise, and draw up a monthly chart of the decrease or increase in profits over the past years. There are special indices that can be used to reflect price declines or increases in current or comparable prices. Indices of price changes for certain goods will also help.

If the company's revenue curve is growing steadily all the time, then everything is in order with your company, as it should be ideally. If there is a decline, you need to think about it. In general, the reasons for a decrease or increase in price dynamics can be measured using factor analysis techniques.

When analyzing the state of your enterprise, do not forget about certain indicators that, one way or another, are interconnected with the volume of product sales and the company’s profit. The indicators of decrease or increase are as follows:

• quantity of goods produced;
• product inventories in the warehouse premises of the enterprise;
• contracts for a certain number of company goods. Compliance of this quantity with the technical capabilities of the organization;
• How fully and efficiently are agreements on the production and loading of goods fulfilled;
• share of repayment of receivables.

If you intend to correctly assess the guarantees of receiving the greatest revenue (and especially not reducing it) from the sale of a product, you need to correctly calculate the balance between the number of product orders, the possibilities of its production and sales volume. A balance between production volumes in the company and their synchronous change is also absolutely necessary. If the condition is not met, you risk a reduction in revenue. So, it is necessary to analyze the changes in the following points:

• Low or declining level of product sales. The reason for the decrease in revenue may be both problems with the sale of goods and overestimated production of products. The list also includes violation of contracts and problems with payment discipline.
• The growth rate of production volume exceeds the growth rate of sales volume. There are a lot of reasons for this. Incorrect market forecast regarding demand for products, fraught with a decrease in profits. Incorrectly defined dynamics of enterprise development. At some point, the company's products simply ceased to be in demand among potential buyers - hence the decrease in revenue.
• The growth rate of production volume is lower than the growth rate of sales volume. Same decline in profits. But here the situation is reversed compared to the previous one. And it remains to be seen which of the two is worse. In this situation, there is a risk of violating agreements concluded in advance, and in the best case, simply getting a shortage of products for sale. However, sometimes a decrease in production revenue is due to an oversupply of goods “in reserve.”
• The growth rate of production volume exceeds the growth rate of the volume of production orders in accordance with the economic contracts for the supply of products concluded at a given time. A decrease in revenue may occur due to the fact that the company’s regular customers have “turned away” from the product. Also among the possible reasons for the decline in revenue are the company’s product release program that was not fully developed, or too rapid changes in the market, which they did not have time to react to in time. In this case, until alternative options for selling the product are considered, it will continue to uselessly take up space in warehouses. This means that an inevitable decline in revenue is guaranteed.
• The growth rate of production volume is lower than the growth rate of the volume of production orders in accordance with the economic contracts for the supply of products concluded at a given time. There is a decline in revenue, and not only business reputation is at stake here, although it will suffer first of all if the company is unable to fulfill its obligations to produce a certain product. This, in turn, is fraught with the loss of not only individual large customers, but also entire markets. Well, as a negative “bonus” there is an inevitable decrease in the company’s revenue.
• Reducing the number of contracts for the supply of products and their volumes. When warehouses are filled with goods, and no one is in a hurry to sign contracts for their purchase, then there is most likely one reason - there is more than enough product. This state of affairs indicates that the company's products are currently uncompetitive. The result is a decrease in revenue.

The analysis of changes in the above points is carried out in value terms for the entire activity of the company. Assortment analysis is done in physical terms.

How to manage costs to prevent sales revenue from declining

The dynamics of growth, as well as the size of the decrease or increase in the company’s revenue, also determine its financial balance. They are tied to both the turnover of the company’s assets, profitability of sales, and the actual attractiveness of the company for investment from outside.

Sales revenue depends on two factors:

1. The total volume of products sold, the piece value of each type of product.
2. Cost of goods sold, proceeds from sales.

In light of this, revenue will be equal to the total cost of the product and the revenue from its sale.

There are two groups of factors that determine a decrease or increase in revenue from sales of goods.

One group of factors is used to achieve a particular revenue from a product. The other solves the problem of achieving a certain amount of sales revenue, and the final financial result does not matter if, in the end, you do not go into the red.

However, most often in reality (and not in theory), business owners, in order to prevent a decrease in revenue, try to kill two birds with one stone, and therefore use both factors for calculations, especially if they take into account their relationship.

To effectively manage sales revenue, it is important to correctly determine the nature of the costs of the product being sold.

Variables are costs, the value of which depends on the quantity of products produced and its sales, and here everything is proportional. This includes money for raw materials for goods and piecework wages. Payment for energy for production (electricity, gas, fuel), as well as packaging for products, is also part of this topic.

Constant expenses include expenses that do not directly depend on the volume of production and sales. This is, say, rent for premises or depreciation of various enterprise assets.

By the way, there are more specific formulations of these costs, namely conditionally variable and conditionally constant. This is due to the fact that in some situations certain costs change their “color”, and one day a constant may become a variable, or vice versa.

Let's give a simple example. For example, in the employment contract of people working on piecework, there is a clause on payment for forced downtime. These amounts are not directly related to changes in production volumes. So it turns out that costs from the category of variables have been reclassified as constant.

It follows that it is simply impossible to compile an exact list of certain costs for a company for the entire period of its operation. However, this is why there are specialists who, in each individual case, calculate exactly which costs will “jump” after increasing the capacity of the enterprise, increasing the total sales volume, and in what proportion. And will there be a decrease or increase in revenue? So it is not only possible, but also necessary to temporarily divide costs into fixed and variable. This will help you understand how the demand curve for a product affects an increase or decrease in company revenue.

There are other types of costs that affect the decrease in revenue: direct and indirect. Those that go only to the production and sale of a specific type of goods are called direct costs. All the rest, without exception, are indirect costs.

This is where a little confusion may arise for a non-specialist. Because if direct costs in almost all cases will be variable, then some types of the latter are not always so “true” to direct ones and easily turn out to be indirect. Let's give a simple example. Let's say that different types of goods are produced in the same technical room. But there is only one electricity supply for all production lines.

As already mentioned, only direct variable costs are associated with a certain type of product. For all other costs, the distribution across the product range is no more than conditional. What does it mean? And so, depending on the choice of a specific distribution feature, the costs of a certain product can either increase or decrease. This state of affairs is extremely useful for establishing upper and lower price limits for certain goods produced by the enterprise.

There is such a thing as marginal profit. In short and to the point, the sum of constant indirect costs and profits from the sale of goods contained in the revenue from sales of goods will be called marginally th profit. Depending on the demand for a particular product, some parts will be included in its price marginal arrived.

From all of the above, we can draw the following conclusion: the financial feasibility of selling a product is determined by one condition - the cost of sale must be higher than direct variable costs.

How to eliminate a decrease in revenue from product sales

1. Study the market thoroughly

“Go there, I don’t know where, find something, I don’t know what, and sell it somehow” - this phrase is not about business. In it, you can’t rely on chance at all. Therefore, before opening your own business and counting on some kind of revenue, you must carefully analyze all the components of your future market. In particular, collect information about possible competitors. Understand why they got such a result (a quick takeoff or, conversely, a catastrophic decline in revenue). Analyze their mistakes and findings. And, of course, it wouldn’t hurt to have a detailed business plan that takes into account the decrease and increase in revenue over different periods of time.

There is no normal revenue without advertising, as any more or less savvy businessman knows. Another question is how much it costs now. For example, commercials on television, “thanks to” their exorbitant prices, are not available to every company. Television is not clearly complaining about revenue. However, there is always a way out. To avoid a decrease in revenue, advertising banners on the roads, leaflets on poles and advertisements in newspapers have not yet been canceled. Among other things, with the development of the Internet, many other quite effective advertising platforms have appeared: email newsletters, various kinds of websites and social networks. Spend money on advertising and you can avoid a decrease in revenue.

3. Make prices flexible

Not exactly a new trick to avoid revenue decline. Many potential clients have long since figured it out. However, it continues to work. How many times have you seen an ad in a particular store: 30 percent discount! Everything is fair, no one is deceiving anyone, there really is a discount. Only, some time before the reduction, the store raised prices for the same goods by 30 percent. And it’s good, if not by all 40.

4. Run more promotions

Various types of promotions are our everything to avoid a decrease in revenue. This is, one might say, a kind of game for adults. For example, collect a certain number of coupons and get something for free - no matter what. In the same retail chains “Pyaterochka”, “Dixie”, etc. every week there are discounts on certain categories of products - and this is also a promotion. Show your imagination, and you definitely won’t face a decrease in revenue!

5. Make changes to how your company operates.

Find out if your salespeople are as good as they said they were during the interview and promised that there would never be a decline in sales again. Or maybe the same product can be found much cheaper somewhere? Or your company's logo doesn't impress your clients?

Expert opinion

Attracting customers with a competitive offer

Timur Dasaev,

General Director of the company "Dachny Sezon"

Several years ago, after the company's revenue declined, a study was conducted based on information from competitors. Marketing agencies also analyzed the relevant industry for us. This allowed us to make an assessment of the total market volume, and then post a good commercial offer on the website to avoid a decrease in sales. This offer could not only compete on equal terms with other companies in terms of pricing policy, but also included some additional services, which provided additional revenue to the company:

• Different price range. To prevent a decrease in the company's revenue, we try to make the client an offer that will not only satisfy all his requests, but also correspond to his financial capabilities. Let's say we can build a house using the same technology in different configurations, no less than three. Among other things, each configuration can look different, as they say, for every taste and for the same money. And without reducing profits for us.
• Possibility of ordering additional services. For example, if the client expresses such a desire, then workers’ accommodation will be fully provided at the site during construction at reduced prices. The customer will not need to take care of the cabins for employees and the same electricity generator. He can rent all this from us at reduced prices.
• Simple and convenient presentation of information. Potential clients are attracted not only by quality and reduced prices, but also by the visibility of the offer. If you include simple and concise explanations in the presentation (and, for customers knowledgeable in construction, diagrams of the main components), this will ultimately have an impact on increasing the company’s customer base, and therefore its revenue. A reduced price for the buyer is good revenue for the organization.

By the way, after all these innovations, the company received twenty percent more orders than during the same period a year earlier.

Expert opinion

How to increase revenue by reducing the cost of services

Askar Rakhimberdiev,

CEO and co-founder of the My Warehouse service, Moscow

What will happen if one of the already reduced-priced services is made completely free for some time? That's what we did.

True, to begin with, everything was carefully calculated. Prices for our company’s services varied from 400 to 6,400 rubles monthly. There were four tariffs in total. After analysis, it turned out that the most reduced tariff in economic terms simply does not justify itself. There is such a thing as customer value - the total profit received by the company over the entire period of working with them. So, users who chose the minimum tariff brought the organization 27.5 times less profit than clients who ordered higher tariffs. And that is not all. Consumers with the lowest tariffs were four times more likely to abandon the company's services. Ultimately, the demand for the 400-ruble service stopped showing growth dynamics. That is, the decrease in sales from this tariff was absolute.

As already mentioned, the lowest tariff has become completely free. Those. a complete decline in sales. And it was accessible to absolutely everyone: both old clients and new ones. According to calculations, sales were expected to decline by five percent. And this is only if people paying for more expensive services do not decide to exchange them for free ones.

However, we took the risk of lower revenue in hopes of acquiring more customers. And then, having become accustomed to our company, they can switch from the “zero” tariff to a more expensive one. The calculation was not based on a reduction from scratch. The fact is that the free service is more suitable for very small companies; in a sense, it is even some kind of help for their growth. But when the company develops and “grows up”, the small tariff becomes too small for it, and it is necessary to switch to a larger one. That is, from a reduced tariff to a normal one.

There were two main ways to switch to the free plan. The first is due to a decrease in income: not to advertise our innovations too much (for fear of losing “paying” customers who will decide to reclassify as “free”). And the second is, on the contrary, to make the information publicly available and even conduct an advertising campaign about changing the company’s policy on reducing sales. We settled on the second path: we updated the website and sent out an offer to our client base. Hopes for revenue were tied to the influx of new customers into the company, precisely from among site visitors who were not previously our clients. The decline in revenue had to be offset by the number of users.

And the results were not slow to arrive:

• the number of visitors registered on the site increased by 23%;
• if previously there were no companies on the free tariff at all, then after the reduction there were 600 of them;
• The company’s revenue curve shows growth every month: over six months, profits not only did not decrease, but rose by 12.5%.

And most importantly, even after the introduction of a free tariff to the company’s services, the number of paying clients almost did not decrease - only by 1.5%. But total revenue has increased.

Expert opinion

Increasing revenue step by step

Daria Goryakina,

Director of the Retail Business Department of the Helix Laboratory Service

Several years ago, our company set itself the task of increasing revenue.

In such cases, it is best to act in stages:

• Increase in repeat orders

To maximize revenue and to ensure that clients return to us again and again, we have added online medical consultations to the list of company services, and not even at reduced prices, but absolutely free. A similar service has become available to anyone who contacts any of the organization’s centers to get tested. The fact is that test results from our diagnostic center can be received by e-mail, which is both fast and convenient. And along with the results, the client receives an offer to receive a free online consultation with a doctor, of course, immediately with the necessary link. Letters regarding the results of the analysis are read by everyone without exception, and therefore the proposal catches the eye of everyone. As a result, 28 percent of clients opened the site page and applied for this service of ours.

• Increasing consumer loyalty

There are two areas of work here:

• Firstly, a prompt solution to the client’s problem.

For this there is a so-called feedback. You can go to our website or “personal account”, call the call center and voice your wishes, suggestions or complaints - and not even at a reduced rate, but absolutely free!

• Secondly, the use of bonuses for dissatisfied customers.

To resolve conflict situations, the company has a special budget (30 thousand rubles every month), which is managed by the head of service quality control. Money can be used for a variety of purposes. For example, someone can retake tests for free (including at home using our mobile service). Next time someone will undergo an examination at a reduced rate (30 percent discount), while others will simply be pleased with a small gift certificate or a token of attention in the form of a bouquet of flowers from the company.

• Changing the motivation system

This part affected primarily company administrators. Previously, they had a rate of 180 rubles/hour, and now – 100 rubles/hour. Income seems to have decreased, but bonuses have been added that directly depend on revenue. But that is not all. Company employees receive additional bonuses for offering comprehensive services to visitors. Bonuses for attracting customers and their loyalty (50 percent of all bonuses) are awarded according to a special scheme.

• Increase in average check

Previously, the job of administrators was only to listen to the visitor and place the order he needed, even if at a reduced rate. There were no counter offers, but the vast majority of clients may simply not be aware of the entire list of services provided by the company. Let's say about the same online consultation or the possibility of a comprehensive examination. There was only one way out: in order to increase revenue, change both the form and content of communication between administrators and clients. A specially developed script program helped us with this, which automatically processes all available data about the visitor: age, gender, previously ordered studies and their results, many other factors, including, for example, pregnancy and current orders. After viewing the results of the program analysis, the administrator already knows approximately what other services or studies will be of interest to the client. The decline in income has stopped.

• Project "Heroes"

In order to increase the company's revenue, we have created a new position, namely, diagnostic center manager. His task is to solve certain urgent problems and control the work of administrators. The manager also reports to senior management on the sales plan. But the main thing here is that a certain link has appeared between subordinates and management. As a result, “staff turnover” decreased (to 3%), and the planned profit at retail outlets, on the contrary, increased (to 96%).

How to prevent a decrease in sales revenue during a seasonal sales decline

• Development of special service offers

A good businessman must thoroughly prepare not only for the seasonal lull, but also for the onset of the so-called “high” season, i.e. active sales season. If you approach it correctly in the future, it will pay dividends. Let's give one example. The company, which sells high-end software, lost revenue every year due to a seasonal decline in sales in the summer, when many people go on vacation. What did the owners do? During the winter and spring months of high sales, they announced one interesting promotion. Its essence was as follows: subject to a certain amount spent on software in the summer, the buyer has the right to free training for one of the employees, but only in the summer. As expected, many people were interested in the proposal. As a result, the seasonal decline in revenue was not so noticeable. And the competitiveness of the company has increased significantly.

• Business diversification

Behind the complex name there is a simple essence. If your business directly depends on the season, try to redirect it to another, more profitable direction during “bad” times. For example, one owner of a chain of hotels on the Black Sea accommodated workers there during the winter months and held various events. For example, alumni reunions, corporate events, etc. There was a decline in revenue, but not catastrophic.

• Long-term project planning

Prepare your sleigh in the summer and your advertising strategy in the winter. And best of all, at the end of the year, taking into account all the past shortcomings. Particular attention should be paid to future seasonal downturns and resulting declines in revenue. Advertising will help here: both stable old and new ones aimed at attracting new clients to the company. It would also be a good idea to try to develop activities in other markets during the forced decline of the priority business. With outside income you can “zero out” the decrease in revenue from seasonal business.

• Launch of new products to the market

New products that have not previously been produced by the company are also a good way to combat the seasonal decline in revenue. Experts have calculated that the best time to introduce new products to the market is January and July. An example is the strategy of car dealers, who provide customers with the most favorable conditions for purchasing goods during the months of greatest decline in profits. Thus, they offset the seasonal decline in revenue.

• Assortment adjustment

The product range should also be selected depending on the season. Agree, in winter they often order mulled wine and various kinds of hot drinks in restaurants, and in summer, on the contrary, cocktails, shakes or cold juice. It's the same in many other businesses. For example, mass flash mobs from advertising campaigns can be seen more often in the summer than in winter in thirty-degree frost.

• Short-term promotions and employee motivation

The decline in revenue or its growth largely depends on the ordinary employees of the company. And if they are well motivated, then an increase in profits will not be long in coming. What can be done for this? For example, a competition for the best employee of the month. Or the simplest option is a good bonus for the highest sales.

Expert opinion

How to prepare in advance for a seasonal sales decline

Valery Razgulyaev,

information manager for Izbenka and VkusVill companies, Moscow

The main thing here is accurate and subtle calculation. There should be just enough product (or close to it) so that it does not deteriorate and at the same time can fully cover customer requests. It should be remembered that during the off-season, less of certain products are sold, therefore, supplies must equal consumer demand. This is ideal, of course. To do this you need to work in three directions:

• Seasonality coefficients. Such coefficients are used to determine the company's revenue in a specific month of the year. Based on the calculation results, you need to plan the quantity of goods ordered. But these coefficients are a guideline only in the case when the product delivery period is long. The calculation formula, expressed as a percentage, is as follows: the ratio of the amount of sales for a particular month to the average monthly amount of sales for the year. By the way, this formula for calculating the stock of goods is suitable both during the sales season and out of season. As for the short delivery period, it is best to focus on the sale of products over the last week or two.
• Inventory of seasonal and non-seasonal goods. The calculation of reserves is done using seasonality coefficients. Here is an example of such a calculation. 100 units sold in April. one product and 50 units. another. We calculate the amount of basic products for May using the following formula:

quantity of goods for May = quantity sold in April × (kn: kn – 1), where

kn - seasonality coefficient in the last month of the season;

kn – 1 - seasonality coefficient in the penultimate month of the season.

• Timely advertising. With advertising, you don’t have to wait until the last minute, that is, until the seasonal decline. Consumers should know in advance that the store will soon expand its product offerings. However, at the very beginning of the season, advertising will also not hurt, as, in fact, at the end - one way or another, but it is advisable to still sell the remaining products.

Information about the experts

Timur Dasaev, General Director of the Dachny Sezon company. Timur Dasaev graduated from the Moscow State University of Civil Engineering (MISI named after V. V. Kuibyshev) and Moscow State Technical University named after. N. E. Bauman. He began his career at the Mirax Group and participated in the development of large projects. Worked his way up from engineer to site manager. In 2005, he headed the construction company “Dachny Sezon”. "Dachny Season" is a company founded in 2002. Field of activity - low-rise country construction of frame houses and wooden cottages. There are 20 people on staff.

Askar Rakhimberdiev, CEO and co-founder of the My Warehouse service, Moscow. Loginex LLC. Field of activity: trade automation, cloud services ("My Warehouse" service). Territory: head office - in Moscow, branch - in Nizhny Novgorod. Number of employees: 35. Increase in turnover: 77% (in 2014).

Daria Goryakina, director of the retail business department of the Helix Laboratory Service. Daria Goryakina graduated from the Russian State University of Trade and Economics and received an Executive MBA degree from St. Petersburg State University. She began her career at the Mobile TeleSystems company, where she worked her way up from a marketing specialist to a commercial director of a retail network. He has been working in his current position since 2013. “The Helix laboratory service was created in 1998 in St. Petersburg. More than 170 diagnostic centers and laboratory points have been opened under the company’s brand in Russia.

Valery Razgulyaev, information manager at Izbenka and VkusVill companies, Moscow. Graduated from the Moscow State Institute of Electronics and Mathematics (Faculty of Applied Mathematics) and the Institute of Economics and Finance (Faculty of Management). Over the years, he held the positions of analyst, marketer, logistician, and head of departments. Conducts business trainings. Has been with the company since 2011. “Izbenka” and “VkusVill” are chains of healthy food stores. On the market since 2009. Today there are more than 300 retail outlets in the network in Moscow and the Moscow region.

Entry No. 1174, Life, business.

February, 2012, man, 53 years old.

Q. He has a store, his own farm, recently the revenue in the store has fallen by half, over the past few months, why?

A. Problems with suppliers, not all groups of goods that are ordered are delivered, there are no suppliers. This is a temporary phenomenon, everything will resume in March, this is due to the weather, weather conditions. Many groups of goods are imported from Russia, due to weather conditions, deliveries are disrupted, there is no clear supply of certain types of goods. Mid-January and all of February, as well as November, these months are a certain stagnation. Everywhere, in all industries, in all directions, these months are considered dead months; revenue is always very poor. Shops, consumer services, factories, everything related to consumer services is the second factor. By spring, at the end of March, the situation will change, everything will resume.

Q. Are there any other reasons for the store why revenue has fallen, besides supplies?

A. There is also an emotional factor at play here; family problems take a lot of energy, time, and, above all, emotional strength. And perhaps it is necessary to conduct an audit of the possibility that employees are not very honest towards the employer. Strengthen control and make an audit. It’s just that now the problems with the store somehow fade into the background and people feel it and begin to take advantage of this moment. You just need to show your strength, in terms of making it clear that there will be no slack.

Q. Should they sell the store or change vendors or lease it out?

A. The best option at the moment is to rent it out.

Q. Are there still problems in the family?

Oh yeah. Now this store is like a burden, I have neither the energy nor the time for it now.

Q. What will they live on then?

A. For your own farm. That is why it is said that the lease is for now, for a given period of time.

Q. Isn't it best for them to sell the house, sell the store and move? What advice can you give them?

A. This issue is up to them to decide.

Q. But what will be better for them?

A. The easiest way is to sell everything and live in the city.

Q. And if this is an option, change sellers, arrange supplies, strengthen control over the store, will this be any good?

A. Such a business always requires a lot of attention and constant monitoring is needed. Your own participation is necessary, almost daily.

Q. Does he have powers?

A. There is some fatigue, rather reluctance, at the moment. This is the burden that fell on his shoulders. Problems in the family, business, it weighs down and presses, I want some kind of inner freedom. The earth always requires great attention, many advantages, but also a lot of attention. Living on earth is always a great responsibility.

Q. And if he rents out a store, will he have inner peace?

A. He just needs to somehow come to his senses, calm down, he needs a break, fatigue seems to be showing through.

Q. Is it better for him to rent out the store, rent it out, and take the money for the goods in advance, or hand over the goods along with the goods and they will be paid off little by little as they are sold?

A. As sales progress.

Q. Who is the best person to rent it to?

A. This should be prompted by inner instinct and intuition. This usually happens at the very first moment of contact, an instant assessment of what is happening, just a subjective attitude towards it. If there is any doubt, it is better to reject. In general, all information about a person, visual, auditory, is instantly processed and provides information.

Q. And if you sell to him, what is the best price for him to choose?

A. You need to be a strategist, you need to calculate all possible steps and options for the future. If you plan to buy something, then you need to start from the purchase first of all and draw appropriate conclusions about prices. They must be real, first you just need to collect information, study advertisements, newspapers, demands and offers and then build on it.

Q. Maybe it’s better not to sell to them now? His wife is used to living in this house, maybe it’s better to let them live in it?

A. It has already been said that it is up to them to decide, no one can give any advice.

Q. Is any move stressful for the psyche?

A. Before you go somewhere, you need to get a feel for this new place, how comfortable you will feel in it. It happens that moving, on the contrary, greatly changes the existing reality.

Q. If they are to move, where is the best place to do it?

A. It is better to choose the purchase of real estate, if it concerns an apartment, in the winter, do not take my word for it.

Q. Why?

A. All problems are better visible in winter.

Q. What if this is a house?

A. The same thing, the house is more likely in the spring.

Q. Why buy a house in the spring?

A. Wastewater, what location the house is on, how the water drains, and so on.

Q. When we last looked at their house, you said that there was negative energy in their house, is that true?

A. The house seems to be located in a not very good place, energetically. In general, it was not possible to build on this site.

Q. Why?

A. The place is not intended for habitation, for living.

Q. They don’t want to say why now?

If you notice a spelling error, please highlight it with your mouse and click Ctrl+Enter.

Why don't individual salespeople or even entire teams fulfill their sales plan? Often neither managers nor company leaders can answer this question. Instead, more excuses are made, hasty decisions are made, but the situation does not change.

Qvidian, a business solutions company, tried to find out what was behind the low performance and conducted a study ( 2015 Sales Execution Trends study), which reflected the latest trends in the modern world of sales.

It turned out that the degree of responsibility of sales managers is greatly exaggerated: only 30% of company heads surveyed cited poor coaching skills of specialists as the reason for low sales. On the other hand, the two most common responses made us think about the quality of salesperson training: 42% of managers complained about an excessively high failure rate, and 41% were convinced that their employees simply did not know how to profitably present a product.

Main priorities

The main concern of most companies in 2015 is achieving high financial performance: 94% of managers expect an increase in profits and 87% - the fulfillment of sales plans. Based on the data obtained, the authors of the study identified the TOP 5 reasons why salespeople fail to cope with their responsibilities:

1. Too many deal refusals (42%)
2. Inability to competently present the product (41%)
3. Overload with administrative tasks (36%)
4. Long waits for results from new employees (36%)
5. Poor training of salespeople (30%)

“Tip for 2015: Provide better training and motivation for your employees.”

In the endless race for big profits, do not forget about the key sources of growth and income of the company:

1. Finding new clients (59%)
2. Increase in average check due to cross-selling (43%)
3. Increased sales efficiency (35%)
4. Optimization of transaction conversion rate (31%)

Most businesses today are gradually realizing that they need more rigorous forecasts regarding their trade policies. Almost 46% of executives admit that their understanding of the modern sales cycle and consumer behavior needs clarification.

"Tip for 2015: Study your customers' behavior and create relevant content"

According to the study, in the business world, along with high competition, there is an increasing gap between new and old technologies: the growing popularity of modern CRM systems (by 7% compared to 2014) is adjacent to a clear commitment to old channels of interaction with customers (by 11%). since 2014). This discrepancy cannot but affect the overall sales process.

One of the biggest difficulties today, according to 24% of company heads, is the insufficient effectiveness of managers in training employees. Compared to last year, this figure increased by 15%, which indicates the need to increase the competence of management personnel and update knowledge in the field of sales.

Advice for 2015: Invest in modern technology and business analytics

Conclusion

A study conducted by Qvidian illustrates the current business situation by 2015. As long as most companies are concerned with the transition from cautious development to aggressive growth, obstacles such as incompetence, poor employee onboarding, irrelevant data on purchasing behavior, inappropriate customer communication channels and poor business intelligence will remain the main reason for poor financial performance and slow growth. .