Granted the fast-changing vagaries of CPG customer preferences, you need to make sure your sales reps understand the balance between sales and finance priorities in your business. Get them to think like your CFO!
Sales equals profit equals business success – but only if all the following three strategic business areas are understood by your sales teams and taken into account. Use our ideas and examples to help your teams understand how sales and finance issues need to be aligned.
Strategic Revenue Management in Sales and Finance
Sales strategy needs to consider business revenue management. It’s not an ad hoc process!
Revenue Growth and Profitability
You need to balance the drive for higher sales while maintaining your profitability margin. For example, you could offer a premium shampoo line with your cheaper ones to bring a higher profit margin alongside standard sales.
Dynamic Pricing Strategies
Effective pricing models are critical to remain competitive. But it’s fairly easy to introduce higher pricing for seasonal CPG products (gifts and holiday items) and reduce prices post-season to clear inventory.
Financial Forecasting and Budgeting
Your teams need to use the same data when considering strategies. Historical sales data of dog food, for example, can be used with market analysis to budget for production, marketing, and inventory management. This means you can meet anticipated sales without overproducing and wasting money.
Now that we’ve optimized revenue strategies, let’s focus on operational efficiency to support these strategies.
Sales and Finance: Operational Efficiency and Investment
Cash Flow Management
Your sales income must support your operational cash flow needs. If you use data to better forecast sales of, for example, detergent, you can encourage an “in time” supply chain instead of an “in case” one – which often happened during the pandemic when supply chains were disrupted. This accelerates cash inflow and reduces warehousing costs.
Investment in Marketing Activities
Sales and finance also need to be in sync with marketing for operational efficiency! No silos. Digital marketing investment is crucial to balancing sales and finance, not “an extra.” Investment in timely marketing ensures maximum impact and ROI from, say, your cosmetics line sales.
Expense Control
Do you check what’s being spent where? Do you have a trade promotion strategy? Sales reps need to understand how their trade plan affects the fine balance of sales income and financial stability in your business!
However, it’s not just reps. Can you use more cost-effective materials or redesign packaging for more efficient logistics to reduce per-unit costs for your beer cases? CPG is seeing a much-needed shift to sustainable packaging.
In addition to these effective methods for balancing sales and finance, your teams also need to consider credit and risk issues.
Risk and Credit Management when Balancing Sales and Finance
Credit Management
You need to offer credit terms to large retailers, but have a structured approach with credit checks to ensure their welcome offer to sell your bathroom tissue in prime position doesn’t affect your cash flow! Your reps need to understand how this works when they place products for you.
Risk Management
As we mentioned up top, consumer preferences are fickle – even in the CPG world – because ESG mindsets can affect buying habits. Having a wide range of, for example, different toiletries means you’re not overdependent on a single product – or supply chain. So – get your reps and leaders thinking widely and innovatively to see what also might sell well!
If your reps understand how sales and finance work together, you’ll find they sell more intelligently, and your business benefits.
MomentumCPG Can Help with Balancing Sales and Finance
At MomentumCPG, we’re committed to helping you overcome any barriers in your CPG enterprise. We can help you with strategy, process – and expert partnerships on pricing and finance, so your teams gain ground instead of standing still. Contact us today and let’s talk!