Ariel Baños, price management specialist and founder of Fijciondeprecios.com, explains how through the "carrot strategy", companies can move from the "culture of volume" to the "culture of profitability."

The carrot strategy is to implement the right incentives for everyone to be committed to the same goal: the "culture of profitability". It is not an easy path, since it can mean to say "no" to certain businesses contributing volume, but end up deteriorating the final results.

First, educate the sales force, noting through simple exercises and simulations, what the true impact of discounts is on the company's bottom line. Many are surprised, for example, to discover that quantities sold must be doubled if an additional 15% discount is granted on a product with a 30% return on sales.

Regarding commissions, some companies have managed to profitably stimulate sales by granting higher commissions for higher-priced Premium options. This recognizes the superior effort involved in selling differentiated products, in which the role of the salesperson in communicating value is fundamental. Likewise, commissions for those commodities that are more commoditized, such as "self-selling," should be lower.


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