Sales Lost On Price
Sales Lost On Other Factors (unclear marketing, poor quality, bad cusotmer service)
Where should we be?
The answer is that SLOOF is always bad, so we want to minimise this.
SLOP is different – we WANT to lose about 50% on price, otherwise we are too cheap and could have charged more! It’s worth losing some sales if we make more from the ones that remain.
There are five places where you might be at the moment:
1 – SLOOF (Sales Lost On Other Factors ) is very low, so it’s a great offering. But unfortunately we are pricing it too cheaply – very little SLOP (Sales Lost On Price) – so we will sell loads but make very little profit in each sale. We would increase our profit if we put our prices up, until approximately 50% SLOP.
2 – High SLOOF, so we are losing sales on Quality, Service or Marketing, and trying to make up for this by being cheaply priced. So what we DO sell will not be very profitable. Get that SLOOF measured and sorted out!
3 – Poor SLOOF makes it hard for us to sell at the strong price we are trying for. Don’t give up and cut the price (back to #2) but improve Quality, Service or Marketing and move to #5, where you CAN maintain that profitable price. Often the SLOOF is blamed on the price being too high, so it’s important to separate them out – is it really SLOOF or genuinely SLOP?
4 – SLOOF is low, so that’s great, but we are losing over 80% of our sales on price: the unusual situation of SLOP being too high! Probably we should cut prices a bit and sell more. This current situation is only OK if we have a limit to our capacity, e.g. Ferraris, in which case we should put the price up until we only just sell our full quota. But if we CAN increase capacity we should.
5 – YES!! This is where we want to be! SLOOF is really low which is great, and SLOP is approximately 50%, which is also great. You are maximising your profit from what you’ve got.
