3 Secrets of Sales Automation to Promote Small Business Growth

How to Scale Your Small Business With Sales Automation 

“By increasing efficiencies through better qualifying leads and increasing effectiveness by ensuring sales efforts are more personalized and relevant, marketing automation enables sales teams to do what they do best – SELL.” – Kristen Hambelton, Chief Marketing Officer at ServiceChannel

Marketing automation has become an integral part of many organization’s strategic mix as the toolset provides businesses with enhanced opportunities to transform raw leads into sales-qualified prospects.

This is done by continually nurturing leads with various forms of informative content and personalized communications as they move through the sales funnel.

But marketing automation, just like everything else in technology, is evolving at light speed. As marketing automation becomes commonplace, sales automation – often called sales force automation (SFA) – is becoming the new cutting edge focus.

After all, you can engage in all kinds of effective marketing tactics, but if you can’t get a sale out of it, your efforts are wasted.

As automation makes its leap into the realm of sales, businesses unlock new opportunities to gain heightened levels of revenue and success.

How to Scale Your Small Business With Sales Automation

If you are interested in understanding how sales automation software can help elevate your business to the next level, check out these 3 steps SMBs can take to leverage sales automation for higher revenues and brand awareness.

1. Fill the Top of the Funnel

The top of the sales funnel is the foundation of your entire process. Without a means to steadily generate awareness and attract leads, the entire funnel collapses and your company runs the risk of doing the same.

As the digital realm becomes an increasingly competitive, dog-eat-dog world, keeping your sales funnel full has become a job unto itself. Therefore, businesses arm themselves with savvy and skilled sales teams that know how to bring in new prospects to guide through the funnel.

Unfortunately, only about 27% of the leads the end up in a company’s funnel are actually “sales ready.” What’s worse is that only about 44% of salespeople remain persistent after the first follow up. Most estimate that it takes somewhere between 5 and 10 follow ups to make a sale.

This means that a lot of potential customers and cash are slipping through the cracks. It also clearly illustrates why sales automation software is a necessity for many smaller organizations.

Using AI-powered services like Growbots, intelligent algorithms match a company’s customer profile against more than 200 million contacts to create an ideal list of high-quality prospects who are more likely to be “sales ready.”

The terrible loss that comes as a result of failed follow ups, however, also means that brands have ample opportunity to collect those lost leads and enter them into a highly personalized nurturing campaign with automation services.

But humans, cannot be expected to sift through these leads to establish which need to be cycled back through the funnel as this would be incredibly tedious and many would likely still slip through the cracks.

By implementing a sales automation tool that begins to track leads the moment they enter the funnel, however, prospects can be sorted into appropriate nurture campaigns that tout personalized outreach based on the lead’s demographic information and actions taken.

This allows businesses to better manage its leads and convert more potential customers into dedicated patrons.

This is not the end of sales force automation’s ability to help SMBs makes sales, though; it’s only the beginning.

2. Accelerate Productivity

No matter if a prospect enters a brand’s funnel sales-ready or if they are nurtured into it, it is vital to get those individuals over to sales representatives as quickly as possible. The fastest way to accomplish this is through automation.

The urgency of passing prospects over to sales teams in a timely fashion cannot be overstated; with each passing minute, potential customers become less included to buy.

This was proven by a 2015 Velocify study, which analyzed 3.5 million leads. The study uncovered that placing a phone call to a new lead within the first minute increases the chances of gaining a conversion by a staggering 391%. Waiting a mere 30 minutes reduces the odds all the way down to 62%.

If your brand employs a sales automation software that incorporates robust lead scoring attributes and processes, businesses can leverage quantifiable data to determine when a prospect is ready (or enters the funnel ready) so that they can be transferred to a sales team member immediately.

3. Enhanced Relationship Management

Purchase decisions are ultimately contingent on a variety of factors; and customer support is a huge factor.

Sometimes consumers opt to enter an agreement with a brand not because of superior products or services but because of remarkable relationship management; customers often break off deals for the exact same reason.

On this front, chatbots are becoming an increasingly popular option as these AI-driven assistants can manage customer service questions, leaving your sales reps to handle more complex and in-depth service issues.

This has made services like ChattyPeople extremely popular. Platforms like these enable enterprise-level companies to hand off a large portion of customer relations as it can be integrated with other online portals like Facebook and Shopify.

If chatbots are not an appealing option for your brand, however, CRMs have been the next best thing – until now. And while a CRM tool might be equipped to handle such customer-facing situations, the job should not solely be delegated to that sector; if a sales agent cannot answer a customer’s question because it is another department’s concern, there’s a chance your company could be losing an account.

By leveraging sales force automation software, however, businesses large and small can provide customers with better relationship management as they will often have transaction records and other vital account details at the ready.

Some of the more robust platforms enable sales reps to access this info from mobile devices as well to ensure they have all the data they need, even when outside of the office.

Using sales force automation software, SMBs stand the chance to significantly increase their number of leads and conversions by filling the top of their funnel with an abundance of leads, understanding more intimately where a prospect is on the buyer’s journey, and managing relationships with their customers in a more favorable manner.

In today’s day and age, sales automation is a tool that SMBs can’t afford not to add into their marketing mix. Combined with a savvy human touch, automation can be the exact edge a business needs to blow away the competition and achieve its loftiest goals.

[“Source-smallbiztrends”]

At Snap, cost of hosting sets high bar for revenue growth

FILE PHOTO - A Snapchat sign hangs on the facade of the New York Stock Exchange (NYSE) in New York City, U.S., January 23, 2017.  REUTERS/Brendan McDermid/File Photo

Snap Inc’s initial public offering filing seemed to show a company with a basic math problem: the company’s cost of revenue for 2016 – the amount it had to spend just to keep the messaging service running – was $47 million higher than its $405 million in sales.

The high cost of revenue, which in Snap’s case consists mainly of payments to Alphabet Inc’s Google for hosting the service, means that, on an annual basis, Snap lost money on every one of its 158 million users in 2016, even before accounting for salaries, office rents or anything else.

Snap revealed in its IPO prospectus, filed with securities regulators on Thursday, that it will pay Google at least $2 billion over the next five years.

But the cost side of the problem may not be as serious as it seems. The company’s hosting costs are broadly in line with other social media companies. Its cost of revenue per active daily user was 97 cents in the last quarter of 2016, not much higher than the 85 cents that Facebook Inc paid for each of its 1.23 billion daily users in the final quarter of 2016.

Further, while Snap’s cost of revenue was higher than sales on a yearly basis in 2016, the company drastically tightened up hosting costs over the course of the year. While costs were nearly double revenues at the start of the year, by the fourth quarter, when Snap hit 158 million users, the company eked out a small gross margin.

Snap’s bigger math problem is how much revenue it generates per user. The $1.05 per user for the last quarter of 2016 was a massive increase from the 31 cents per user it drew in the same period in 2015. In its IPO filing, Snap said it hopes to increase its revenue per user by focusing on more lucrative advertising markets, like North America, where its revenue per user was $2.15 at the end of 2016, nearly double the global rate.

But even those higher rates for Snap pale in comparison to the $7.16 in revenue per user that Facebook brought in in the fourth quarter.

“Snap’s issue is not cost, but user growth and revenue per user,” said Ethan Kurzweil, a venture investor with Bessemer Venture Partners who backed startups such as Twitch and Periscope but has not backed Snap. “If they can get revenue per user into the kind of territory they think is possible, the cost of hosting will be a hit to gross margin but it’s not going to be an issue.”

Facebook provides the example. Even though its cost per user rose 7.4 percent between the last quarter of 2016 versus a year earlier, its revenue per user grew at a much faster 27.5 percent, a difference that helped drive its $10.2 billion in profits for the full year.

All of that does, however, mean that Snap has little leeway in delivering dramatic revenue growth in light of the high underlying cost of delivering all those pictures and videos.

The cost of revenue figure, noted analyst Brian Wieser at Pivotal Group, “was notable for what it indicates about the expense of running Snap.”

[Source:- Reuters]

Bank of England back in Brexit spotlight after growth rethink

FILE PHOTO:  Commuters walk past the Bank of England in London, Britain, October 7, 2016.  REUTERS/Peter Nicholls/File Photo

The Bank of England is feeling the heat again after its new, more upbeat picture for Britain’s economy put an uncomfortable focus back on its warning last year about a quick and sharp Brexit vote hit to growth.

Governor Mark Carney woke up on Friday to headlines in anti-European Union newspapers that accused him of leading the Bank into a U-turn. “More humble pie for Bank as economy keeps growing,” the Daily Express said.

The BoE surprised investors on Thursday when it hiked its forecast for growth this year to 2.0 percent. That was up from a call of 1.4 percent made just three months ago and represented a leap from its first post-referendum forecast of 0.8 percent.

The new prediction was higher than all but one of 50 forecasts by private economists in a Reuters poll in January, raising some eyebrows in the City of London. The BoE also edged up its growth forecasts for the following two years.

At the same time, Carney and his fellow policymakers lowered their forecasts for inflation over the next three years, potentially making it easier for them not to put Britain’s economy to the test of higher interest rates any time soon.

Asked by a reporter on Thursday whether he was nervous that the BoE’s new projections – which influence investments in financial markets and spending decisions by businesses – might turn out to be wayward like its ones in August, Carney said things were different now.

“Last summer we were in pretty exceptional circumstances,” he said.

A string of surveys in the weeks after the referendum showed a collapse in confidence among consumers and companies in July and persuaded the BoE that a slump was coming.

In fact, confidence bounced back almost immediately and Britain’s economy barely flinched after the referendum.

Yet Carney was unrepentant about the BoE’s decision to cut interest rates to a new record low and ramp up its bond-buying programme in August, action that he credited for some of the strong performance of the economy since then.

“The committee took the judgment which in retrospect was correct,” he said. “We still have the same policy stance so it’s hard to sit here and say, well, we shouldn’t have done that.”

The BoE’s new view on the economy rests in part on factors that would have been hard to call in August, chiefly the victory of Donald Trump in the U.S. presidential elections, which some believe could boost the world economy, and the British government’s relaxation of its austerity targets late last year.

DISMAL SCIENCE

Central bankers are no strangers to criticism for failing to predict how their economies will perform.

The U.S. Federal Reserve, like the BoE, failed to see how slow the economic recovery would be after the financial crisis. The European Central Bank raised interest rates in 2011 to head off a rise in inflation only to reverse the decision quickly later that year as the euro zone crisis deepened.

The BoE’s chief economist Andy Haldane said last month that it was a “fair cop” to say that the central bank had misread the initial impact of the Brexit vote although he still believed it would weigh on the economy over the long term.

In fairness, many of the world’s biggest banks were further off the mark than the BoE with their calls for the Brexit impact on the economy. Most economists who took part in a Reuters poll in August said Britain was heading into a recession while the BoE predicted the economy would still grow, albeit barely.

One lesson for the BoE might be to rely less on surveys of consumers and businesses – which gave the false signals of a slump last July – and more on how momentum in economic growth may withstand political shocks better than widely thought.

BoE Deputy Governor Ben Broadbent said the Bank was due to discuss the links between survey indicators and future growth as part of an annual assessment of its forecasting work in May.

But he conceded that alterations to its models was unlikely to endow the Bank with infallibility.

“Unfortunately we didn’t need only the experience of the second half of last year to tell us that forecasting is a hazardous business, when you have done it as long as we have,” Broadbent told reporters on Thursday.

[Source:- Reuters]

UK house price growth will slow to 3% in 2017, say surveyors

UK house price growth will slow in 2017 but the legacy of insufficient housebuilding will mean that demand will outstrip supply and lead to a 3% rise over the year, surveyors have predicted.

Although the most bullish housing market forecast for the new year released so far, the Royal Institution of Chartered Surveyors said it expected growth to be about half that in 2016. A year ago, it predicted price rises of 6% and official figures are on track to meet that, with October’s annual growth rate at 6.9%.

Rics said it expected supply issues to continue to drive prices upwards over the next 12 months. “Following on from the 2016 forecast, the supply pipeline or lack of it is at the forefront of the analysis and dominates the residential market,” it said. “While there is an improvement, the legacy of building on an insufficient scale has left the average inventory on estate agents’ books close to a historic low.”

Since June’s referendum, Rics members around the UK have reported a fall in the number of homes coming on to the market, while would-be buyers have continued to register their interest. This has been backed up by figures from mortgage lenders, which showed a 20% fall in the number of loans to home movers in October.

Rics said the number of sales was set to fall slightly from 2016’s figure, from about 1.25m to between 1.15m and 1.2m, reflecting a downwards trend over recent months.

The organisation said it expected East Anglia to have price rises above the national average, alongside the north-west of England and the West Midlands. Separate figures from the property website Zoopla showed that the east of England had seen prices rise by 12% in 2016, with the Norfolk town of Diss recording the biggest increase over the year. The West Midlands was the second-placed in its rankings, with growth of almost 9%.

Prices in central London look set to stabilise after recent falls, Rics said, with the weak pound encouraging foreign buyers into the market. Meanwhile, across the UK rents are forecast to increase by between 2% and 3% and Rics said that they could rise more quickly than house prices over the next five years. In London, it said growth would be more modest in 2017, predicting rents could flatline or rise by up to 1% over the year.

The Rics chief economist, Simon Rubinsohn, said: “Although recent announcements by the government on housing are very welcome, the ongoing shortfall of stock across much of the sales and lettings markets is set to continue to underpin prices and rents. As a result, the affordability challenge will remain very much to the fore for many.

“Meanwhile, the lack of existing inventory in the market is impacting the ability of households to move and will contribute toward transaction activity over the whole of 2017 being a little lower that in the year just ending.”

Many of the biggest players in the property industry have now published their forecasts for 2017. Property firm Savills has suggested that prices will remain flatacross the UK, and fall in the north of England, Wales and Scotland. In the east of England it expects 2.5% growth. On Monday, the UK’s largest building society, Nationwide, said it expected the UK average price to increase by 2% over the year, below the rate of growth it has reported in 2016. It had forecast growth between 4% and 6% this year, and at the end of November said year-on-year growth had slowed to 4.4%.

Robert Gardner, Nationwide’s chief economist, said: “Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in less robust labour market conditions and modestly slower house price growth.

“But we continue to think a small gain (around 2%) is more likely than a decline over 2017 as a whole, since low interest rates are expected to help underpin demand while a shortage of homes on the market will continue to provide support for house prices.”

The government is due to publish its long-awaited housing white paper in January, which will address the shortfall in supply in all types of homes, including rental properties and social housing. The Rics head of policy, Jeremy Blackburn, said this would be a “defining moment”. He said: “Whilst the system based on large, private housing developers and homes for owner occupation has increased house building, it’s not delivering. The UK needs a coordinated strategy for building across tenures, using all of the delivery and technology mechanisms at our disposal.”

Gardner said: “The major housebuilders appear to have capacity to expand output, with most reporting land banks that could support around five years’ worth of construction at current rates of building activity. However, there is a risk that the uncertain economic outlook may weigh on activity in the period ahead.”

[Source:- theguardian]

Brexit latest: Retail sales growth slows in November

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Growth in retail sales, a key leading indicator of GDP momentum, slowed in November.

The Office for National Statistics reported that sales volumes grew by 0.2 per cent in the month, down from strong growth of 1.8 per cent in October.

The annual rate of expansion slowed to 5.9 per cent, down from 7.2 per cent previously.

Retail slowdown

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Retail sales account for around 30 per cent of household spending, which in turn accounts for around 60 per cent of overall GDP.

Household consumption has been the dominant driver of the economy since 2013 and was responsible for most of the growth since the Brexit referendum

Economists expect rising inflation, as a consequence of the sharp fall of the pound since the Brexit vote driving up import costs, to squeeze disposable incomes and consumption next year, slowing the overall economy.

The ONS said that average store prices showed their first positive increase since June 2014, mainly powered by higher fuel prices at peterol station.

Annual fuel sales growth was the lowest in two years.

The end of retail deflation

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Consumer price inflation hit 1.2 per cent in November, the highest in two years.

The index is widely expected to go above the Bank of England’s official 2 per cent target next year, with some forecasting that it could go as high as 4 per cent.

 What does the falling pound mean for you?

The ONS reported that on a three month basis retail sales volumes continued to show “strong growth” with a 2.1 per cent rise.

It said that Black Friday events had boosted non-food stores in November.

Sales of household goods rose by 6.7 per cent year on year, following 3.6 per cent growth in October.

“Even if you ignore Black Friday, UK retail sales have been surprisingly strong in recent months. The big question now is: can this last?” said James Knightley of ING.

[Source:- independent]

House price growth lowest for 10 months, says Nationwide

Annual house price growth has slowed to the lowest rate in 10 months, according to an index.

Property values increased by 4.4% year on year in November, the weakest annual growth since January when there was also a 4.4% increase, figures from Nationwide Building Society showed.

House prices edged up by 0.1% month on month in November, following a 0% change in October, taking the average property value across the UK to £204,947.

Despite the slowdown, Robert Gardner, Nationwide’s chief economist, said the latest increase is in line with growth rates seen since early 2015. In October, an annual increase of 4.6% was recorded.

Gardner said: “There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs. Mortgage approvals increased in October, and surveyors report that new buyer inquiries have increased modestly.

“The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect.”

Gardner pointed to data from the Council of Mortgage Lenders showing the popularity of fixed mortgage rates as borrowers lock into ultra-low-rate deals.

He said: “Data from the Council of Mortgage Lenders suggests that over 90% of new mortgages were contracted on fixed rates over the past 12 months. This may be driven by a desire to lock in record low interest rates.

“The proportion of new mortgage lending contracted on fixed rates has increased considerably since the low point in 2010, when less than half of lending was on fixed rates. In recent years, the proportion of lending accounted for by fixed-rate deals has persisted at levels well above those prevailing before the financial crisis.

“Fixed-rate deals are most popular amongst first-time buyers for whom certainty over monthly payments is likely to be particularly important. Indeed, over the past 12 months 95% of new mortgage lending to first-time buyers was on fixed rates.”

Gardner said the average rates on fixed-rate deals have edged down in recent years, adding: “For borrowers with a 10% deposit, two-year fixed rates are currently the lowest on record, at 2.42%.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said the housing market tends to slow down in the run-up to Christmas.

He said the figures “reflect the struggle between those trying to take advantage of very low interest rates and softening house prices versus those showing caution in view of the economic and political uncertainty. The result is modest house price increases mainly because of the continuing shortage of supply”.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “House prices look likely to rise modestly in the near term.

“However, we suspect that house prices will come under increasing pressure as 2017 progresses and may edge down over the year, possibly by around 2%.”

Archer said a lack of homes on the market would help to keep prices up.

[Source:- theguardian.]

Asia stocks stumble as weak China trade data raise growth concerns

A man stands next to an electronic board showing stock prices in Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon

Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China’s September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world’s second biggest economy.

Risky assets have had a torrid start to the final quarter of 2016 after recent outperformance as concerns around the outcome of U.S. elections, fallout from a “hard Brexit” and a struggling German banking sector spread turmoil in markets.

Early on Thursday, the mood soured after data showed Chinese imports in dollar terms were back in contractionary territory in September while exports dropped by a sharper-than-expected 10 percent.

The weak trade data fueled a broader-risk off move. Some analysts said the soft data also raised concerns that China may pursue a weaker currency policy in the coming months, stoking deflationary pressures for the rest of the region at a time when corporate earnings’ growth has slowed.

“The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters,” economists at Capital Economics wrote in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 percent, its lowest since Sept. 19. Hong Kong stocks fell 1.5 percent in opening trades while Japanese shares were down 0.4 percent.

“The China data has exacerbated the broad cautious mood and we should see more gains for the yen and other safe-haven assets,” said a currency trader at an Asian bank in Hong Kong.

Ten-year yields on U.S. Treasury debt fell five basis points to 1.74 percent, a relatively large move in the Asian timezone, while U.S. stock futures deepened losses to be down 0.6 percent on the day.

Despite the broad pull back in U.S. Treasury yields, markets were relatively more confident in the view of a likely rate increase in December.

“In our view, if you came into these minutes with a December hike penciled in, there is no reason to change your stance,” Omair Sharif, an economist at Societe Generale, wrote in a note.

Wall Street struggled to find fresh momentum after breaking conclusively below a 100-day moving average this week. The Dow Jones industrial average closed up 0.09 percent, while the S&P 500 gained 0.11 percent. [.N]

The CBOE Volatility Index, the “fear gauge” of near-term investor anxiety, held just below 16, indicating broader market uncertainty.

Elsewhere, sterling treaded water after British Prime Minister Theresa May’s offer to give UK lawmakers a say in plans to leave the European Union.

Within Asia, the Thai baht will be in focus after falling to an eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej. The health of the world’s longest reigning monarch has “overall not yet stabilised”, the palace said on Wednesday.

Oil prices struggled following a 1 percent drop overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group’s pledge to restrict output.

U.S. West Texas Intermediate crude slipped 1.1 percent to trade at $49.62 a barrel. Gold stabilized around the $1,250 per ounce level after falling sharply last week.

[Source:- Reuters]

Euro zone economic growth slows in second quarter as estimated

Euro coins are seen in front of displayed flag and map of European Union in this picture illustration taken in Zenica, May 28 2015. REUTERS/Dado Ruvic

Economic growth in the euro zone slowed in the second quarter, after a strong reading in the first three months of the year, estimates released by the European Union’s statistics agency showed on Friday.

Eurostat said gross domestic product (GDP) in the 19-country currency bloc in the second quarter increased 0.3 percent on the quarter and 1.6 percent year-on-year, confirming its preliminary estimates published at the end of July.

The readings were in line with the average forecasts of economists polled by Reuters.

In the first quarter, the euro zone GDP went up 0.6 percent month-on-month and 1.7 percent on a yearly basis, as previously estimated.

GDP in the European Union as a whole in the second quarter rose 0.4 percent quarterly and 1.8 percent year-on-year.

Among the largest economies of the euro zone, Germany grew 0.4 percent on the quarter, Spain 0.7 percent and the Netherlands 0.6 percent. Growth in France and Italy, the second and third largest economies in the bloc, was instead flat.

[Source:- Reuters]

India’s infrastructure output growth hits 5-month low

A project under construction

India’s infrastructure output grew an annual 2.8 per cent in May, its slowest pace in five months, primarily dragged down by a slowdown in output of electricity, steel and refinery products, government data showed on Thursday.

The output expanded 5.5 per cent from a year ago between April and May.

Annual growth in electricity production last month slowed to 4.6 per cent from 14.7 per cent in April.

Refinery products expanded 1.2 per cent year-on-year in May compared with 17.9 per cent growth a month ago.

7th Pay Commission: Pay hike to boost growth, say India Inc, analysts

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India Inc, analysts gave thumbs up to the Union Cabinet decision to clear the 7th Central Pay Commission recommendations, stating the move will “boost consumption in the economy” and lead to higher GDP growth.

The pay hike combined with continued public push to the capital expenditure will help steer the economy to higher growth levels of 8 per cent and above, which is much needed amidst the current global headwinds, India Inc said. “The pay hike of nearly Rs 1 lakh crore for government employees will give a strong boost to the consumer demand and help uplift the growth of the economy,” said A Didar Singh, secretary general, FICCI.

Motilal Oswal, chairman and MD, Motilal Oswal Financial Services, said, “Just ahead of Monsoon, the 7th Pay Commission will set the snowball impact in the economy. This is a well expected positive move, this will help achieve GDP growth target quicker. Auto, consumer durables and FMCG sectors would see much higher demand. The small concern could be that this may push inflation a bit higher.” “We feel contented by this move which is in favor of as many as 10 million people. This will certainly have an impact on the sales and trigger purchases. Favoring a tilt in demand for premium products, we expect the new age technologies segment to boost our business,” said CM Singh, COO, Videocon.

India Rating estimate shows that the demand boost to the economy as a result of the revision in the salaries/pensions of the employees will be at least four times the panel’s award. Though it does not see any immediate threat to inflation due to the award of the commission, consumer price inflation may inch up somewhat due to higher prices of services, impact on wholesale price index is likely to be muted due to the counter balance provided by the deflation in commodity prices and the availability of excess capacity in several manufacturing sectors.

“A rise in demand is likely to not only increase capacity utilisation but may also help revive the investment cycle earlier than expected,” it said.

“The impact of pay revision of state government employees will be felt only in FY18. The Commission award is expected to be less severe on state finances than expected earlier due to a lower arrear pay out. Now that the central government has accepted the report of the Central Pay Commission, state governments will also follow suit after a gap of six months to a year,” said Devendra Pant, chief economist, India Ratings.

The government move will lead to surplus cash at the hands of the employees. “The pay commission will put extra money in the hands of a large section of the Indian consumer. This is great positive for the consumer durable industry since this will definitely spur demand for discretionary and aspirational products. We look forward to this contributing to good growth in the later part of this year,” said Sunil D’Souza, managing director, Whirlpool of India.

However, the Reserve Bank had listed the Pay Panel recommendations as one of the upside risks to inflation. Announcing the monetary policy earlier this month, RBI Governor Raghuram Rajan had said the recommendations will be factored into the inflation projections as soon as clarity emerges.