Execution is about a lot more than just meeting your financial objectives. But unless you’re on track financially, execution tends to grind to a halt for lack of funding to invest in people, technology, equipment, facilities, market development, and more, AND because your most valuable resource, leadership time and attention, gets pulled away from other strategic initiatives to focus on the numbers.
Hitting the numbers is conceptually easy: sell more products and services… to more of your ideal clients… at higher prices… and lower costs. In practice, it’s more difficult. And among the thousands of Executives I meet at my seminars each year, only a handful have anything even approaching a plan to achieve that.
4 Was to Accelerate Execution
Let’s drill down on each of these and find some of the double-edged swords that are eating into your financial results:
- Sell more products and services: This one seems easy… unless you’re deep-discounting to drive sales. Or unless you’re selling the wrong mix of products, and leaving all the cream for your competitors. Or unless you’re selling to the wrong customers, i.e. taking business that is less than ideal for you, which actually ends up costing you money. It’s too easy to blow the roof off your sales numbers with skinny, discounted margins that are actually taking you in the wrong direction. Over the years, I’ve helped clients develop a sales matrix which shows which of their customers are most profitable, visually highlights where they have low-hanging fruit AND where they’re wasting marketing dollars on customers who’ll never buy. With the insights we gain, “bad” business becomes obvious… and every one of these strategies adds substantial amounts to the bottom line. I often see “Increase Sales” as a Strategic Initiative, but rarely do I see it executed strategically in a way that grows margins and profit.
- To more of your ideal clients: Ah, the kicker in this one is the term “ideal” clients not just “all prospects.” Each market has a limited number of ideal clients, and most companies chase new business with increasingly marginal accounts and keep increasingly hostile accounts (who are anything but ideal clients) because they don’t want to lose the volume. First, you need a matrix like the one I highlighted above to identify your ideal clients based on PROFITABILITY, not revenue, and I train clients how to achieve that in less than an afternoon, without complex accounting. When you know “who’s who” in your customer base, it’s easy to spot the similarities amongst the clients who are your most profitable. Then, you simply need to develop the tools and sales strategies to go and find more like them. Rarely do I ever see Customer Profitability as a Strategic Initiative, yet without knowing whether you’re making good money or working for free, you’ll never have the resources to tackle everything else on your Strategic Plan and execute well.
- At higher prices: Clients will always balk at price increases unless you need to change the conversation to showing them higher value-add that justifies the increase. If you’re finding yourself increasingly commoditized, discounting more heavily, losing sealed bids, and being surprised when existing customers go elsewhere, it’s a clear sign that your customers are not seeing as much value as they need to in doing business with you. It’s time to get inside your customers’ heads and sell to their emotional right brain that appreciates value, not to the logical left-brain side that focuses on features and prices. One of the best ways to change the conversation to one based on value, is to hear in their own words what they value most about doing business with you, and what’s still missing. Fill that gap, and you can price for it. Pricing should be a strategic initiative for every business because most businesses have huge leverage that they’re not even aware of. If you’re missing your numbers at the end of each quarter, strategically pricing for value is the way to get back on track, but you CAN’T simply start slapping price increases on willy-nilly – in fact, that’s one of the most dangerous and least strategic things you can do. This blog post will inspire you to take action.
- And lower costs: Develop an eagle eye for sludge in your system – but NOT in the operations areas where you’re currently applying Lean or other continuous improvement efforts. For example, are your customer service people still busy, even though you’ve invested in lots of quality initiatives? If so, ask yourself why they’re still dealing with issues that shouldn’t be there, and get those unnecessary costs to serve out of your system, but then, go beyond that. Product-related problems are only 1 of the 5 hidden costs to serve that we drill down into in ProfitU. Sludge gets into every business, no matter how well run, and periodically, just like cleaning out your closets at home, you need to take the time to address it. Bonus tip: When you learn how to clear the sludge out of your operations, you’ll also learn the 5 biggest issues that cause challenges in execution. Take a look at this blog post for the details.
If you’re behind on your financials or if you have concerns about the balance of the year, take action now on the 4 recommendations above. Get strategic about your strategy by booking 60 minutes in your calendar (over lunch hour is perfect) to read the extra blog posts above. If you’re not quite sure how to effectively implement a strategic Profit Plan that is quite different from what your CFO and Continuous Improvement resources are doing today, let’s talk about ProfitU an innovative online–at-your-convenience-and-be-personally-mentored program that doubles profits or more within one year.