Results for the first quarter are in. How’s your top line? If it’s not entirely where it needs to be, then take a look at March’s blog posts or better yet, pick up a copy of Profit in Plain Sight and read Challenge #2. But let’s shift gears – how’s your BOTTOM line?
Thousands of business leaders have expressed their frustration that so often they have a great year on the top line… but not enough to show for it on the bottom line so this month’s blog posts are going to be chock-full of ideas to change that.
Conceptually, its easy. Sell more products and services… to more of your ideal clients… at higher prices… and lower costs… with pull vs. push.
Let’s drill down on each of these and find some of the double-edged swords that are eating into your profitability:
1. Sell more products and services: This one seems easy… unless you’re selling the wrong mix of products according to margins. 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. When was the last time you looked closely at the margins for each of your product lines?
2. To more of your ideal clients: ah, the kicker in this one is the term “ideal” clients. Each market has a limited number of ideal clients, and most companies chase new business with increasingly marginal accounts. The first thing you need to do is identify your ideal clients based on PROFITABILITY, not revenue. If you don’t know how to do this, there’s a chapter in Profit in Plain Sight that will walk you right through it. Then, it’s a simple matter of finding “more like them”.
3. At higher prices: post-recession, clients are still balking at price increases. That’s why you need to change the conversation to one of value. If you’re finding yourself increasingly commoditized, discounting more heavily, 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, and its time to get inside your customers heads and sell to their emotions, not to the logical left-brain side that calculates features and benefits. Rethink how you save them time, save or make them money, solve their problems better than anyone else, create feel goods when they do business with you, or provide peace of mind. Change the conversation to one based on value, and you can price for it.
4. And lower costs: Develop an eagle eye for sludge in your system. For example, are your customer service people 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. We’ll dig deeper into this as part of a bigger conversation on Quality in May.
5. With pull, not push. Think of some of the great marketing legends of all time – customers swarm to every new product announcement, eager to get their hands on it. Although you may not be selling to consumers, you can still get customers seeking you out, rather than chasing them with traditional sales and marketing techniques. You need two key elements – providing a great experience that creates word of mouth, and having products and services that provide an often-intangible “Yes!!” when the customer thinks about them or uses them.