This is the second in a 7-part Profitability series coinciding with the July 14 release of my new book, Profit In Plain Sight: The Proven Leadership Path to Unlock Profit Passion and Growth by New York publisher Morgan James, AND the accompanying 2015 Return on People Benchmark Report that will help you shatter your profitability speed limits, set the bar higher, and achieve your new goals.
Part 2 of 7: Get Everyone Behaving Like Owners When It Comes to Profit – Eye-opening Driver Shows How
So, how did you do on that amazing Benchmarking exercise from Part 1 when you read the first Chapter of my forthcoming book and shattered your speed limits? Did you get a great wake-up call about what is really possible? My own business is a solid B when I’m not taking years and years off to write books – it suffers during those times but its all worth it. And this year, I’m working the next phase of my business plan to take to an A. If you missed this, take a look at my blog and grab your free chapter and free Report. It will forever change the way you look at your business.
Today, I’ve got the next installment, and it’s an eye opener too:
Part 2: Figure out Your Who’s Who of Customers
Do you instinctively know that you have customers costing you more than they’re worth? The problem is, measuring customer profitability is tough in most businesses. In fact, I worked with an engineering firm who has spent 3 years and more than a million dollars trying to measure profit per customer with intense accuracy. A workshop that took less than an afternoon gave them good-is-good-enough-for-good-decision-making information instead. In fact, when Accenture back-tested this method using 9 months of regression analysis, they found no statistical differences between a more rigorous approach and a more entrepreneurial approach.
In most companies, their money-losing customers are costing them the equivalent of 100% of their profits. What would be possible if you could figure out in less than an afternoon, without any complicated accounting, your “who’s who” of profitability and then be able to take action to retain the best, develop those in the middle, and have 5 new strategies other than “fire the customer” for those who are bleeding you dry? When you work though the Customer Profitability Diamond exercise in Profit in Plain Sight, you can. The fun part is that the outcome is a very straightforward Profitable Customer Ratio that fires up your people to automatically start behaving in more profitable ways. Most companies score less than 3 profitable customers for every unprofitable customer the first time around. Yikes! And employees quickly “get” that 10:1, 50:1, or 100:1 is WAY better than 3:1!
Just a few months ago I facilitated this workshop for a client, and a young and motivated Accounts Receivable rep was in the room. She “got it” and immediately took action in a very pleasant way with delinquent customers (one of the key determinants of profitability that anyone can spot in an instant). In one case, she found to her surprise that the only reason that the customer was always paying late was that the invoices were going to someone who was no longer in the Payables job… and they’d sit in his inbox sometimes for week before he’d pass them along! Updating the email address fixed that problem instantly and for good… and it was easier on the customer, and easier on the Receivables rep.
I want you to imagine what would be possible in your business if every single person instinctively started taking small, simple actions every day to improve profitability in your business. These are proven success strategies that are truly “in plain sight.” Register today to claim your launch bonuses when the book is released July 14th – you won’t want to miss them!
What’s the best strategy you ever found for getting your employees to behave like owners?