Continuing with this month’s theme of driving bottom line growth, here’s one great idea that you can practically implement tomorrow, and safely, sustainably and significantly improve your bottom line profitability : Find 1% everywhere. Here are just 3 strategies to get you started:.
- Find 1% everywhere on your top line by selectively pricing for value. As an analogy, think of your favorite grocery store. They’re probably highly price competitive on items that are undifferentiated and subject to comparison shopping. However, if they have specialty items in their bakery, you may even be happy to pay a premium. And, if you happen to spot the birthday candles on the way out that you’ve been meaning to pick up, then price is likely no issue, because you’re getting the value of convenience. Finding 1% is not about gouging, its about recognizing the value you provide. By the way, feel free to increase prices selectively by more than 1%! And when in doubt, test price changes on the customers who are currently less profitable for you, while holding prices for your very best customers.
- Find 1% everywhere when you stop using round numbers to discount. For example, instead of applying a standard 10 or 15% discount, apply 9% or 14%. There’s typically no rhyme or reason to “typical” discounts, and simple shifts will make a significant difference to the health of your business.
- Find 1% everywhere on with your suppliers by asking for the flip side of value-based pricing. When you are a “good customer” who is loyal, easy to do business with, not high maintenance, and pays on time, ask your suppliers what you can do to earn a 1% discount. Chances are in most cases, your suppliers will reward you on the spot, or make a reasonable request that you can easily comply with. And you will probably get much more than 1%, without grinding them.
Go ahead and do the calculation. See what happens on the bottom line when you add just 1% on your top line and change nothing else. Then, see what happens when you trim 1% on the cost side of our business. Keep it high-integrity on both sides. You don’t have to slip back into conventional cost-cutting, which often holds your business back instead of moving it forward.