In a previous post, you learned the P in the P.R.O.F.I+T Roadmap: 3 Powerful Insights that can forever change the way you see your business. If you missed the post, read it here.
Let’s tackle the R, which stands for Realize Rapid Results with the 5 Rs that deliver take-it-to-the-bank results.
Have you ever had a great year on the Top Line and not much to show for it on the Bottom Line?
- Ambitious entrepreneurs would never try to start a business without a Business Plan.
- Seasoned executives would never try to lead their business without a Strategic Plan.
- Yet business leaders frequently try to run their business without a proactive Profit Plan!
A Profit Plan is not a P&L. It’s a carefully crafted set of strategies and tactics to sell more of the right products and services to more of your ideal customers, at higher prices based on value and at lower costs, in ways that differentiate you from your competition.
The good news is that you’re already 80% of the way there. You have customers, products, services, people, technology, equipment, facilities, processes, procedures, marketing materials, financial reports, and more. Unfortunately, your competitors have all that too.
What puts millions on your bottom line is doing the 20% that makes all the difference. And you don’t want your competitors to get there first. So where do you start?
R1 is Retain: Just a 5% increase in retention can put 95% more on your bottom line
No surprise, your first step is retaining your biggest and most profitable customers. And no, loyalty programs and the ho-hum effort of repeated sales calls, lunches, event tickets, t-shirts are not the answer. The secret lies in looking for gaps and dissatisfiers in the value you create for customers and plugging those holes before your competitors use them as a toehold. The good news is that your customers will tell you exactly what those holes are… but NOT if you simply survey them. Instead, you’ll want to use a structure that I call the Value Creation Conversation, which is tailored for every client, but proven to deliver massive and rapid results – in one case a $300K uptick in revenue from a single customer, in another case a $600K uptick. Would that help your top and bottom line? You bet!
R2 is Ramp Up: This is low-hanging fruit… you have a 60-70% chance of success with this strategy vs. a 5-20% chance of success closing a new customer.
Many of the customers who are in the Ramp Up section of your Customer Profitability Diamond (see post #1) already know and like you. At any point in time, between 5-30% of them could be doing more business with you… if only you knew how to ask for it!
Your sales team will never uncover the additional opportunities for more profitable business just with their existing sales calls because it’s their job to sell what you have today. It’s your job as a leader to determine what you should be selling your customers in the future. It needs fresh eyes and your creative talents.
R3 is Restore to Breakeven or Better
In 5 out of 6 cases, “fire the customer” is the wrong choice to make even for customers who are costing you more than they’re worth because in the majority of cases YOU’RE the problem, not them! Have you ever cut margins to the bone for a big blue chip account? Self-inflicted wound. Have you ever put up with bad behavior from a big account, or let them run long on paying their invoices because you didn’t want to run the risk of losing them? Ditto. Did you ever overserve a big customer, hoping to keep them? Ditto. Every single one of those actions is within your control to shift, and when you truly understand what your customers value about you, you can often make those changes easily. What are you waiting for? Let’s deploy the 5Rs in your business and create rapid results.
R4 is Regain
You know that you haven’t always found the grass greener when you’ve changed suppliers, right? Your customers experience exactly the same letdown. Every business leader knows that when you lose a customer, you should take the time to find out why, fix the issue, and make an effort to win them back. Make it easy for them to do business with you again, and never accept “price” as the reason. When a customer leaves because of price, that simply means you haven’t shown them why you’re more valuable, and you’ve got a great opportunity to change the playing field on your competition when you nail your true value. Making the effort to regain lost customers will help you easily grow your top and bottom line, AND make you more effective at knowing what new and existing customers truly value. There are a limited number of great customers in any market. If you’ve lost some of those to your competitors, it’s time to go and get them back – not with discounts, but by addressing the value gap that made them leave!
R5 is Reactivate
Do you have a big database of customers you never hear from anymore? Your best strategy EVER is to simply pick up the phone to find out if they’re “dead or just sleeping” and if they want to hear from you. Otherwise, you’ll incur huge marketing costs for no good reason other than wishful thinking. In one case, this simple strategy saved over $100K in marketing costs to people who were not longer there, AND re-engaged a customer who’d gone dormant. This strategy can not only close major profit leaks in your business, but grow “low-hanging-fruit” revenues. And both of those go right to your bottom line.
Realize Rapid Results: Summary
67% of your customers who leave or spread their business amongst you and your competitors do so because they think you don’t care.
Indifference causes more client churn than price. It causes bad customer behavior in retaliation such as slow payment and being high-maintenance to get your attention. And it causes customers to vote for the other guys with their wallet.
YOU have the ability to make your customers feel important, appreciated, and that they matter, simply by learning and applying the 5 Rs to proactively manage customer profitability. It’s the 20% of opportunity hidden in plain sight that makes all the difference to getting rapid results.
Should we talk?