As we approach the final weeks of the year, I want to help you see how to get outside your comfort zone and achieve more in the coming year. We’ll use the easy-to-remember acronym P.R.O.F.I+T for this 6-part Roadmap.
Conventional thinking suggests that the P in the P.R.O.F.I+T Roadmap should stand for P&L. But it doesn’t, because a P&L reactively measures results against the best of intentions. It’s a lag measure of what’s leftover after all-too-often lower than expected revenues and higher than expected costs.
Instead, P stands for three Powerful Insights that will push you outside your comfort zone and change the way you look at your business forever.
Your First Powerful Insight is Provocative
People. They’re your greatest asset when you’ve got the right ones. Your greatest pain in the neck when you don’t. They’re one of the biggest expenditures of time, effort, and money in your organization. And the only asset that walks out the door every night.
Each year I produce the Return on People Benchmark Report based on 500 of the largest companies in the world, and you can get a complimentary copy using the link above. Use it to see exactly how other companies in your industry are performing – when I share this in speaking engagements most leaders in the room are shocked to see themselves ranked a D or an F… do YOU know where you rank?
Your Second Powerful Insight is Penetrating
You measure revenue by customer all the time (another lag indicator that’s impossible to influence after the fact), but up until now measuring profit by customer has been a complex, cumbersome time-consuming, expensive, after-the-fact accounting exercise. Some leaders look at Gross Margin instead, however, all the profit leaks that turn a great top line into a mediocre or non-existent bottom line happen below the gross margin level.
There’s a better way to get a snapshot of the profitability. It’s what I call “CPR for Your Business”: the Customer Profitability Ratio. You can calculate it by developing your Customer Profitability Diamond as outlined in the #1 Best Seller Profit in Plain Sight to assess just your 30 biggest customers in less than a couple of hours. What you learn will help drive powerful changes in your team’s day-to-day behaviors that have tremendous impact on profitability. The behaviors that create or destroy profit are invisible to you right now, but by using a ‘good-is-good-enough-for-good-decision-making’ approach, you’ll finally get proactive about managing customer profitability.
Your Third Powerful Insight is Proactive
One of the most popular topics in any speaking engagement I deliver is the OCEANS of Opportunity Sales and Service Plan, which is a scoreboard for seeing exactly where you can significantly increase “good” revenues (very different from chasing sales at all costs just to hit the numbers!). It’s a powerful sales management tool for helping your sales representatives set the bar higher by identifying opportunities that have been overlooked until now. Once they get proactive in following through, and once your conversations focus on helping them succeed vs. just flogging them for higher sales, you’re going to see the kinds of results that were out of reach before. If growing sales the right way matters to you this year, contact me and let’s talk.
The Biggest Surprise: Often Your Own Self-Inflicted Wounds are the Profit Problem.
It’s tempting to write off unprofitable customers as “bad”, but few leaders want to “fire the customer” because they don’t want to lose much-needed volumes. Here’s the good news. When you see Who’s Who as a result of going through the 3Ps outlined above, you’ll find that half the time, customers are unprofitable for you NOT because of THEIR behaviors, but because of self-inflicted wounds on the part of YOUR company that are completely within your control to fix! That realization empowers your employees to be accountable and to proactively take steps to heal those wounds.
You now know the P’s: Provocative, Penetrating, and Proactive Insights.
Next week we’ll explore the R in the P.R.O.F.I+T Roadmap.
Which were the most powerful insights you had from this article?