This newsletter will focus on providing insights on how to increase profit margins and performance without making any new capital investment. I call this finding your True Profit.
Purpose Customer Retention Reduction
Organizations should always be focusing on customer retention because it is the fastest way to accelerate growth and increase profits. Your existing customers already know your organization and what you offer, so it is easy to offer them new products and services as well as help them become ambassadors to help you attract new customers. But how much effort are you putting into retaining customers you don’t want? My guess is, too much.
This means you are taking time and effort away from retaining the customers you do want.
Maximizing overall customer retention is not always good. Not all customers are good customers and not all business is good business. It’s only effective if you are retaining the customers you want. I call this concept purposeful customer retention reduction. This is the act of NOT retaining certain customers because they are not your ideal customers. They take time and resources away from your ideal customers so you let them go. Yes, that’s right, you let them go.
Review the chart below and ask yourself (be honest) in which quadrant your organization fits. Do you have deliberate retention efforts focused on your ideal customers (top right quadrant)? If not, you are losing growth opportunities and wasting time. You are putting resources into retaining customers you don’t want, while the ones you do want are walking down the street right in front of you (figuratively speaking).
But have no fear, if you are anywhere but in the top right quadrant, you can get there quickly by answering these questions:
What value can we offer that is needed in the marketplace?
Who is ideally suited to benefit from that value (our ideal customers)?
What deliberate strategies do we need to employ to attract and retain them?
To what extent are you inadvertently losing important customers while retaining unimportant customers?
Increasing Profit By Implementing Your Own Best Practices
Many organizations have internal best practices that they are not leveraging. They do something well in one are but not another. They empower employees in one department, but not another. They have strong customer relationships in one business unit, but not the others. One of the best ways for organizations to increase profit margins without making any new investment is to learn how to implement and adopt their own best practices to achieve the broadest impact possible.
In order to do this, start by answering the questions below:
Where have you had great success?
What outcome was achieved? Why would you consider it a best practice?
What elements can be replicated across other areas, departments, or divisions?
What kind of impact could it have elsewhere?
Who would most benefit from implementing the best practice?
What needs to be done in order to implement elsewhere?
By answering these questions, you start to develop a common approach to identifying, implementing and achieving better results from your own internal best practices.
In a recent article, I discussed the four levels of adopting best practices. As you attain each level, the impact of your best practices broadens, helping you to increase profit and grow your margins even further. Take a look at that article and see how many of those characteristics your organization exhibits.
If you don't exhibit those characteristics to leverage your own best practices then you are missing a tremendous opportunity to dramatically increase profit.
Have an Idea or Topic You Would Like to Hear More About? Send it to me.
I am always looking for new ideas and topics to cover so please don't hesitate to contact me with topics and themes you would like to read more about.