What would you need to do to triple your gross revenue while only doubling your labor-related costs?
Remember that this result does not have to happen within one year’s time. At the end of the process, your team could conclude that it could require 3 years, 6 years, etc. And the “final” plan you decide to implement may not call for the exact triple/double combination, but this is a powerful question to ask.
The premise opens discussion about opportunities. What part of the tripled revenues could come from serving existing customers better? What other products/services could active and inactive customers buy? How much could result from repeat business and referrals? Where should marketing and prospecting efforts be aimed to contribute to the triple revenue goal? What innovation would be needed? Somehow when you talk about tripling instead of “How could we grow 10%?”, the discussion stays focused on customers.
And the “only double labor” premise drives a quest for efficiencies, utilization of technology, achieving ROI on tangible assets and locations, and making astute human resource decisions. I’ve seen this discussion prompt executives to bring in new talent, invest in training, introduce incentive programs, &/or accelerate adoption of CRM.
If your executive team would/could not productively engage in this discussion, ask yourself if you first need to make some changes in your executive team.
Before you become deaf to the overworked phrase “taking your business to the next level”, pause to ask yourself if you truly know what it means to you and your company at this point in time.
For some folks with a developmental mentality, “the next level” refers to an incremental change like becoming a bit more efficient, generating a little more profit, attracting slightly larger accounts, or improving the website.
For other people who think in terms of transition, “the next level” refers to more tangible changes with steps and deadlines, i.e. installing/learning a CRM system, opening a second location, executing an ESOP, or establishing an advisory board of directors.
For the people among us who think in terms of transformation, “the next level” refers to moving toward a vision, such as growing to $1 Bil, becoming the industry leader, or creating a corporate culture that is conducive to innovation.
Often, during my strategic working sessions, I ask executives what size their business would need to be to re-energize them or turn any feeling of pushing things uphill into a magnetic force that more readily pulls progress along. It’s fascinating to see how quickly those questions surface a consensus about an optimum size for the company.
It can be too confusing and difficult to make good decisions about important topics like organizational structure, financing, branding, capital investment or incentive programs without open exploration of the logic and assumptions behind “the next level” for you and your executive team.
I close each of my weekly radio shows by wishing my audience success in Achieving Accelerated Growth With Sustained Profitability® and reminding them [you] that the secret to accomplishing that goal is to reverse the phrase. First, know what truly drives your profitability and then make sure that your profitability can/will be sustained before getting all excited about going for growth and accelerating.
A slow economy magnifies any weakness in a business model, so by now you have undoubtedly had to make changes to have your chance at profitability. But does that profitability still feel fragile to you?
Profitability is sustained through the consistent use of systems…things like budgets, monitoring, and ratios. But more importantly, sustained profitability of truly resilient businesses is usually based on very strong relationships forged with customers. Resilient businesses tend to do what it takes to make sure their customers succeed.
Are you and your customers genuinely motivated to help one another survive and thrive through the tough times? If not, what could you do to reinforce that interdependence and guarantee “win/win”?
For more on SUSTAINABILITY log on to www.business.voiceamerica.com or www.TheGrowthStrategist.com and download my June 16,2009 interview with Jane Morgan, the CEO of 411 Solutions International. Here why Morgan deserved to be named “Woman Business Owner of the Year” for 2009 by the Chicago Chapter of the National Association of Women Business Owners (NAWBO).
The best business development programs appropriately encourage a focus on your existing customers. After all, it should be easier to encourage someone who already knows you to buy more from you. A satisfied customer is a source of referrals. Plus, if you know traits that your most satisfied customers share, you can tailor your marketing campaigns to attract more customers who are more likely to also be satisfied. Customer satisfaction surveys can guide your product and service improvements.
But all of this does NOT mean that external market research isn’t needed. How do you know how much market share you have of important target markets? How do you know if your marketing has been inadvertently attracting high maintenance, low profitability customers? Internally focused research can’t tell you enough about important changing demographics, industry shifts, transience, technological improvements, etc. How can you know if a reasonable goal for one branch of your business is to triple while another branch should only be asked to double?
How often do you need to do externally focused market research? That depends on how static or dynamic your market place is. Most businesses benefit from constant research and analysis of the existing customer base. Whereas externally focused market research is typically needed every 3-5 years.
After a few years using the traditional “billable hours” approach, the leadership of HR411, Inc. made the strategic decision to provide software as a service. They needed to quickly get the word out to achieve an adequate return on their hefty investment in product development. Founded in 2001, HR411, Inc. currently has a run rate of $26 Mil and is shopping for venture capital to help fund their next wave of growth. The CEO of HR411, Michael Pires, credits their strategic partners for their growth from 300 customers in Jan. 2007 to 135,000 today
Most companies don’t realize that successful affiliate programs and strategic partnerships require just as much time, attention, and money as their product development…often MORE! Like other firms with a strong partnership program, HR411, Inc. has employees assigned to work with their three levels of partners (AFFILIATES, PRIVATE LABEL, and WHITE LABEL) to spell out expectations, provide training, track results, and promote the relationships.
During my interview with Michael Pires, I wasn’t surprised to hear that they have 15 PRIVATE LABEL partners for every 1 WHITE LABEL partner since the “completely hidden” sole source role can be very labor intensive (including weekly coordination meetings).
In my experience, most companies that utilize multiple levels for their strategic partnerships have 100 AFFILIATES for every 1 PRIVATE LABEL partner (consider the various levels of Microsoft or IBM certifications), but so far HR411 has been a bit more selective. They actually have fewer AFFILIATES than PRIVATE LABEL partners at the moment. It pays to check out a firm’s marketing before inviting (permitting) them to promote your product, so maybe HR411 is onto something here.
To listen to my radio interview with Michael Pires, download the June 2, 2009 broadcast of The Growth Strategist™ from www.business.voiceamerica.com or from www.TheGrowthStrategist.com.