Every business wants higher profits, the question is how best to improve profits and how to manage the resultant growth. Over the next few weeks this blog will focus on various areas to address in your search for a more profitable business.
Value is the most important component to improved profitability. Your customers must believe that what you offer creates value for them in excess of the price they pay. Ron Willingham states this in his book, Integrity Selling for the 21st Century, and says “ethics and values contribute more to sales success than do techniques or strategies.” When your customer believes your product will meet their needs and is convinced that you are someone they trust and want to work with, they will bring business to you.
That may not be what you expected in a discussion of increased profitability, but frankly, building a rapport on trust is critical to building a long term profitable relationship with your customer.
Price is a very sensitive issue in most discussions with customers. It is typically a win-lose proposition between you and your customer. But price comes back to value. If your customer believes they are receiving superior value, they will not be as price sensitive. Superior value comes from you and your firm meeting and exceeding expectations in terms of quality, price and delivery. It also comes because you have done an excellent job of identifying your customer’s needs and demonstrating how working with you will fulfill those needs.
As we explore profitability, I encourage you to add your comments and thoughts to this blog. In future posts I will address product mix, customer selection, geographic restraints, material costs, people, labor efficiency, labor turnover, identifying fixed and variable costs, administrative and selling costs, financing costs, and monitoring your cash so you can finance your growth.
There will be one additional theme in this series. Measurement. If you want to improve something, you have to measure it. That sounds so simple but in practice measurement is often ignored. As you think about these parts of your business, begin to measure your areas of focus. Build a historic baseline so you will be able to track your progress.
I want to credit the Integrity Solutions firm, Ron Willingham and their course in Integrity Selling for many of the concepts above. While I have rephrased some of their material, the concepts are based on my study of their approach to selling.