Growth and efficiency: find both for success

PBN Staff

05/17/2009

In the hyper-competitive marketplace and ridiculously challenging economic times in which we conduct business, the debate rages on about which is the more important goal to ensure success. Find more customers to add revenue to the top line or streamline your operation to make a better bottom line? The answer is simple and obvious. You need to do both.
Growing revenue requires marketing. But marketing is really an investment decision. You spend money to make money, in ways that are easily measurable or which bring more indirect benefits. In fact, all long-term studies on economic downturns and how companies respond to them show that the ones that try to capture more business have enjoyed sustained sales and profit growth. You cannot save your way to success.
On the other hand, operational decisions tend to be purchasing oriented in nature. You must find ways to contain, reduce and remove costs. How can we procure products and/or outsource services more effectively so that they improve efficiency and save money? No good to bring more in on the front end if your overhead and cost structure make you cost prohibitive or unprofitable in the long run.
Consider, then, these three priorities as the key to sustained marketing and sales revenue success.
&#8226 Attract. Until you have potential customers aware that you are even a viable option for what they are looking for, you have no ability to impact your top line. The latest research I have seen indicates that on average in the U.S., we all see more than 3,000 marketing messages in the form of advertisements, logos, etc. every day. The question becomes, how many do you remember? For your business, the better question is, do your prospective customers remember yours?
If you adopt the philosophy that you can pull back on your marketing and still have people find you, you run the risk of what Henry Ford commented on when he said that “a man who stops advertising to save money is like a man who stops a clock to save time.” &#8226 Acquire. It’s wonderful to create a steady pipeline full of prospects. But what happens if you cannot convert them into customers? As sales cycles lengthen and decisions become more complex, involving multiple people on each side, how can you close the deal so both parties can enjoy the benefits of what you offer?
Your job on the sales side is to make sure that the leads you receive or generate are a good fit for you, your organization, and your products and services. There is no good reason in the long run to try to use the hammer to fit a round peg into a square hole. Know your business, understand the prospects and work cooperatively together to discover if you can help – or not.
&#8226 Retain. If you do a good job generating leads, a reasonable job making the sale, but then your customer service effort lets too many customers leak out the back end, you again will not be able to get any traction for revenue growth.
The best way to retain customers: exceed expectations. If you do not meet customers’ expectations, you not only will lose them, but in addition they will tell an average of 16 more people. If you only meet expectations, you still can count on 33 percent who will try someone else. Only by exceeding expectations do you give yourself a chance to realize long-term value with your customers. And remember, customer expectations are created both by your marketing promise and their sales experience.
On the operations side, consider these three ways to improve efficiency and reduce costs.
&#8226 Vendor consolidation. With the number of full-time staff shrinking all the time, it becomes difficult, if not impossible, to keep track of too many suppliers. Better to find fewer suppliers, each of whom can do more for you. The time saved in managing them, as well as the reduced amount of paperwork that needs to be processed, very often pays for itself. In addition, when a supplier becomes more of a partner, their level of intimacy with your business goals and preferences grows, increasing their ability to make positive contributions. This is not always the “cheapest” way to buy, but almost always creates the highest value and overall most favorable cost structure in the long run.
&#8226 Print on demand. Very often organizations that use even a moderate amount of printed materials can benefit from reducing order quantities and going to a more just-in-time fulfillment process. Average obsolescence can run as high as 33 percent on a larger print run – especially when warehoused. Smaller quantities may have a higher unit price but will not have the waste factor associated with larger orders.
Candidates for this kind of production method include: business cards, envelopes, postcards, targeted marketing campaigns and almost any internal document.
&#8226 Outsourcing. Over the last few years perhaps the major strategic initiative that has helped many organizations increase efficiency more than any other is the outsourcing of noncore competency functions. Sales management, IT and HR functions, warehousing and distribution of products, parts and samples through third-party logistics providers have been successfully accomplished.
The new business reality demands that companies with reduced internal resources specialize in various products or services and outsource the rest to maximize efficiency.
So when you find yourself wondering which area to tackle first, increase sales or reduce costs, realize that you have to do both, often simultaneously. By taking measured, prudent and consistent action in these two categories and six specific areas, you can grow your top line, increase your bottom line and reduce your worry lines. &#8226