In the last blog post, you learned the P in the P.R.O.F.I+T Roadmap: 3 Powerful Insights that can forever change the way you see your business. If you missed the post, read it here to get access to 2 complimentary and eye-opening resources, all in honor of Manufacturing Month.
Let’s tackle the R, which stands for Realize Rapid Results with the 5Rs
Who doesn’t want rapid results, especially as we approach the end of the calendar year and find ourselves below plan year to date? Whether you’re looking to drive revenues or profits, the 5Rs show you exactly how to proactively manage customer profitability, and deliver take-it-to-the-bank results.
Have You Ever Had a Great Year on the top Line and Not Much to Show for it on the Bottom Line?
Ambitious entrepreneurs would never try to start a business without a Business Plan.
Seasoned executives would never try to lead their business without a Strategic Plan.
Yet business leaders frequently try to run their business without a proactive Profit Plan!
A Profit Plan is not a P&L. It’s a carefully crafted set of strategies and tactics to sell more of the right products and services to more of your ideal customers, at higher prices based on value and at lower costs, in ways that differentiate you from your competition.
With a very clear Who’s Who snapshot of your biggest customers we looked at last week, you have everything you need for good-is-good-enough-for-good-decision-making on how to best nurture, develop, and course-correct with each of your top customers.
You have the foundations for eliminating self-inflicted wounds (such as over-serving) and helping your customers shift any behaviors that are part of the profitability problem (such as being high maintenance or consistently paying late).
The missing 20% of the 80-20 Rule is what puts millions on your bottom line.
The good news is that you’re already 80% of the way there. You have customers. You have products and services. You have people, technology, equipment, facilities, processes, procedures, marketing materials, financial reports, and more.
The bad news is that your competitors have all that too.
You need to do the 20% that your competitors AREN’T doing.
It’s the shift from reactive and run-of-the-mill activities to the small everyday strategies and tactics of a proactive Profit Plan.
Master the 5Rs of Customer Profitability Management.
R1 is Retain: Just a 5% increase in retention can put 95% more on your bottom line
No surprise, your first step is Retaining your biggest and most profitable customers. Do you have a specific retention in place that goes beyond the tired, ho-hum effort of repeated sales calls, lunches, event tickets, and logo’d t-shirts that they’ll never wear?
Conventional tactics just aren’t enough. Your competitors are actively pursuing them, looking for a gap to exploit, or a toe-hold that will give them traction to take the account away from you. You need to make your competitors’ efforts irrelevant.
Loyalty programs aren’t the answer – they’re inappropriate in most B2B environments and in the B2C world most of them cause dis-loyalty with their convoluted terms and conditions.
Increased sales efforts may not be the answer either, as some of your biggest customers may already be buying as much as they can from you.
At the conclusion of this overview of the 5Rs, I’ll share the retention strategy that positions you as the gold standard and that you need to add to your toolkit now, before your competitors beat you to it.
R2 is Ramp Up: Take care of the low-hanging fruit. You have a 67-70% chance of success with this strategy vs a 5-20% chance of success closing a new customer.
Where do you want to spend your time? Generating rapid results or going for the long shot? The research shows that at any point in time, between 5-30% of them could be doing more business with you, and the fastest way to Ramp Up their profitability is with executive-level meetings that strengthen the relationship and uncover the deeper needs and wants your customers don’t even know they have.
Your sales team will never uncover the additional opportunities for a more profitable business just with their existing sales calls, because it’s their job to sell what you have today. It’s your job to determine what you should be selling your customers in the future. It needs fresh eyes and your creative talents.
R3 is Restore to Breakeven or Better
In 5 out of 6 cases, “fire the customer” is the wrong choice to make even for customers who are costing you more than they’re worth. Instead, a couple of straightforward cut-to-the-chase questions and a simple matrix to plot their answers on will identify exactly which strategy will make them profitable again. In only one case will you need to exit them, and in that case you’ll do so in such a graceful way that they may even thank you and refer more business to you.
R4 is Regain
Every business leader knows that when you lose a customer, you should take the time to find out why, and make an effort to win them back. Although few companies ever get good at this, which means that opportunity is hidden in plain sight because the grass ISN’T always greener on the other side, yet customers can be embarrassed to reach out again to come back.
It’s your job to make it easy for them to do business with you again, even if they left because of an issue.
Developing an effective win back strategy will almost effortlessly grow your top and bottom line.
R5 is Reactivate
Do you have a big database of customers you never hear from anymore? Think of your company as a radio station. We often assume that “broadcasting” is enough – as long as we’re sending emails, marketing materials, brochures, and more, these customers will do business with us again “someday.”
Unless they’re tuned into us, they can’t hear us no matter how much wattage we use.
How much junk mail and email do you simply ignore every day because what’s being pitched isn’t top-of-mind for you in that moment? We all tune out when what we hear is just noise.
Proactively finding out if they’re “dead or just sleeping” and developing value-focused reactivation strategies is the secret to creating a dog whistle that breaks through the noise and gets their attention. Otherwise you’ll incur huge marketing costs for no good reason other than wishful thinking.
It’s time to choose the hard way or the easy way to proactively manage customer profitability!
You can guess at what you need to do for each of the 5Rs. That’s the hard way.
Or you can take the time to know with certainty what actions you need to take next to Retain, Ramp Up, Restore, Regain, and Reactivate your customers.
You don’t have to keep fighting for new customers, which is statistically the most difficult way to grow.
Mining the hidden gold by creating more value for your existing customers is the easiest path to profitable growth, much less time consuming, much less expensive, and much more effective.
Stop spinning your wheels. Here’s the catalyst for successfully implementing the 5Rs.
67% of your customers who leave do so because they think you don’t care!
Indifference causes more client churn than price. It causes leakage of products and services that could have been purchased from you but weren’t. It causes bad customer behavior in retaliation such as slow payment and being high-maintenance to get your attention. And it causes customers to vote for the other guys with their wallet.
If you don’t show you care about them, why should they care about you?
The usual techniques of launching a new marketing campaign or upping the barrage of emails are not the answer – because all of those tend to be all about your company, not all about them!
If a senior executive from one of your suppliers asked if they could see you to learn more about where your business was headed in the next 5-10 years so that they could serve you better, would you say yes?
It’s your responsibility as a leader to create your future!
You probably went into business because you love applying your creativity to solving sticky problems. That doesn’t happen when you’re trapped behind your desk doing email.
YOU have the ability to make your customers feel important, appreciated, and that they matter.
YOU are the catalyst for all the growth and profit your business ever needs, because you have the power to LISTEN, learn, and make things happen.
Whether you have only a few customers or thousands of clients all over the world, there’s a 7 step listening framework called the Value Creation Conversation (VCC) that holds the key to activating the 5Rs… and every other element of the P.R.O.F.I+T Roadmap.
Value Creation Conversations aren’t sales calls. They’re not meet-and-greets. They’re not ride-alongs with a rep. They’re deep, insightful dialogues that build the kind of personal relationships that create loyalty and long-term partnership. They’re best done in person, but the classic elements can be implemented even when that approach is not a match for your business model.
In this age of high tech instead of high touch, showing you care and learning how to add more value is what builds a high level of trust and partnership with your clients and a barrier to entry that your competitors can’t penetrate.
Transform your business with the 5Rs!
Mastering the 5Rs is the 20% that your competitors aren’t doing. It’s the 20% of opportunity hidden in plain sight that makes all the difference. Find out more about the 5Rs with this complimentary 3-video training resource.
We all know we should be spending more executive time with our customers. We all get busy.
Take back the time you need for the 5Rs when we tackle the O in the P.R.O.F.I+T Roadmap in the next post.
How much time do you spend connecting with your customers at an executive level each week? Is it more or less time than you spend on email? Which of those choices would really move the needle in your business?