Most businesses think of productivity in terms of cost and how to make savings in the delivery of products or fulfilment of orders.
However, just as many, if not more, opportunities to realise business performance and profit improvements exist in terms of winning work as well as managing delivery costs.
The key thing is to recognise that winning customers is not a single stage process, but has a number of phases. Make small improvements to each phase and the productivity gains usually drop straight to the bottom line as they are not accompanied by increased costs.
Greater Scope
When you start to breakdown the buying cycle into each phase, there are many ways to achieve productivity gains:
- More enquiries
- Better conversion
- Average order size or scope
- Price achieved
- Frequency of purchase
- Reduce defection
- Lifetime value
Improve productivity by 5% in each case and profitability will be increased by 30% or more. Don’t just stop at 5% improvement though – with a clear offering, high impact engagement strategy and a systematic opportunity management programme it is possible to improve performance of different phases by 10%, 20% or even more. The resulting compound effect of such productivity on profitability can be 50% or more – without increasing costs!
Greater Potential
Unlike costs which are usually already squeezed to the bone from years of trading in highly competitive markets, income growth opportunities are still often largely untapped by many firms. In many cases, businesses have not explored the possibilities to improve performance with a more systematic approach to opportunities.
It is the single most prominent feature that separates the corporate enterprises from small to medium firms. They have a greater focus on what makes them desirable and how to convert enquiries most effectively. They invest because they can see the return through measuring each phase as prospects transition into customers.
Firms who see marketing as a simple and quick way to save cost, when looking to protect their profits are realising a false economy as reducing the customer pipeline merely causes greater problems down the road.
Greater Longevity
Cost savings may be quick and easy to implement, but they are inevitably short term and severely limited in their scope. Savings can rarely be sustained beyond 12 months as it is not possible to take something away more than once and very often the savings made are only temporary as they have an impact on reducing income or additional costs elsewhere in the business.
By contrast income productivity gains can be sustained and extended year on year and whilst there may be some cost considerations of managing greater work volumes, it is usually a minor effect compared to the marginal gains achieved.
If you would like to know more about low cost, high impact ways to improve your productivity through income gains rather than cost savings give us a call on 01823 429339. You might be surprised how much you can influence profitability with a few small changes. Or visit our website for more information.
