5 Strategies to Optimize Your Business
All indications are that 2016 will be a strong year for Mergers and Acquisitions. Last week, I had a chance to spend time with Investment Banker, Mark Herbick.
Mark defines Business Optimization as “the process of making a business as efficient, effective, and profitable as possible”.
In the world of M & A, the more optimally you present your business the more value your company has, increasing your opportunity to attract the right pool of buyers at a higher M & A valuation.
Measuring a business begins with a financial assessment to thoroughly understand historic revenue, profit, G & A expense, etc. Understanding a company’s position with its customers, the relationships and their sustainability is a barometer for future revenue and will influence valuation. Let’s zero in areas of opportunity business leaders have to optimize their business regardless of any exit strategy.
What should you be doing NOW to Optimize Your Business from a CUSTOMER perspective?
1. Customer revenue and profit
All customers are not created equal. Do you have the right relationships with the right clients? Conduct a financial segmentation analysis of your account base. Chart your accounts low revenue/low profit to high revenue/high profit and everything in between. Next conduct a “what if” analysis to:
Review and determine if low revenue/low profit accounts are strategic to a particular market and if not, raise prices/rates or move to a lower cost channel (telesales, Internet).
Determine if you can raise prices/rates on higher to high revenue/low margin accounts.
Find a way to gain a bigger share of wallet in low revenue/high margin accounts by developing a penetration strategy.
To protect your high revenue/high margin accounts, implement Quarterly Business Reviews to educate these clients on the value you bring and look to further expand and secure your relationship.
2. Customer engagement and loyalty
The Net Promoter Score (NPS) has become the de facto standard for measuring loyalty for the best companies in the world. Sustaining relationships and continuing to develop loyal customers are essential initiatives to help you grow your business through increased client retention, expansion and new client acquisition and to truly MEASURE if your clients are at risk.
Make NPS an integral part of your culture
Make a commitment to analyze the data
Take action!
3. Competitive advantage
Can you articulate your competitive advantage or value proposition in the marketplace?
Does your value statement resonate with your clients to fulfill their “needs and wants”?
Can you differentiate yourself to the degree that you are your customers “best option”?
If asked, can you substantiate your offering to instill trust and confidence that you will “deliver what you promise”?
4. Customer relationships
When was the last time you analyzed your client relationships? Often times, the words key account, strategic account and partnership are used to describe relationships. These are good if, in fact, you have effectively reviewed your position in your accounts. For example:
Do you have a single threaded relationship in an account? In other words, the sales rep is the only contact point with your company. Or do you have a minimum of a 3x3 relationship, meaning 3 on both sides at three different levels?
How does your customer view the relationship? Would they say that they have a collaborative relationship, where they feel confident that you are working to help them achieve their goals and objectives? Or, is the relationship defined as cooperative in nature leaning more toward the positive. Or, in fact, is the relationship stuck in a competitive environment, where someone wins and someone loses?
5. Customer experience
Do you and your team understand the value of creating a frictionless customer experience? At Butler Street this experience begins with a customer’s moment of truth:
A “moment of truth” happens anytime a client, talent or prospect comes in contact with your company. That moment, however remote or brief, gives them an opportunity to form an opinion.
When executed flawlessly, moments of truth create a “frictionless customer experience” that lead to high satisfaction and loyalty scores. Conversely, inconsistent service delivery will cause a customer to move to another provider.
I briefly touched on five strategies to optimize your business. How can Butler Street help?
Run “what if?” scenarios through Butler Street’s proprietary Segmentation IQ™ to help you determine the best course of action across both challenging and strategic accounts.
Obtain the actionable insights you need to advance relationships through Butler Street Research VOC and NPS survey processes.
Participate in our Knowledge Team program to create the environment to clearly define and refine your value to your customers.
Conduct Sales Effectiveness & Account Management training to develop skills and talent to retain and grow your customers.
Contact us to help optimize your business, engage and retain your talent, and be a growth company.