How to find your company's bag of missing profit
In my corporate life, tough times meant we could expect a top executive (sometimes it was me) to declare we needed to go find some big profit gap in our budget -- as if the dollars were in a bag taped under a chair in the company cafeteria. If we looked under the right chair, we’d find the profit relief we needed to go back to doing what we wanted.
This economy is, of course, a different kind of game. You are under pressure to find money in your business – cost savings, reduced risk, pockets of new revenue - all to protect or improve your bottom line. How is your company looking for its bag of money? Are you cutting expenses across the board? Or is there something else driving what your company decides to cut?
Top performing leaders are discovering that when a clearly defined target customer experience is used to drive choices about what to cut and what to keep, they can protect – and improve - revenue and profit performance in spite of a tough economy. They have found an undeniable link between their best customers’ ideal experience and their company’s financial performance.
In recent research, our firm Aveus found that organizations that define a target experience are nearly twice as likely to beat their profit targets than those who do not.
What is a target, or ideal customer experience? It starts with your careful choice of a target customer, and the need or problem you can solve best for them. Their target experience is what – ideally – should happen and how customers should feel as they learn about their options, try out a short list, buy, solve their need using their purchase, and then evolve to the next triggering need.
I imagine you see it – the gap between the customer experience you have, and the target experience you want. That’s ok. You may never actually achieve your ideal experience. You can get a performance payoff simply using your target experience as the beginning, or purpose for daily actions across your company.
Our research also revealed that those use their target experience as the primary driver for daily actions across the company were most likely of any group we studied (across industries, size, and other factors) to beat BOTH revenue and profit goals. The clearer your defined experience and the more you use it, the more money you can make. In good times certainly, and especially now.
Imagine a line of dominos stood on their ends. Profit is the back – or outcome domino. The middle dominos are the daily actions and decisions made across your organization. At the front, the action or purpose domino – the one to which all the dominos in the middle must align to get a great result.
Especially now, your target customer experience should be your front domino.
This is VERY different than cutting X% of your total staff or next quarter’s advertising spend. Use the degree that each and every thing you do contributes to solving your customer’s need as your litmus test. If something doesn’t contribute strongly to solving your customer’s need – your ideal customer experience – let it go. Customers pay you to solve their need, and anything else is at best white noise. In tough times like these, those things are the money leaking out of your business.
Perhaps you’re on the top team, making tough choices about products or services to trim. Maybe you are the leader deciding how to incent service reps when calls and revenue are down. It doesn’t matter who you are. It matters what you do. When anyone (and everybody!) can leave at the end of the day saying “I moved us 3 inches closer to our ideal customer experience” you can rest assured that you moved your organization toward a better profit outcome.
And you can forget looking for the bag under the chair in the cafeteria.
A blissfully twisted career path and a passion for the link between customer experience and financial performance. Gets excited when actions align to a target experience "front domino." More about Linda.
Customer experience can drive better financial returns. Leaders tell me that they know this intuitively, but need proof of the payoff, as well as a map showing how to translate a target experience into the actions across their organizations that generate those returns. So Domino is the first how-to book on customer experience. Read and find evidence that customer experience can be a path to better profits. See the gaps and opportunities between the customer experience you have and the one you want. Provoke conversations in your team, area or whole organization about the actions that link customer experience to the financial reward you deserve. Learn more.