Menu

Your Industry News 

How to double your profit (part three of a three part article)
Graham Hawkes
/ Categories: Miscellaneous

How to double your profit (part three of a three part article)

The last two articles explained to you how you could improve your profits by using your time better, and by analysing your product base.

 

The third area is the one that can really build your business.  No matter how you look at it 20% of your customers or clients will be giving you 80% of your sales and/or profits.  So the first step is to identify who those customers are.  If you are selling on credit, it’s easy – all you do is to list your customers or clients in order of sales value or profit contribution.  You will find, as you did with your products, that approximately 20% of your customers contribute 80% of your sales revenue or gross profit.  It’s that simple! 

 

If you are in retail, or don’t have a debtors ledger that gives you that information then the identifiers are a little harder to find.  It may be a group of customers, such as teenagers, people in a particular type of business, or with a geographical common denominator – it could be anything.  But once you find it, that secret is like gold to your business.  Because that group of customers tells you a number of things.  First of all it tells you who to target your marketing to.  And marketing in this sense means direct promotions, referral requests, special promotions, seminars and the like. 

 

Secondly all of those customers know and associate with others like themselves, which means that they will talk amongst themselves.  And if you are able to give that group exceptional service as opposed to the great service you give to everybody else, then just imagine how the word will spread.

 

And thirdly it tells you who the timewasters are – they are the ones who take up all of your time, moan about everything, first to come to the Xmas booze up and last to leave – you all know who they are.  And they are only giving you 20% of your results.  It’s not hard to decide where your priorities should be, is it?

 

So take some time out, do the exercise, and then the most important thing, set out a plan of action and just do it.  And by the way, if you want us to perform a Pareto analysis on your business, give us a call.  For the insignificant amount the exercise will cost it will repay you many, many times.

Previous Article Nothing beats a well trained team
Next Article In retail, often you only get one chance
Print
1609 Rate this article:
No rating

x