How will you unleash your latent profit?
Step 2: Design it!
If your business is producing all of the profits it could possibly produce, stop reading.
If not, let’s focus on how you can unleash the latent profit in your business.
In the last two issues of this newsletter, I described a process for developing the hidden profit potential in your business:
- In the April 21st issue I described “The Mine Your Own Business” System.
- In the May 5th issue I focused on the first of three steps in this system, Find it!,
“Mining your own business,” to unleash your latent profit potential, requires 3 major steps:
- Find it! Identifying the most lucrative sources of latent profit.
- Design it! Determining the best ways to unleash that latent profit.
- Mine it! Orienting your entire organization to implement your plan to produce more profit.
This graphic illustrates the The “Mine Your Own Business” System:
Full-size “Mine Your Own Business” graphic
Today we’re focusing on Step 2: Design it! in which we determine the best ways to unleash the latent profit opportunities identified in Step 1 of the “Mine Your Own Business” System.
Customer Action Drives Profits
Figuring out how to make your business more profitable requires, from the first moment, recognition of the key premise of Step 1, the Find it!, phase: That your customers, not you, create the major profit breakthroughs in your business.
Yes, your business will be more profitable if you cut costs, but cost-cutting usually produces incremental, marginal profit increases, at best. Order-of-magnitude profit increases happen when customers act. Stop for a moment and think about all of the things customers can do to impact your bottom line. It’s staggering.
The Design it! Phase is where we answer this question: What would make customers act in ways that unleash the latent profit in our business?
Customer Beliefs Drive
Always remember this: Your customers don’t do what you tell them to do. They do what they tell themselves to do. Customers’ beliefs drive their actions, and these beliefs are formed by the free speech going on in their own minds.
So, in order to answer the question, “What would make customers act in ways that unleash the latent profit in our business?” we really need to address these two questions:
- What do we want our customers to believe about us?
- How are we going to encourage them to believe it?
What do we want our customers to believe about us?
This first question is the most important question in branding: What do we want our customers to believe about us?
However, most branding exercises only give lip service to this question. Brand strategy conversations about positioning, taglines and Unique Selling Propositions (USP’s) are often less about what we want customers to believe about us, and more about what we want to tell customers about us. In my workshops, I regularly ask senior executives to describe to me what they want their customers to believe about their companies, and I rarely hear a compelling, differentiating, thoughtful, well-pondered response.I hear lots about sales pitches and catchy slogans, and a lot of least-common-denominator mission/vision statement jargon… but not much about desired customer beliefs.
For the moment, don’t worry about what you want to tell your customers in your sales pitches and marketing communications. We’ll get to that in a bit. For now, focus only on what your customers would need to believe about you in order to act in ways that unleash the latent profit potential in your business.
To do this, look back at Step 1: Find it!, and consider the customer actions that will most impact your profits. (If you haven’t done the Bring the Future Forward exercise from the Find it! Phase, consider doing it now. It’s well worth your time and effort.)
Now, let’s focus on determining the beliefs that will drive those profit-inducing actions. Here’s my favorite way to do this: Imagine a customer, who loves doing business with you, who has just been told by her boss to drastically reduce the amount of business she gives to you. She doesn’t want to reduce the amount of business she does with you, so she resists and immediately starts to persuade the boss that she should do more, not less, business with you. Describe what you would want her to say to her boss that would be so compelling that the boss would say, “Oh, now I get it. I didn’t realize how important they (your company) are to us.” (If you sell to consumers and not businesses, just change the boss into a spouse, and imagine a similar scene.) Can you define, in the customer’s words, what you would want her to say? Imagine that the boss (or spouse) is skeptical, so you need to “aim high” and envision the customer making an impassioned case for you.
As an example, imagine that you are a wholesaler of office supplies. You have determined, through the Find it! process, that the most lucrative sources of untapped latent profit lies in your existing customer relationships, because most of your clients purchase less than 30% of their office supplies from you. You identify that the customer actions that could most powerfully and immediately boost your bottom line would be if customers…
- Bought a broader range of products from you.
- Gave you a larger share of their overall office supply business.
- Allowed you to monitor and manage their stocks of office supply inventories, automatically replenishing supplies as inventories dwindle.
Imagine what your customer’s beliefs would need to be in order for her to want to do those things. To do this, imagine what you would want her to say to her boss, persuading him why their company would be so much better off if they relied on you more heavily, not less. What kind of compelling argument could you envision her making that would make the boss do an about-face and support increasing the budget allocation for your company? Could it be that, as they invest more in their relationship with you, you will understand their business better and be able to help them manage their overall office supply expense? Would it be a story of convenience? Of price?
What you imagine your customer to say represents, directly, what you want her to think about you. What is the essence of what you want her to believe? If you find yourself writing a long list of bullet points, don’t stop when the list is complete. A brand strategy is not a list of bullet points. Look for the common thread, the DNA, that ties the list together.
How are you going to encourage customers to believe this?
A customer’s beliefs about you are influenced by each and every interaction she has with your company. When these interactions blend in Brand Harmony, she will more likely form strong, motivating beliefs about you.
In too many companies product decisions, operational process decisions, customer interface decisions, marketing communications decisions and sales strategy decisions are made separately. It astounds me how infrequently I encounter companies that have taken a comprehensive, customer’s-eye view of the entire customer experience. Different silos within the company assert their influence over a piece of the overall customer experience, and it’s a total crapshoot whether the entire story comes together in harmony.
Your challenge is to orchestrate the entire set of interactions customers have with your company, its people, its products and its services in such a way that the customer perceives a clear, compelling, differentiating brand story in her mind. Meeting this challenge is not a marketing function, or a product function or an operations function. It is an enterprise function. Your customers are paying attention to what your entire company is doing, so you had better pay attention to it also.
As I described in my first book, Brand Harmony: Orchestrating the total customer experience to create dynamic results, it is critical to map all of the interactions customers have with you throughout the entire experience of their relationship with you. This is the best way to determine what you need to do to enhance your products, services, marketing communications, sales efforts, or any other touchpoint with customers, because you will be able to see where your story is not being well communicated.
To pick up our example of the wholesaler of office supplies, let’s say that you determine that a brand story based on the ability to manage a company’s overall office supply expense would be meaningful and differentiating. Now, you have to ensure that your overall customer experience communicates that story. Here are a few ideas:
- You could offer an inventory management/replenishing service for companies who reach a certain level of volume with you.
- You could create customer reports that track office supply spending, by category of supply and by company department.
- You could offer audits of supply usage and suggestions for enhancing the effectiveness of their office supply investments.
- You could create an easy-to-use web interface to enable the company to make special adjustments to supply levels, based on situational needs.
- Your sales conversations and marketing materials should focus on this brand story and its benefits.
- Etc… the list has only just begun!
Creating this list is like the process a filmmaker goes through when determining the scenes for a movie.
Here are some immediate things you can do to “Mine Your Own Business,” starting now:
- Go back to Step 1: Find it! and do the two exercises recommended there: Bring the Future Forward and What Customer Actions Created this Future.
- Do the exercise in this newsletter that addresses the question, “What do we want our customers to believe about us?” in order to identify the essence of your brand story.
- Then address the question, “How do we get them to believe it?” by mapping customer touchpoints and designing the overall customer experience that will communicate your brand story.
As you do these exercises, recognize that your first set of answers to these questions are only that– your first set of answers. Answering these questions is an ongoing process, and if you continue to address them, you will make progress each time you revisit them.
In our next issue I will focus on the 3rd step of the “Mine Your Own Business” System– Mine it! In the Mine it! step, we will discuss the role that everyone in your organization takes on as you seek to unleash the untapped potential for improved business results that lurks just under the surface of your business.