Watch out for scrap, spoilage, and wastage.Study the most common "drop points" in your client's purchase history.Can you strategically reinforce your business system to reduce that attrition? Perhaps you need to better communicate with them how to use your product or service? Or give them a well-timed "gift" or make a well-timed visit or phone call?Ĭourting your current customers eliminates or greatly reduces the acquisition or marketing cost on that second and all later transactions. Do all you can to keep your clients actively purchasing from you.
Retention, retention, retention.Attrition costs.these bottom third clients were costing them money every month to have them as clients!) One CPA firm we helped do this discovered that their best one-third of clients were covering their costs for their bottom third of clients who due to "scope creep" in their monthly write-up work were actually negative margin clients (i.e. Cut low-margin clients, products, or services, and invest the saved time and money in higher-producing parts of your business.This presupposes that you have accurate and timely reporting that shows you which clients, products, or services produce what margins.Assuming that you do, review a "margin analysis" of your key products, services or customers to see which are most and least profitable.Up-sell and cross-sell to increase your average unit of sale.In general, when you increase the amount you sell to your customer at one time, you'll improve your margins because you'll be increasing the purchase velocity and therefore lowering your cost per sale in terms of overhead burden.So how can you increase your average unit of sale per customer? Can you up sell to richer offerings? Can you offer larger units of purchase? Can you cross sell complimentary products or services?Īll of this allows you to amortize your marketing cost over a larger unit of sale which dilutes your marketing cost for each sale and hence grows your profit margin.Remember, the faster you make the this cycle, the better your margins will be, all things being equal. This in turn means improved profit margins.So go back to your main systems from order to delivery, how can you speed up the process? Are there steps you can eliminate? Ways to shorten parts of the process? Can you automate, template, or pre-do steps? Can you script out your linkages between people and departments to speed up the process. The faster your turnaround time (from order to delivery), the lower your overhead cost per unit produced.
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