When it comes to increasing profits I’ve found that there are predominantly three schools of thought. Increase prices, reduce costs or some variation thereof. As we enter a new year I’m here to provide you with a third option. Why not focus with ...johavel/Getty Images/iStockphoto
When it comes to increasing profits, there are three predominant schools of thought: raise prices, reduce costs, or some variation of the two.
As we enter a new year, how about a fourth option? Why not focus with laser-like intensity on providing what your customers value?
Here are 10 ideas on how to make 2015 your most profitable year, built solely on capitalizing on what your customers value:
1. What do your customers value? Let's start with something simple, like understanding what keeps your customers coming back. Is it your personality, location, pricing, unique service offering, or convenient hours? Take a survey of your top customers and ask them why they keep returning to your business time and again.
2. What do your competitors offer that you don't? For those customers who frequent your competitor's business, or split their investing between your business and another, what are you not offering that your competitors are? You can easily find this information by shopping your competitors business, and if you are daring enough, ask unsuspecting patrons why they keep coming back to your competitor's business.
3. Strategically populate your gaps. You can't be everything to everybody, nor should you attempt to be. However, with the intelligence obtained from steps one and two above, where and how should you invest your time to increase value? This could range from re-deploying how employees greet and interact with customers to developing new services that further enhance existing product offerings. If it's a gap that will provide additional value to customers or clients, then it's a gap you must populate.
4. Prioritize what you offer. Building on point three above, are you leading with the products and/or services that provide the greatest value to your customers? A client was in the business of selling HVAC products to customers, but also offered (if you inquired) an installation service. The latter was more lucrative as margins were higher. It turned out that existing customers placed greater value in their installation service than in the products themselves, so the company re-prioritized how this service was positioned to customers, which increased sales opportunities and revenue.
5. Validate value on a continuum. With gas prices in a free fall (although perceivably temporary), the demand for hybrid and electric vehicles is sure to subside. If you were a car dealer, how would this impact your business? A local dealer I visit frequently has recently moved several hybrid vehicles from the showroom into the parking lot, allowing them to feature and demonstrate the new and more spacious (while still reasonably economical) SUVs and mid-sized pickups. How are changes in the market, community and media likely to impact your customer's value?
6. Bundle to increase perceptions of value. If you can bundle a low-margin offering with a higher margin offering, then the compliment of one may offset the low margin of the other. With McDonald's introducing its new Create Your Taste program, it is unlikely to increase margins significantly, but it will create a new and enticing way to attract customers from Harvey's and Subway that is sure to increase profitability.
7. Introduce new value. You will find that the more frequently you interact with customers to understand what they value, the more new product and service ideas will naturally evolve. You won't reasonably be able to pursue them all. Pick those ideas that are most frequently presented by customers and then create a calendar to schedule the development and progressive introduction of new products or service offerings. Consistently introducing new value is a way to continue to catch the hearts and minds of customers.
8. Blow your value horn. As my mentor Dr. Alan Weiss says: "If you don't blow your own horn, there is no music." With new products and service offerings in place, you must be willing to blow your own horn and tell everyone what you have to offer to capitalize and monetize new customer value. Ask customers to provide testimonials on the value your products or services provide. Who better to tell prospective customers how they enjoyed your products or services than your customers themselves?
9. Momentum trumps competition. As you promote the new value you are offering, competitors are going to emerge and try to do the same, but if you continue applying steps one through eight, the momentum will create a void your competitor is unlikely to match. The more you listen to customers and take action on their suggestions, the more customers will be willing to provide you with new ideas and new business referrals. This not only builds customer loyalty, it also creates a perpetual stream of value intelligence that your competitors simply won't have.
10. If at first you don't succeed ... Not every new idea or new product will turn into a cash cow or even a calf. The underlying premise in building a business based on customer value is that you are constantly seeking out, obtaining, and acting upon customer intelligence. Some ideas will pan out, and some won't, but the steady stream of new ideas, customer referrals and increasingly loyal customers will more than make up for any potential losses in revenue or time.
Are you capitalizing on the things your customers value?
Shawn Casemore is the founder and president of Casemore and Co. Inc. a management consultancy focused on helping business owners build a business their customer's value. Follow Shawn on Twitter @ShawnCasemore.
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