Your company is growing, your team is adding clients and your net income is growing in terms of total dollars – but not in terms of net-income percentage. Companies that are growing and really focused on client acquisition usually see negative pressure on net-income percentage – much to the CEO’s frustration.
Here are some things you can do RIGHT NOW to grow revenue AND grow net-income percentage.
1. Look at your client mix. List all of your clients on a spreadsheet, then ask the following questions:
- Which clients produce the most revenue? The most gross profit?
- Which ones require the most management time? The most staff time?
- Which ones have the most growth potential?
- Which clients are absolute pleasures to work with? Which ones just drive you and your team nuts?
2. Look at your data objectively and figure out your Top 20% clients. This will help you create your “Top 20% client profile” -– the types of clients that you want more of.
3. Identify the decision makers at the Top 20% clients and begin to create a Buyer Persona. Think about: What are their habits? How do they buy? Where do they look for information? What groups do they belong to? What are their needs and their biggest problems to solve?
4. Focus your sales and marketing efforts on prospects that fit your Top 20% profile, and leverage their typical Buyer Persona into your sales process and messaging.
5. Stop lowering prices to get a deal and stop giving away margin!!! Your targeted group appreciates you and your firm and is willing to pay optimal profit for your products or services. You have already proven it with the spreadsheet you developed. This is also a great time to raise prices.
At the end of the day, without making any additional investment in operations, product delivery, etc., just by getting more focus on WHO you are selling to, you are automatically increasing the value of WHAT you are selling because this groupVALUES what you are selling more than others who are willing to buy, but only at a discounted price.
Another net-income percentage benefit is that this targeted group is easier to service. Your core product or service is already exactly what they need. This saves huge amounts of time, but that does not show up easily on any of the P&L statement line items … just net income.
Ask The Question
Get your team together at your next Quarterly Planning session and ask the question:
“How can we get our net-income percentage from X% to Y% by the end of 2015?”
Don’t shoot for the moon. The objective is getting your team aligned around some key priorities and focused on execution. Results drive engagement.