Pruning for Profit
Mark Frasco - President
To my delight, my wife loves gardening and most things around the yard. This past Saturday morning, we were on our patio and drinking coffee, catching up on things, while she wandered around pruning the flowers and plants we store in pots.
Many of us think of pruning as removing that which is dead, but to the expert, pruning is as much about removing overgrowth. It seems counterintuitive to those who are not knowledgeable with things that sprout, but pruning increases the health of a plant. The plant becomes more fruitful and will grow healthier because of pruning.
In the northern hemisphere, summer is upon us. The soil is fertile, and everything in it is reaching high for the sun. Growth is plentiful. I’m not a horticulturist, but I know a thing or two about the concept of pruning.
Our economy is experiencing an uptick, with growth in most areas. Hiring is up, and utilization is at higher levels than we’ve seen for several years. Our people are busily servicing customers, and our systems are bustling. Growing our top lines is becoming more predictable.
In every business system, there are strata of customers. You can classify them by revenue, profit, or order activity. There are As, Bs, and Cs. Your As are a tight fit with your value propositions. They value what you supply and how you supply it. They buy with more repetition, or in larger quantities. Your Cs, not so much. Many organizations tend to attract Cs during economic downturns. When sales are down, we find ourselves becoming less strategic and less focused, accepting business that isn’t a strong fit with our model.
Now, with our top lines recovering, our people busier, and our resources stretched, I’d suggest that it is time to prune your customer base. Now is the time to become more focused, strategic. It is time to invest in strategic growth and profit management… pruning for profit. Analyze your Cs. Determine what would elevate them in your system and make the adjustments. For those who don’t seem to fit, begin the process of pruning, freeing capacity to attract, serve and retain more As.
The best time to grow your bottom line is when you don’t need to. In other words, it is much easier to improve your business performance during up times than down. When results are lagging, we often become less strategic.
Here are a few tips that will help you build a more fruitful, healthier business:
- Develop criteria that will help you objectively evaluate and grade your customer base. Volume, sales or profit per order, hassle-factor, payment performance, etc.
- With that criteria, develop tactics that will either elevate your Cs, or prune them. If you want your competition to take some of your business, let it be your Cs.
- Develop strategies, build structures, and focus your business growth processes on making friends with As—maybe those of your competitors, who lack your focus and are distracted by serving Cs.
I won’t cover it here, but a healthy garden that is regularly pruned also needs good soil, a little fertilizer, water and sun… yes, I’m talking about business growth.
Questions or comments? Please contact Mark Frasco at mfrasco@teamCOACT.com