Understand the Impact of Your Profit Per Sale

Make Sure You’re Dedicating Your Resources to the Right Clients

By Jill J. Johnson, MBA

Jill Johnson-profit per sale

Few enterprises truly understand the actual profits generated by the individual sales they make. Most metrics for sales effectiveness are monitored by reviewing top line revenue results. Yet the most critical determinant of on-going business viability is to understand what revenue actually drops to the bottom line after all costs have been taken into account. You must understand what profit is generated by sales to each of your clients. Then consider the benefits and vulnerabilities the cumulative impact these sales mean to your business. Knowing the breakdown of the profitability by the individual sales to your clients can have a significant impact on your ability to achieve your business goals.

The impact of the true profits generated by each individual sale takes on greater importance. Click To Tweet

1. Understand the Impact of the Profit Per Sale

There are many expenses that go into determining profitability for a company. The same is true for determining the profitability of a sale. Each sale has multiple components impacting its final profit. You should consider your total cost of goods sold, including investments in promotion and delivery expenses. Factoring in the costs associated with the staff time required to generate a sale is a must, too. Unfortunately, few companies consider all these expenses when developing their marketing and sales strategies. Whether you are working on growing your business or you are struggling financially, the impact of the true profits generated by each individual sale takes on greater importance.

2. Know Your Profit Per Client

Frankly, not all clients are worth the effort to generate the sale. Sometimes your growth goals for your business mean you also are growing beyond clients you have historically served. This transition period is a very vulnerable point for any enterprise. It is also very stressful because you might be wrong and wind up losing a client that could have provided even revenue value if you have not been afraid to maximize your relationship.

Carefully study the costs associated with serving each client.  Perhaps you have long-term clients you like personally, but if you have not taken the time to explore the costs of the sale, their value to your business may have changed dramatically over the years. Before abandoning these clients, try to identify options to trim your expenses without jeopardizing your quality. But it may be time to move on if they are not generating any real profit to your company.

3. Review Your Customer Segments Revenue

Using a target marketing approach to grouping your customers into similar client segments provides you with a more detailed understanding of what is working and what is not. The key to effective target marketing is to focus your sales activities and expenditures toward those type of customers who can best be served by your enterprise, who will stay with you over the long-term and who will generate solid profitability. 

4. Evaluate Individual Sales Profitability

There are two ways of looking at your sales profitability data. One is by the individual clients. The other is by combining clients using some specific target marketing components. Grouping clients by similar characteristics makes it easier to identify trends in the data that you can use to assess the profitability of each of these major segments.

There are many options for grouping your customers into segments. For a B2B client, you could group them by their industry sector, number of employees, location, etc. For a B2C customer, you could group them by where they live, personal attitudes, age, family size, income level, etc.

If Client Segment A generates solid profits for you, but all of your marketing efforts are being devoted to Client Segment B who are barely break-even, the choice is obvious. You must retool your marketing and sales activity to attract more prospects from Client Segment A.

5. Monitor Individual Client Profitability

A complete review of the mix of your customers and sources of sales will reveal your potential vulnerabilities if market conditions change. It is not enough in today’s complex and competitive marketplace to look only at your total overall sales. If you have one customer that generates more than one-third of your sales, you are in an extremely vulnerable position if you lose that client to a merger, change of staff or if it goes out of business. Controlling and monitoring your client profitability and cost of sales allows you to take corrective action before your business’s survival is at risk. This takes on even greater importance if you are overly dependent key clients for your profitability.

6. The Impact of Pricing on Profitability

A close companion to client profitability is to understand the impact of various pricing strategies on the perceived value of your goods and services, and how they intertwine in attracting the customers who will buy from you. Engaging in discounted pricing strategies often attract customers who are buying from you based on price, not your value. If you are in a service-oriented business, this can be a slippery slope. You may get clients who keep you busy, but who do not generate the profits you need to build a sustainable enterprise or build your net worth. It is a delicate balancing act, but one you must realistically consider given your business objectives.

7. The Impact of Strategy on Profits

You must also consider the financial consequences of your business direction and your vulnerability to setbacks. This assessment allows you to make better business decisions and to set a more realistic strategic vision for your organization. “Finding a lane” or picking your niche through target marketing must also incorporate a true understanding of the costs of reaching them, as well as their ability to add to your bottom line in a meaningful way.

Final Thoughts

Reviewing the trend information for each of your major client segments is a highly impactful approach to revaluating the effectiveness of your sales and marketing efforts. It removes your emotions and relationships with your clients to allow you to be more detached in considering their impact on meeting your business objectives. They are no longer become just people you like, but a bigger grouping of customer segments who impact your future costs and business growth. If you are not attracting the kinds of clients generating the profitability to move your enterprise forward, it is time to reconsider all of your sales and marketing efforts.

Jill J. Johnson is the President and Founder of Johnson Consulting Services, a highly accomplished speaker, an award-winning management consultant, and author of the bestselling book Compounding Your Confidence. Jill helps her clients make critical business decisions and develop market-based strategic plans for turnarounds or growth. Her consulting work has impacted more than 4 billion dollars’ worth of decisions. She has a proven track record of dealing with complex business issues and getting results. For more information on Jill J. Johnson, please visit www.jcs-usa.com.

Avoiding Days of the Living Dead

Addressing Workplace Zombies and Promoting Engagement One Person at a Time

By Kate Zabriskie

Kate Zabriskie-zombi sotry

Zombies in the workplace are soul-sucking, money-draining, productivity-killing entities that chip away at an organization’s spirit and its engagement levels one convert at a time.

These creatures often look like the rest of us, but deep down they’re cancerous beasts that can potentially drive a business to ruin.

So what’s a manager to do? Recognize the problem, know its source, understand why action is essential, and then do the work required to create a zombie-free workplace.

Knowing Your Zombies

Although zombies come in many varieties, most resemble one or more of the following:

Zombies in the workplace look like the rest of us, but deep down they’re cancerous beasts that can potentially drive a business to ruin. Click To Tweet
  1. Negative zombies—Often the easiest to spot, they complain, moan, and express their dissatisfaction regularly. Some will use humor to disguise their disgust, but they are nevertheless contagious and a threat to the uninfected.
  2. Minimum-contributor zombies—They do the basics but nothing more. You will never see them looking for work or volunteering for projects. Furthermore, many act as if they are doing you a favor when you ask them to perform a task they get paid for doing.
  3. Status-quo zombies—These change-averse creatures dig in their heels and fight the future. They are happy with everything the way it is and take no initiative to implement new ideas. The most dangerous of this variety will even resort to sabotage if they feel threatened.
  4. Shortcut zombies—They find ways to cut corners and circumvent processes. Their choices frequently expose the organization to unneeded risk. Worse still, when these zombies are in charge of training others, they pass on bad habits and poor practices.

Identifying the Source

To rid an organization of zombies, you must understand how you got them. Each zombie has a creation story. These are the most common:

  1. The ready-made zombie story: People who were really zombies when someone interviewed them, and they got the job anyway.
  2. The we-did-it-here zombie story: Unlike the ready-made zombies, these zombies were created after they joined the organization. They were discouraged, taught to fear, or worse.
  3. The retired-on-the-job zombie story: These zombies should be long retired, but because of a need to complete a certain number of years of employment before receiving some financial reward or other benefit, they’re still in the workplace and just going through the motions.
  4. The abandoned zombie: Abandoned zombies are employees who could perform well if they didn’t feel as if they were the only ones who cared. After struggling alone, these poor creatures eventually succumbed and now just try to survive.

Making the Choice Before It’s Too Late

When left unchecked, zombies can take over a department, division, or even an entire organization with relative ease. For that reason, it is essential that organizations are focused and vigilant in their approach to zombie management.

Organizations that fail to take the problem seriously may find that it’s too late. To escape havoc when zombies gain a foothold, good employees will often leave for safer territory.

Then, by the time management recognizes its predicament, a lot of talent has walked out the door, and what remains is not sufficient to do great work.

Taking Action

Implementing an anti-zombie initiative is no easy task, but it can be done and done well if you take the process seriously and stay dedicated to invigorating your workforce.

Step One:Be candid about your numbers. High turnover is a strong sign that there is a zombie problem. High absenteeism, poor output, and substandard financial performance are other clues. Think about what you would see if your organization were-zombie free and what numbers would be associated with that vision. Next, compare those statistics to the current reality and set some performance goals.

Step Two:Once you understand your global numbers, you should measure employee engagement. You can run a formal survey with a company that specializes in engagement or create one on your own. As with step one, the goal here is to get a sense of what’s working, what isn’t, and the breadth of your zombie problem.

Step Three: Next, ask yourself what are you seeing and hearing that you don’t want to see, and what are you not seeing and hearing that you do? After you know where the gaps are, think about solutions to address those shortcomings. If your zombies belong to the status-quo category, for example, consider putting in a process whereby everyone is tasked with finding two ways to improve his or her work processes or outputs.

No matter what you choose, be sure you have the stamina to stick with the zombie-eradication tactics you implement. Fewer activities done well will beat a lot of mediocre ones every time.

Step Four: Be prepared to let go of those you can’t save. Despite best efforts, some zombies simply can’t be cured. If you’ve done all you can, and they’re still the walking dead or worse, it’s time to say goodbye. If the termination process in your organization is cumbersome and lengthy, at a minimum, you must protect the uninfected and recently cured from the zombie holdouts.

Step Five:Recognize success and coach for deficiencies. Saving zombies happens one employee at a time. People, who are clear about expectations, receive proper training, get coaching when they miss the mark, and feel appreciated when they get it right or go above and beyond, are highly unlikely to enter or venture back into zombie territory.

Ask

  • Do managers “walk the talk” and model anti-zombie behavior?
  • Do employees understand how their work is connected to the organization’s goals? Can they explain that connection in a sentence or less?
  • Are employees held accountable for following established processes and procedures?
  • Do managers confront negativity?
  • Do managers encourage and reward initiative?
  • Do they meet one-on-one with their direct reports on a regular basis?
  • Does a strong zombie-screening interview process exist?
  • When good people leave, does someone conduct an exit interview to see if zombies are the reason for the departure?

The answers to those questions should serve as a starting point for encouraging engagement and avoiding everything from a small zombie outbreak to a full-blown apocalypse. You can never be too prepared.

Kate Zabriskie is the president of Business Training Works, Inc., a Maryland-based talent development firm. She and her team help businesses establish customer service strategies and train their people to live up to what’s promised. For more information, visit www.businesstrainingworks.com

10 Commandments for the Inspirational Leader: The Foundation of Business Solutions

By Michele Wierzgac, MSEd

Michele-your personal brand

There are so many theories in leadership ranging from vision to self-awareness to service. The simplest way to develop your leadership skills is to have a work ethic mixed with a solid foundation of core values.

Inspirational leaders have commandments they work and live by. Commandments, or guidelines, lay the critical foundation for the development of leadership and business solutions.

All of you have your own commandments that you work and live by. These Ten Commandments will work as a guidebook to inspire your staff, increase workplace morale, and lay the foundation for a successful company.

1. Be truthful

Any leader aspiring to greatness must do two things all the time—listen and tell the truth. Inspirational leaders own up to their mistakes and correct them as soon as possible. Do not blame others for your error. And when someone comes up with a brilliant idea, give credit where credit is due. Do not take credit for the idea. You will be respected by your team.

2. Be consistent

Leaders are always performing like an actor on a stage. You must consistently and authentically act out your part in front of your audiences. You must lead with high energy, all day, every day. You must protect your personal brand.

3.Be empathetic

To start using empathy more effectively, put aside your viewpoint, and try to see things from the other person’s point of view. Then validate the other person’s perspective and examine your own attitude. Perhaps you are more concerned with being right rather than finding a solution or accepting others as they are. Listen with your heart to determine what the other person feels.

4.Be generous

Business and personal relationships are everything. Every relationship needs to be a two-way street. However, before a relationship can be formed, you need to give with zero expectation of receiving anything.

5. Be strong

Inspirational leaders bring a light to someone’s life. You become the message of hope and encouragement to your staff. Encouragement comes from focusing on the strength of another person to drive their motivation and perform at a higher level which adds value to the organization and your personal brand.

6.Be articulate

Effective leaders put words together based on the thoughts and needs of others. You must create the whole story out of words you have collected. Inspirational leaders are able to articulate and clarify what many of us have been thinking on the subject for a long time. Inspirational leaders seek and inspire excellence, not perfectionism. Go out there and learn so that you can return to your team members and inspire a culture of learning and accountability.

7. Be approachable

Are you accessible? Do you have appropriate body language? How you appear to others is key to being an inspirational leader. Some people have a fear of authority, but it is your responsibility to remove the barriers and establish an environment of trust. By using proper verbal communication and listening skills, you will become much more approachable and inspirational. You are in control of how approachable you are.

Your name can open and close doors for you. Guarding your personal brand needs to be a priority. Click To Tweet

8. Be a brand champion

If you are passionate about a common interest, you create a very attractive personal style of interaction, and inspire your team to become involved and take an interest in you. They become a brand champion, a supporter, and a cheerleader of sorts for you. In return, you become a brand champion for them. Because we share a bond, we naturally support one another no matter the situation because of our passion. Remember, passionate people are attuned to the five senses, taste, touch, scent, sound, and sight. Passion for a common purpose brings people and ignites warmth.

9. Be a genuine spirit

Talk to people—listen to what they have to say and what they actually mean. Sometimes those two can be completely different things. There is a beautiful story in everyone, so listen intently with an open mind; try to add value to the conversation wherever you can. Everyone has a gift—bring the best out of everyone. Among many other lessons of the heart, Leo Buscaglia reminds us “love is open arms. If you close your arms about love you will find that you are left holding only yourself.” Remember, some people are unreasonable and self-centered….love them anyway. Inspire them. Bring the best out of them.

10. Be credible

Reputation is about earning credibility, not expecting it. You must work hard at building credibility so others are confident about doing business with you. One way to earn credibility is to keep your promises. Another way is to be honest. Actions speak louder than words. If you are credible and honest, your personal brand will sell naturally. So make your brand work for you. Most people agree that there is a direct correlation between a person’s reputation and his or her success. How effectively you represent yourself in public often determines what you will accomplish in your life. Your name can open….and close….doors for you. Guarding your personal brand needs to be a priority.

As an inspirational leader do you have commandments that you work and live by? What do they look like?

Michele Wierzgac is a leadership expert, keynote speaker, and author of the forthcoming book, Ass Kicking Women: How They Leverage Their Informal Networks For Success. With her high energy presentations, Michele conveys sound leadership solutions and promotes audience engagement and on-your-feet participation. She promises her audience that they will leave her solution-driven keynotes and workshops with at least one passionate, life transforming leadership tool. For more information on bringing in Michele Wierzgac for your next event, please visit: https://micheleandco.com.

The Pursuit of Perfection

Do you want a staff of perfectionists?

By Peter Lyle DeHaan , PhD

Author Peter Lyle DeHaan

Some managers say “yes,” whereas others respond with a resounding “no.” The informed answer is, “it all depends.” Here’s why:

Of that portion of the populace who are perfectionists, some are blindly or proudly so. Others are self-aware of possessing this characteristic and informed about it; I call them recovering perfectionists. A self-aware perfectionist understands this condition, knowing how to tap into and celebrate the many strengths and benefits of pursuing excellence. At the same time, they know to guard against its limiting, self-defeating, and even paralyzing facets.

Doing research on perfectionism reveals a host of debilitating traits, starting with compulsiveness and going downhill from there. However, knowledgeable perfectionists can tap into the positive aspects of their natural tendencies when appropriate, that is, when it is to their advantage to do so. At the same time, they can usually avoid being handicapped by perfectionism’s alluring snares.

Doing research on perfectionism reveals a host of ominous and debilitating traits, starting with compulsiveness and going downhill from there. Click To Tweet

For a perfectionist, there are many traits which provide great value in the workplace:

  • Produce quality work: Perfectionists tend to produce high quality work. They take pleasure in excellence and find satisfaction in a job well-done.
  • Exceed expectations: If the boss expects a short summary, the perfectionist will submit a report. If achieving a 99 percent rating is admirable, the purist will aim for 99.9—and then 100. Being above average is not good enough; being the best is a self-imposed requirement.
  • Go the extra mile: Perfectionists often give more than asked. If a report needs to be five pages long, they will turn in six. If a product needs to have three new features, they will add a fourth and maybe a fifth. If they set a record last month, they will strive to better it this month. In sports, this results in shooting free throws while the rest of the team showers or taking 30 minutes of extra batting practice—every day.
  • Set high standards: Another trait is that perfectionists set high standards, both for themselves and others. As long as the standards are reasonably attainable, it is acceptable, and even admirable for the perfectionist to set a bar high—for him or herself. (However, foisting faultlessness on the others does little more than establish the groundwork for future frustration, disappointment, and conflict between the precision-minded and the rest of the world.)

Of course, there are counterparts to these traits. One is procrastination. It is said that the perfectionist subconsciously reasons that the results of their work will never be just right—no matter how much time is invested—so why start? In fact, the project is often delayed until the last possible moment, so there is a plausible excuse as to why it’s not perfect: “I didn’t have much time to work on it!” Taking this to an extreme, some perfectionists miss deadlines and blow past due dates, often agonizing over some trivial or irrelevant detail.

Another side-effect associated with perfectionism is having problems in making quick decisions. Sometimes, they need to “sleep on it” to be assured of the correctness of their judgment. Other times decisions can be agonizingly difficult for them to reach. They fear making the wrong conclusion, that is, a less than perfect one. They delay a decision, while awaiting more information, so they can conduct an informed analysis. Unfortunately, this mental paralysis is seldom cured by amassing more data.

Over the years I have often interviewed perfectionists during job interviews. As it becomes apparent that I am talking to a perfectionist, I segue into a special interview segment, just for them. “So,” I inquire, “Do you consider yourself to be a perfectionist?”

Their responses fall into one of three categories. The first one is shock or denial. If a person who has just exhibited several perfectionist traits is taken aback at the thought of being called one or disavows any connection whatsoever, I judge them to either be disingenuous or lacking in self-awareness. Neither are characteristics that I seek in an employee.

The second type of response to my perfectionist query is unabashed pride and total satisfaction in possessing this quality. To make sure I am not rushing to a snap judgment, I give them one last chance for redemption. “What,” I ask, “do you see as the weaknesses of being a perfectionist?” Occasionally, they will comprehend the importance of that question, using an astute answer to move them from this category over to category three. Usually, however, they give me a blank stare, as if my inquiry was nonsensical, responding that there is no downside or that they don’t understand what I asked. In similar fashion, I don’t want to work with a perfectionist that has failed to realize the turmoil and trouble they can produce by their proclivity for perfection.

The third type of perfectionist applicant smiles at this question and begins to share their self-awareness about the shortcomings of how their version of perfectionism is manifested. They openly identify the less then admirable ways that it reveals itself in them and often proceeds to communicate how they guard themselves and others from this tendency. This is a person I want on my team. Yes, they may require a bit more management effort from time to time, but doing so is worth the extra energy as the results will be an employee who produces quality work, frequently exceeds expectations, goes the extra mile, and sets high standards for him or herself. Isn’t that who you want working in your organization, too?

Peter Lyle DeHaan, PhD, is a published author and commercial freelance writer who provides content marketing services.

five Reasons to Hire For Skill Over Experience

By John Carrozza

John Carroza-hire for the skills

When hiring a new person into your organization, it’s very likely that you will review their resume, CV or professional profile and assess how their experience might apply to what your team needs. This is a very logical approach to assessing talent, however, when you look at how quickly the skills to perform each role are changing, only looking at past experience could leave you with a big skill gap. Hiring someone for their skills is a much safer, and longer-term bet, but it’s hard to change how you may have been looking at talent.

Hiring for skills means that your workforce is better prepared for changes your business may need to take in the future. Click To Tweet

There are many news headlines that share the warnings; we have enough bodies to fill the roles, but skills development is not keeping up with the demands of today’s businesses and tomorrow’s innovation. Even if unemployment rates are high, it does not mean you will have more available talent that your business needs. Hiring for skills means that your workforce is better prepared for changes your business may need to take in the future and are likely more adaptable to the future organization you are starting to envision.

To make sure you are not only attracting the best candidates, but know who they are when they’re right in front of you, here are five ways to approach hiring for skill:

Don’t get too caught up with ‘fit’.

Hiring for culture is extremely important, there is no debating that. However, hiring for what ‘fits’ today is extremely limiting. Think about where your business will be in three to five years and look at fit at that point. Every area of your business is likely evolving; make sure your talent acquisition activities are too.

Avoid the shiny pedigree appeal.

Many organizations today focus too heavily on sourcing efforts that target candidates with “pedigree appeal”—impressive or prestigious credentials or educational or employment backgrounds. In fact, these days it takes precedence over the thorough investigation your team should be doing to understand if candidates have the skills needed to do their job today and tomorrow. Make sure you are still using some good old-fashioned interviewing and assessment skills to learn what these candidates gained from their prestigious experience!

Leverage technology, don’t fully rely on it.

There are amazing tools today to search resumes for key words that can help you create a shortlist of candidates. Where the technology cannot take you any further is uncovering why/when/how do people entertain new career opportunities, and what they need or want before you start selling the job and the organization. Be sure to learn a person’s aspirations for growing their career and constantly enhancing their skill set.

Sharpen your assessment skills.

Further to number 2, knowing how to effectively assess candidates for desired skill sets based on prior accomplishments and results, and to coach hiring managers to do the same. Think about the skills the candidate has demonstrated and get an understanding of what they learned from their experience. You can do this by actively listening and interpreting for understanding, not just responding.

Learn the story of the skills.

Know where the value lies in the story of their experience and with at least two skill-based questions (with follow-ups) for each attractive experiential accomplishment in their background, you can get to the story of the skills. Coaching your team who participate in the interview process can help them put the skills in the proper context. An example of a skill-based question could be, “How did you build the skills you needed after a setback?”

Previous approaches may have had you looking for top commercial or consumer brands, or top international schools on a resume. Many have assumed that if they survived a period at that school, or at that employer, they would automatically be able to deliver what is needed in a particular role. Skill-based hiring has you looking for stories with keywords like: ability to communicate, learning new systems, managing relationships, interpreting situations, forming new ideas, strategic thinking, and respecting others’ input.

Many of these things are much harder to teach, change, or develop in candidates regardless of the industry they come from. These are the solid skills that can make an immediate impact and fit in with your culture, today and in the future. For consistency across all your interviews, a scoring tool to identify where the greatest added value would be, where the growth opportunity for each candidate lies and what your recommendations are can be a helpful way to later review the talent available to you.

Having a strong understanding of what you need each role to bring to your team today—and how their role may quickly evolve—will help you find strong candidates. These will turn into fantastic employees who are adaptable and will help bring your organization into the future. It may be tough at first to be able to evaluate experience and then go beyond that to focus on skills. Know that getting a start on this will give you a competitive edge as the battle to attract, develop, and retain your talent heats up.

John Carrozza is a Principal Consultant with Riviera Advisors, Inc., a boutique Recruitment/Talent Acquisition Management and Optimization Consulting Firm based in southern California. His career has been dedicated to helping Talent Acquisition teams perform at their best, and has previously done this at The Walt Disney Company, and consulting for Universal Studios Hollywood and DirecTV. In his spare time, John has dabbled in producing film, video and web content. For more information on John Carrozza, please visit: www.RivieraAdvisors.com

%d bloggers like this: