Tuesday, January 12, 2010

Sweet Spot: Maximizing Business Growth & Profitability

I am frequently asked how we rapidly and profitably grew GRC Direct, from a small retail print shop to a large commercial full-service direct mail facility. After giving it thought, I have decided to start to share what we did and some of the lessons learned.

Of course, not everything we tried worked. Whatever we learned however, through our successes and failures, I will happily share with hopes that our learnings will help you in your success. Whether you are a small business, an association, or an independent, I am confident that applying these lessons will help you take your organization to the next level.

Getting back to our journey, as our business grew, as with most businesses, we tended to take on variety of projects and clients. Some big, some small. Some in line with what we did best at the time, some that forced us to stretch, some that in hindsite we shouldn't have touched.

While they all provided revenue, we did our best to never lost sight of our sweet spot-what we did best, our core strengths, our target market. We wanted to be the big fish in the small pond, rather then be just another fish in the pond. While as the business grew, and our sweet spot did shift gradually over time, we repeatedly spent time finding and refocusing our energies on our sweet spot. That sweet spot then impacted our sales & marketing efforts, internal capabilities, staff training and so on.

So how does one find one's sweet spot? While I am sure there are many ways, here's what worked for us.

Every quarter or so, we would print out a "year-end" report, listing for the previous 12 months, client names vs. year to date revenue, in ascending order. Applying the 80/20 rule, we then identified those top clients who provided majority of our revenue. With this list in hand, we then looked for common patterns. This included looking for items such as:

1. Organization size, e.g. total revenue, staff size, # of members, donors, type, location;
2. Types of projects produced, which internal capabilities were used to fulfill their needs, profitability, etc.
3. Profile of the client as an individual, e.g. gender, approximate age, job title, knowledge of direct mail production; etc.
4. Source of the initial client contact, e.g. referral, direct mail, cold call, speaking engagement, etc.;
5. Clients' desired outcomes through the projects projects, e.g. fundraising, member acquisition, renewal, new member on-boarding, product sales.

These are just some of the many elements we looked into. In essence, we were continually looking for patterns, and they always emerged. Those patterns then provided us insights into how to market, our messaging, to whom, our communication medium, our equipment purchases, staff training, and so on.

As we did this, not only did our revenue increase, so did our profitability, client retention and acquisition. In essence, it allowed us to more effectively align and utilize our limited resources with that of the needs of our target market--and it worked beautifully.

So as you're entering the new year, and if you are feeling stretched, feeling as if you are "all over the map", and less then effective, step back for a moment, find your sweet spot and refocus your game plan. Given that we're just entering the new year, it's a great way to start the new year.

I realize you might be saying that you already have too much to do and there is no time to slow down. Well, remember that before the pole vaulter can jump over that high hurdle, he (or she) first steps back and then hits the ground running. Similarly, in order to make that huge leap and win the race, take some time to step back, analyze, refocus and then hit the ground running. In the long-run, you will more then make up the lost time and you will come out ahead.

1 comment:

Anonymous said...

Vinay, this is a wonderful posting. Unless you've been part of growing a business or organization, you don't fully appreciate how your focus can waver. This offers some valuable advice. Thank you.