Maximizing Profit With The Real Value of Your Customers
December 13th, 2017 // 1:10 pm @ Scott Manning
I have a secret to tell you about right now… something that most all business owners never understand or choose to pay attention to.
First, let’s remember that in business it is all about cash-flow, what is coming in and then how much is left after everything is paid.
Cash is the oxygen of any business. Of course, this comes in forms of leads and revenue streams from your sales and marketing – but you can’t live on leads or opportunity alone – it has to turn into money. Period. That’s the point.
What happens though is that many business owners forget to think about what it actually costs to get, keep, deliver to a customer the goods and services that you provide.
This ‘cost’ number is an investment of course. Yet and still you must have a handle on your ‘delivery costs’ in order to know truly how valuable a customer is to you.
There is absolutely no possible way to make a decision on anything (at least with actual reason and logic), without knowing this.
Our goal is to turn over the customer as quickly as possible, in other words, earn your money, so that you can open capacity for others.
Every business has some capacity that is available and the longer a customer takes up capacity, the less they are worth to you.
Because really everyone, every single business owner, even if they are selling information on the internet is still selling time – the time to create what they sell, the time to get the customer, to market, to operate, to manage. Everything comes down to time capacity, space capacity or people capacity.
If you can find ways to accelerate how you go about earning this money through your process and apply leverage to it, then you will as a result make your customers, clients and patients worth more money to you.
A few examples from my amazing Doctors…
Often if a doctor is dealing with insurance they are getting paid less per procedure than they otherwise would – therefore they have less money but same delivery – so their profit on these types of patients go down and really it’s not a ‘type of patient’ it’s a chosen type of reimbursement, but still.
Many doctors use their clinical team to reduce the amount of time they have to spend with a patient whereas an Assistant can post-op a patient or finish clean up or other things based on the type of procedure.
This saves minutes and therefore reduce ‘costs’ and therefore makes this patient, procedure, hour exchange of value more profitable.
Of course, there are ways to do both increase fees and decrease expenses and move your profit margin up on both sides of the line. That is what we have been talking about and we will continue this discussion over the next couple weeks.
In any business, you want your time, effort and thoughts invested in the highest and best use. You find that by knowing what is most profitable first.
You should know about figuring out how much every hour in your working life or just your life in general should be worth to you in order to achieve your goals.
Well that number is meaningless unless you know your profit number and if you are going after ‘new customers’ but you are not clear on how to maximize your profitability through the delivery process of everything you are doing then you will reach a point of diminishing return and could even actually lose money.
To know this, ask yourself these questions: What are the ‘costs’ associated with each type of service you provide? What is most profitable for you to be doing? Are there ways to speed up service, earn the money, turn the cashflow? Are there ways to minimize the expenses without degrading the experience and outcome?
That’s a lot in a few questions. Some things to think about…until next week. It’s never just about the money you bring in as revenue, it’s about the money you keep as profit. That is where the secret lies in between those two numbers. You win or lose by knowing and managing your ‘delivery costs’ necessary to earn the money and maximize your profit.
Category : Blog
