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Seven Simple Steps to Locating Your Profit-Expanding Obstacles

Jan 27, 2008
Have you ever watched a figure skater skim lightly across the ice making great speed with lots of grace? Imagine how the results would be different if you placed a lot of potholes in the ice and turned off the lights. Unfortunately, that's a good analogy for the way that many company managements try to expand sales and profits.

In assessing the potential for profit growth, a market research purist would insist that you take every variable that you can influence (such as branding, price, promotion, offering, features, availability, packaging, and distribution method) and test each variable. While that would be nice to do, it's more than you need. You should adopt a breakthrough solution approach instead to test one aspect of one area and find out whatever else you need to know in the process.

Here are the steps to follow:

First, identify the current customers and beneficiaries who are employing your offerings for a small percentage of their total needs for that type of offering. Many people describe these people and organizations as "light" or "occasional" users and customers.

Second, identify former customers and beneficiaries who haven't used your offerings in at least three years but who still purchase or use what you offer from someone else.

Third, identify the most attractive potential customers and beneficiaries who have never employed your organization's offerings. Typically, these are the people and organizations that will gain most and appreciate the benefits from your offerings and have large needs.

Fourth, contact the decision makers in those three groups and ask to become the current or potential customer's or beneficiary's major provider of your offerings.

Fifth, thank all those who take you up on your offer and ask them why they hadn't previously selected your organization to play this role. You'll want to make these contacts yourself so that you can hear and understand the reactions.

If there is a protocol involved in your organization (such as no one contacts an account without a salesperson), by all means follow the protocol, but be sure you elicit a candid answer. Let the salesperson (or whomever you go with or have join you on the telephone) know that you will take no negative personal action towards him or her as a result of what you learn. Otherwise, the salesperson may work with the customer or beneficiary to hide the real reason from you.

This result is particularly likely if the reason is unflattering to either that person or their activity in your organization. In particular, you want to find out "what's new" that caused a change in the customer's or beneficiary's behavior.

Sixth, for those who turn down your request to become the biggest supplier, ask them a hypothetical question concerning how much you would have to pay their organization or them individually (if there is no organization involved) to become their lead supplier. Note that this question should be conveyed in a way that doesn't sound like you are willing or trying to offer a bribe.

Explain instead that you simply want to learn how to improve your effectiveness as a supplier.

Then comes the magic. Whether they can cite a specific amount or not, ask why it would take a payment of whatever sort to become their lead supplier. Encourage them to tell you what disadvantage that payment would overcome. Then write down everything they tell you.

They will be describing some of the major obstacles to increasing the delivery of your offerings by 20 times.
Prepare yourself to receive some nasty surprises.

Some people wouldn't use your offerings if you paid them a queen's or a king's ransom. They may be angry with your organization about some old problem or very committed to another supplier (who may even have them under a 10-year contract that they would have to buy out).

Many of the other reasons will be based on a misunderstanding of what you offer. If you bump into such a misunderstanding, politely ask why they came to that conclusion.

It may be as simple as their laboratory does a different quality test than your laboratory does, and you don't look as good on the test their laboratory runs. One company who paid a lot of attention to this kind of information found that its customers ranked suppliers on a variety of performance measures every month. If you fell down in one area, you lost business the next month.

Returning telephone calls with accurate information within two minutes could garner your company a lot more business. But the telephone service people didn't know that. That ignorance was quickly eliminated and sales quickly climbed.

In particular, you should pay attention to any differences you hear between those who have recent experience with your organization and those who don't have any experience. The sources of discontent and disinterest will probably turn out to be different from the one group to the other unless you organization is tainted by a well-known bad reputation.

Seventh, personally contact some of those who have never used your offerings or those of your competitors to find out why they don't choose to use these offerings. Once again ask, hypothetically, how much would have to be paid to add them as a customer or beneficiary.

Pay particular attention to these answers. Hidden under the surface of what you hear will be possible ways to expand your volume by 20 times without incurring a competitive reaction. Dealing with these unmet needs can allow you to turn on the turbo and speed up your progress.

In many cases, you will discover that these people have substantial difficulties to overcome before they can make effective use of your offerings. In other cases, it will simply be a matter of cost. They are doing without because it seems like a better economic decision. Among those people, look for those who might be willing to run some experiments with you to find ways to overcome these obstacles.

Here are questions designed to summarize what you learned from this limited nth-degree research:

-What are the three most common reasons why those who are now willing to let you become their main supplier say they decided to make the switch?

-What are the five most common reasons why those who are unwilling to let you be their main supplier say they decided not to choose you despite your hypothetical offer of a queen's or a king's ransom?

-What are the eight most common reasons why those who don't use your kind of offering are unwilling to start doing so now, even after your hypothetical offer of a large payment?

With these answers, you can set a clear course to smooth sailing in achieving breakthroughs in profit growth.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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