The Silent Profitability Killer

Introduction

There are many factors that affect profitability. Basic economic principles dictate that it can be changed through the degree of competition, the level of demand, the state of the economy, increased costs, even the success of a marketing campaign to name a few. However, what about the silent killer that is perhaps harder to spot? The silent killer is not focusing on the right opportunities, and there are a number of signs to look out for.

The Signs of the Silent Killer

1. You have an uneven market share: If you operate across multiple geographic locations, or different industry sectors, and there is marked lower performance in certain areas, this can be an identifier that perhaps you’re not focusing on the right opportunities.
2. Uneven sales staff performance: Wide variations in sales performance can be an indication that some of your sales force are not pursuing the right opportunities.
3. Relying on the 80/20 rule: The Pareto principle states that for many events, roughly 80% of the effects come from 20% of the causes. In a business context, we may see this as most of your revenue coming from a small proportion of your customers. Sales staff that keep focusing on the top customers only, run the risk of missing opportunities to grow the 20% due to limited customer interaction. 
4. Focusing on the big-ticket items: It is often attractive for sales staff to spend lots of time and energy on that one bigger deal for the thrill of the chase, the commission, and the glory. Why waste all that time trying to selling to lots of customers when I can win big all in one go? The challenge with this approach is that if it does fall through you’re left with nothing but an empty sales pipeline.
5. Not listening to your sales force: Sales staff by nature are typically very logical, competitive, and not afraid to speak their mind. If your sales force are giving you feedback of how performance can be improved, or telling you their attention is focused in the wrong place it often warrants an investigation as remember your sales force at at the "coal face", directly speaking with your customers.

How to spot the signs?

You can make it easier to identify these signs by having the right tools in place to give you visibility of the underlying data. Central administration teams, and a sales force armed with the right data, can quickly identify under performing areas, and ensure their efforts are spread evenly across customer and markets.

Helpful Tools and Contacts

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