Here Are the Top Profit-Building Strategies That All Growing Businesses Are Using to Improve Business Processes, Gain Market Share and Grow Their Bottom Lines
Businesses are busy growing right now, and they’re more optimistic than they’ve been in the past 35 years, according to the National Federation of Independent Business (NFIB).
If your company isn’t already doing so, now is the time to take advantage of this robust economy and grow your profits. That’s sometimes easier said than done. Many growing businesses operate with fixed budgets and finite resources. Forced to put out daily fires, fulfill the most pressing requests and manage customer issues, business managers don’t always have the time or energy to develop—and put into action—new strategies for growing profits.
But when the economic landscape is positive, it’s an ideal time to examine all areas of your business and take steps to:
- Optimize processes
- Drive operational excellence
- Better leverage organizational strengths
- Reduce or eliminate waste
- Expand into new markets
- Sell across more channels
- Find new revenue streams
In this white paper, we explore six key strategies that organizations have used to improve their results and show you how to use them to your company’s advantage. Ranging from top-line revenue-oriented actions to simple cost-cutting tips, these strategies will help you free up scarce resources, maximize your company’s strengths and grow your profits in 2020. Each strategy is accompanied by a case study that brings the ideas to life.
PROFIT-BUILDING STRATEGY #1
Take a 360-Degree Snapshot of Your Business
Increasing your manufacturing company’s profits requires visibility into all aspects of your operations, not just sales, accounting or distribution. By capturing events, activities and outcomes across all departments, you can begin to view your operations holistically and recognize the patterns and connections behind successes and setbacks and then devise fixes and develop new strategies aimed at improving profitability.
When developing a 360-degree view of your business, the best place to start is with your customers. Ask yourself questions like:
- Who are our most profitable customers? Are there identifiable characteristics that make them so?
- Who are our least profitable customers?
- Which customers should we be putting more energy into? Are there some less profitable customers that share traits with our most profitable ones, and are they worth putting more energy into?
- Similarly, which should we be deemphasizing?
Optimizing your most profitable customers and products, or the ones with high potential is a clear way to higher profits.
You can use the same approach with company projects, whether it be in marketing or product development. If, for example, a project is getting to be too difficult and taking too much time, it’s probably eating up your costly human resources.
And speaking of employees, you can gain a 360-degree view of them by answering questions like:
- Who are our best performers?
- Do they share any identifiable characteristics?
- Are any employees not performing up to speed? (And do they share any identifiable characteristics?)
Don’t forget to apply the 360-degree view of your company’s reputation and its perception among customers by asking:
- What are people saying about us online? Are we employing the tools that allow us to listen to those sentiments?
- What kind of feedback are we receiving from our customers? Are we asking for their feedback?
- How does that compare with what people are saying about our competition?
- What steps can we take to better differentiate ourselves and our perception in the marketplace?
- And, how can we leverage industry-specific, specialized automation tools to analyze key customer-related data points that tell us how we’re doing, what’s working and what we can improve on?
Getting that 360-degree view isn’t easy, but it starts with integrated software systems, often with embedded analytic capabilities and a unified database approach. When software systems aren’t integrated, companies wind up with overlapping, disparate databases that don’t provide holistic business performance data, let alone in a timely fashion.
Rob Lindemann knows the headache of disparate systems. He purchased Lindemann Chimney Company from his father and expanded the business, manufacturing and selling chimney caps, dampers and cleaning supplies to complement its established chimney cleaning division. As the supply business grew, the company struggled to scale efficiently as it relied on multiple disparate systems to run the business. Messy integrations prevented Lindemann Chimney from offering the outstanding customer experience it sought to deliver.
Lindemann Chimney chose NetSuite because it offered a single, unified suite for financials, ecommerce, CRM, manufacturing, and order and inventory management. Employees no longer have to manually consolidate customer service, distribution, manufacturing and financial information every month. The front-end and back-end are now connected, with customer, order and inventory data updated in real-time.
Centralizing data on one system improved operational efficiency, allowing the company to contend with bigger competitors. With an improved look and feel and new features, Lindemann’s online store creates a superior customer experience that serves as a competitive differentiator.
PROFIT-BUILDING STRATEGY #2
Drive Down Costs by Maximizing Operational Efficiency
Companies of all sizes are using sophisticated business software that helps fuel growth, but many of them struggle to manage costs and maximize operational efficiency due to a hodgepodge of disconnected functional systems. This disjointed software array fosters problems that range from workflow bottlenecks to employee productivity barriers to customer service problems, and it is especially a major pain point for smaller organizations that lack robust, internal IT teams.
The good news is that streamlined, integrated platforms help companies transcend those growing pains. These platforms are catalysts for profitable growth because they help avoid these traps:
- Wasted employee productivity. In some organizations, employees spend hours manually re-entering order information into the accounting and invoicing system, while others pull that same information from a CRM system for order fulfillment processes. When an order is cancelled, employees must sift through mounds of data to reconcile this information again. Such labor-intensive and manual tasks reduce organizational agility.
- Lack of real-time visibility. Today’s fulfillment and distribution environment demands high levels of visibility. When software systems aren’t integrated, the multiple, overlapping databases don’t provide a timely, coherent view of business performance. As a result, businesses either end up making critical decisions slowly, based on inaccurate or unsynthesized information, or they make hasty and risky decisions from gut instinct.
- Complex and costly integration processes. With so many disparate applications, IT teams waste an inordinate amount of time and money on integrating, maintaining and acquiring new versions of these applications. That valuable IT time that could be used to make the business more productive is wasted, while maintenance costs skyrocket.
- High customer churn. Customer acquisition and revenue growth are key pillars of any competitive business environment. When customers can’t get the information they need quickly, or can’t get issues resolved in a timely manner, they move on to your competitors. An integrated software system ensures a seamless customer experience, where employees have the instantaneous access to all the customer information they need to service and sell to them.
The right technology can solve all of these issues, and more, while cutting operating costs in the long run.
Take the case of Klenzoid, a provider of industrial water solutions. Upon close review, the company learned that multiple disconnected systems (including a custom-built ERP), Lotus Notes for CRM and other manual processes were keeping it from the automation and integration required to drive better operational efficiency.
After implementing NetSuite’s real-time, unified business management solution, Klenzoid was able to start innovating on its business processes, increasing customer satisfaction and positioning itself as a leader in the market.
Over time, Klenzoid’s integrated system increased operational efficiency by 40 percent and allowed the company to gain better visibility into inventory, ensuring nearly perfect on time delivery for its chemicals and equipment. Customer satisfaction has skyrocketed, with Klenzoid doubling its B2B client base to 1,500 customers.
PROFIT-BUILDING STRATEGY #3
Sell More to Your Current Customers
It costs five times more to attract a new customer than it does to keep an existing one, yet 44 percent of companies focus more on customer acquisition than they do on retention (18 percent). Here’s the kicker: You’re 60-70 percent likely to sell to an existing customer, compared to the 5-20 percent likelihood of selling to a new prospect.
If your company isn’t cross-selling and upselling, and improving customer satisfaction with your existing clients, you’re leaving money on the table. This applies to B2B and B2C, both of which are generally ripe for:
- Cross-selling products and services related to current buys (an offer of batteries to go with a camera, for example, or ink to go with a printer).
- Upselling higher-margin products and services that the customer isn’t aware of.
- Understanding your customer’s buying behavior and coming up with offers that are timely, contextual and customized to that buyer’s needs.
For cross-selling and upselling to positively impact your company’s bottom line, your account managers should be constantly communicating with customers and teasing out their unfulfilled needs. For example, your customers may have new departments or subsidiaries that could also use products or services. For that customer, you can offer a product or service bundle that will meet those needs in the “one-stop shop” format that so many buyers love.
You can also maximize existing customer rapport by getting to know their business—and key pain points—and then helping them do their jobs better. This will be much appreciated in a business world where everyone is strapped for time. To find out where you can add the most value for those customers, take these three steps:
- Develop ongoing relationships with them, take them to lunch and call them on a regular basis.
- Survey them and aggregate that data to better understand the commonalities and differences across your customer base.
- Use customer sentiment tactics and tools to find out what they’re saying on social media. If you have a website, what sites were they visiting before they came to your site and where did they go after they left?
Taking these steps will not only help you meet immediate needs, but it will also help your company develop a broader array of products that you can cross-sell or upsell across your entire customer base.
For example, RST Brands, a provider of outdoor living furniture and accessories, leverages targeted email and watches the weather to improve its outreach. If the company launches an email campaign late in the summer, it can target customers in the northern U.S. with offers related to furniture covers and other accessories geared toward winter protection. RST customers located in the south, meanwhile, might get an RST email pointing them toward great deals on excess inventory.
The furniture seller uses welcome and pop-up messages on its website that allow it to treat distinct buckets of customers differently. Its campaigns can also be tweaked to meet particular goals. For instance, the company can offer 10 percent off a purchase if a customer subscribes to its email list. Combined, these efforts all help RST brands improve its sales ratios with current customers while also improving its own profitability.
PROFIT-BUILDING STRATEGY #4
Sell Through More Channels
It’s not enough to just continue selling more to your current customers. In order to grow, you also have to build out your customer pipeline, specifically by exploiting more sales channels. These include offline, online, direct and wholesale sales channels.
This has two important side effects: It diversifies revenue streams, so that your business isn’t overly reliant on the whims of any one single channel; and it increases your company’s exposure, boosting its visibility among more customers.
Consider this: You may have a fantastic website, but people still have to find it in order for it to produce results. If, however, you sell your products on your website and also list them on several online marketplaces, your brand and product reach can increase significantly.
Flipping the conversation, marketing and selling on multiple channels also gives you a chance to gather more information about your customers and their habits. You can then leverage this data when crafting your marketing or sales campaigns and when deciding which sales channel to target next.
The key to a successful, multi-channel strategy is to use automation tools to develop a collaborative and consistent customer experience across all channels. Product offerings, pricing, brand messaging, customer support and fulfillment should feel the same, even as customers move from one channel to another. That enjoyable experience is crucial to driving a purchase.
Precision Medical Products, a startup that sells medical gloves, braces, boots and more, needed an ERP partner to impart best practices in an implementation that could scale with aggressive growth targets.
NetSuite’s unified business platform allowed the company to launch best-in-class financial and inventory management processes in just 59 days. It uses NetSuite OneWorld to manage Precision Medical and three other entities under the same ownership.
Extending its NetSuite solution, Precision Medical launched a new B2B online store in just 23 days through SuiteCommerce. The new site helped more than double average order value year-over-year without increasing operational costs.
PROFIT-BUILDING STRATEGY #5
Identify and Exploit New Revenue Streams
Perhaps your company started with a single product that appealed to a specific target customer. Over time, it may have added more features or services as customers requested them, or as the market presented those opportunities. Now it’s time to increase your company’s profits by adding even more selection to its product or service base, and by exploiting new revenue streams like subscription models.
This is an important step, because new revenue streams help your company scale quickly while staying relevant, competitive and profitable. They also allow you to solve new customer problems, thus enhancing client loyalty in an era where the nearest competitor can be literally one click away.
Exploring new markets for your existing products will also help you expand your revenue streams. An electrical manufacturer that has traditionally worked only with distributors, for example, can expand
its online presence and begin selling electrical components directly to do-it-yourselfers who need both the products themselves and the expertise that independent manufacturers are well known for (e.g., through short video tutorials that walk users through an installation process).
Exploiting multiple new revenue streams requires knowing where expansion makes the most sense. Ask yourself questions like:
- What are your current customers asking for?
- What is the general market asking for (outside of our traditional customer base)?
- Do we have the expertise to fulfill these needs? (Is manufacturing capable of adding new product lines? Is our fulfillment department up to the task? Is our transportation network in place?)
- Will we be able to scale up quickly once we identify a new, potential revenue stream?
- And finally, how will all of these help boost company profits within the shortest possible timeframe?
The answers to these questions will help you whittle down your list of potential, additional revenue streams while ensuring that they’re applicable to (and welcomed by) your existing and future client base, and supported by your internal resources and processes.
That’s exactly what Flogistix, an assemble-to-order manufacturer of oil and gas equipment learned while exploring additional revenue channels.
Their equipment is ‘smart iron’ (i.e. IoT enabled), outfitted with over 50 different sensors, providing data every few seconds about exactly what is happening at the machine. With this data, they provide their customers with a real-time control panel to remotely view the status of each piece of equipment they use, as well as receive alerts when something needs attention. Flogistix also sells a data/analytics subscription service (called ‘Flux’) providing access to all that data, with deeper analytics such as trend analysis and ‘over the air optimization’.
Customers can buy or rent the equipment. Flogistix provides preventative maintenance and repair services, billed on a parts and labor basis (some of the parts are covered by the original manufacturer’s warranty).
Thus, Flogistix is an industrial and high-tech manufacturer, a maintenance and repair services provider, a software/data subscription services company, and a rental company, all in one. Flogistix operates these diverse business models all on NetSuite ERP, with additional functionality from NetSuite-integrated best-of-breed third-party applications.
PROFIT-BUILDING STRATEGY #6
Expand Into Global Markets
With 95 percent of the world’s consumers located outside of the U.S., exporting to increase profits is a business strategy that can’t be ignored. And if you think exporting is only for big businesses, think again. Growing companies have a vast, untapped global potential lying in front of them, and it’s theirs for the taking.
In fact, small to midsized businesses account for 98 percent of U.S. exporters right now, but represent less than one-third of the known U.S. export value. This has been true for a while. As of 2010, roughly 270,000 of the total 293,000 exporters in the U.S. were either small or midsized firms, according to the Small Business Association.
By expanding globally, your business can:
- Extend the sales life of existing products.
- Reduce dependency on the domestic market.
- Grow profits due to seasonal changes or demand cycles that differ around the globe.
- Launch new products that may not have been applicable for U.S. customers.
- Gain greater access to talent.
Global expansion does require readiness and commitment, so be sure to conduct foreign market research and evaluate regulations and methods of distributing your products abroad. For example, there will be cultural, social, legal and economic differences, not to mention practical issues like currency and tax discrepancies to work out. Modern automation tools can accommodate many of these global business imperatives.
If you want to eventually expand into global markets, start planning for the expansion now. This is particularly true for your technology systems, which will need to be able to scale up to meet your new, international company’s needs.
Today, White Labs stands at the intersection of science, education and craft. Founded 22 years ago by a Ph.D. candidate who created liquid yeast for his friends that owned a homebrew beer store, White Labs took off as new yeast strains were made available to homebrew enthusiasts. The company has also benefitted from a boom in homebrew yeast sales, which is also being driven by professional customers who want more options.
With a booming craft beer industry now spreading across the U.S. and abroad, White Labs was poised for rapid growth. Unfortunately, it was being held back by disparate, disconnected systems. Expanding globally isn’t easy but trying to do it without a consistent approach for each
country means even more cost and less chance of success. By switching to a unified global enterprise management system, the company has been able to expand and take advantage of revenue growth— both domestically and abroad—and now has locations in Denmark and China.
The Bottom Line
Whether you’re a new entrepreneur or veteran business owner, there is always room for operational improvements. By fine-tuning your processes today, you can help your manufacturing business run more smoothly while also boosting profitability over the next 12 months.
By taking an honest, 360-degree snapshot of your business, working to drive down costs and maximize operational efficiency, selling more to current customers (and via new revenue channels) and following the other strategies outlined in this guide, you can achieve these and other goals while maintaining a loyal customer base and exploring new revenue boosting opportunities.
Add a leading integrated cloud ERP platform to the mix and you wind up with a streamlined operation that’s ready for anything. Ultimately, if you can’t grow revenue or realize efficiencies, you’ll feel it in your bottom line. If your business is unable to take advantage of the opportunities outlined in this guide, it’s time to switch to a scalable cloud-based business management suite. By leveraging automation and analytic capabilities, you’ll be able to effectively implement innovative strategies, grow your profits, attract new customers and keep your current ones happy.