Reaching Peak Sales Performance
December 8, 2015
A Roadmap to Company Profit
If you operate a for-profit business your primary objective is to make sure your company revenue (sales) exceeds your company expenses (costs) at the end of the business cycle. Simply put, you need to make more money than you spend if you want to exist for very long!
According to this simplistic view of company profit, it would follow that to increase your company profit you can do one of two things: increase revenue (sales) or decrease expenses (costs), or exercise a combination of both. In tough economic times, this task is not easy, but that does not mean it is unattainable.
Lowering expenses – Walking a tightrope
One approach to increasing company profit is to lower expenses. This approach is most popular during economic downturns. With fewer customers spending money a seemingly rational, knee-jerk reaction might be to reduce overhead by downsizing your workforce.
There are usually other operating expenses that can be tweaked, but the amount of money your company spends on its people, including your frontline customer service/sales staff, is usually the highest and therefore the most tempting to “adjust”. Yes, the obvious result is a smaller line item on the Profit & Loss Statement, but what about the downside effects? Let’s take a look at just a few:
- Decreased production – with fewer employees fewer things can be accomplished.
- Decreased quality – with fewer people it is not reasonable to expect the quality of goods and/or services will stay the same. Either it will take longer to produce the same amount, or the quality of the finished product will suffer due to a “rushed job” being completed to maintain prior time commitments.
- Decreased morale – the employees left behind will feel overwhelmed and demoralized.
- Increased employee turnover – demoralized employees will choose to leave.
- Decreased customer satisfaction – the result of which will be decreased sales and most likely, company profit.
Increasing revenue – The flip side of the company profit coin
When profits are sagging the easiest answer may be, “increase sales.” But in a contracting economic environment, this can be very tricky. It might not be reasonable to expect an increase in customer volume, either through the implementation of a new marketing campaign or some other aggressive discount program designed to increase customer traffic. So, you are faced with two choices: increase your prices or increase the amount you sell to each customer that patronizes your business, also known as incremental revenue.
When you raise your prices, if all other variables stay the same, the result seems logical – your bottom-line should increase too. The problem arises when you assume all other business variables will remain unchanged, including the amount of customers you sell to and/or service. Historically speaking, this tends not to be the case, unless ALL other competitors in your market do the same thing simultaneously. Usually, with price increases a business can expect some type of reduction in demand – the simple law of supply and demand takes effect.
Increasing Incremental Revenue – Maximizing every customer opportunity
So far, none of the approaches to increasing company profit seem very feasible. Cutting expenses and raising prices both sound good, but each has a significant downside risk for collateral damage. The answer may be right in front of you and does not require you to reduce staff or raise prices but will still result in increased revenue. Sound too good to be true? Not according to Ziad Y. Khoury, founder of The Khoury Group and the author of an exciting new book, Frontline Profit Machine. Ziad has created a fundamental business model centered around the Khoury Performance Equation (KPE). Simply stated, companies can reach their peak sales
- Creating the Right Environment
- Ensuring the Right Personnel Fit
- Executing the Right Action – consistently!
The Right Environment
A superior work environment that motivates your employees can be the difference between a high-performing organization and one that is mired in mediocrity. The ultimate result is a thriving culture based around taking care of the customer, maximizing sales and enhancing business performance.
The Right Fit
The fastest way, by far, to achieve an improvement in sales is to select top producers. Hiring and keeping these “Right Fit” employees becomes much easier if you have the Right Environment in place.
The Right Action
The Right Environment and the Right Fit are critical. However, without the Right Action providing clear expectations and continued workplace motivation, they are largely powerless in helping you reach peak sales performance.
Although it is not the easiest journey, the most efficient, consistent, and rewarding answer to the profit dilemma is mapped out for you in the Khoury Performance Equation. It starts with your unwavering commitment to transforming your current business culture into a service-based sales culture. Use the KPE as your guide; you will find not only does your business win through increased company profit, more importantly, your employees and your customers will as well.