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TURNAROUND STRATEGIES are not just for companies in deep financial trouble. Every company contends with situations in which what used to work isn't working so well any more. Downward-drifting trends in sales, profits or market share drive C-level executives (CEO's, CFO', CMO'S) to look for ways to "turn things around" quickly -- before shareholders or bankers get nervous. This discussion points out three proven techniques for boosting profits quickly and with minimum investment. |
FIRST, STOP WASTING MONEY ON JUNK
If you use catalogs, direct mail, telemarketing, faxes or email to communicate with your customers, it's likely that you can save money by cleaning "junk" out of your customer and prospect data. Nearly every "mailing list" contains non-deliverable addresses and duplicated, obsolete or incomplete information. Unless you have scrubbed out this junk data, you are wasting money on collateral, postage and fees with every campaign. Obviously, response rates and ROI improve when you stop wasting money on duplicated and undeliverable promotions.
List Processing consists of several tools for finding, fixing and when necessary, deleting junk data from your customer and prospect data. These tools include householding, de-duplication, and NCOA (National Change Of Address) updating. To get the most benefit from list processing, start with the customer data that exist in your financial systems -- not the mailing list that your printer or mailing vendor maintains. Using your actual customer data (rather than a mailing list) helps spot non-buying and other phantom customers that also waste your money.
List Processing - The Fastest Way to Boost ROI will tell you more about the details of how list processing is done. A couple of real-life examples of how list processing can help are showcased in Rediscovered Customers Boost Sales Fast and Making Flat Sales Take Off Fast.
SECOND, FOCUS UPON PROVEN CUSTOMERS
Some of your customers buy a lot from you. Most do not. Performance segmentation shows you which customers deserve your attention and which do not. Knowing this helps you quickly boost revenues because selling more to established good customers is easier and faster than selling to anyone else.
There are several different ways to divide ("segment") your customers upon their performance. All help you understand your customers better, but in different ways. You can learn more about some simple performance segmentation tools (RFM, RFA and RFP) in Segmentation - Finding Your Best Customers. For fast, high-payoff results, these simple techniques are the first place to start (after you get the junk out of your data, of course!)
A couple of real-life examples of how performance segmentation can help are showcased in Gaining An Edge in Tight Markets and Great Growth In A Down Market and Raising ROI Reveals Better Customers.
THIRD, CLOSE THE BACK DOOR
Finding new customers is rarely a good way to boost revenues and profits quickly. Finding new customers is expensive and time-consuming. And, it takes even more time for most new customers to become established and buy enough to generate profits -- not just revenues -- for your company. (You can learn all about these relationships in Life Time Value - Let the Numbers Lead The Way.)
A much faster way to boost revenues and profits is to reduce the loss of the established customers you already have. Attrition -- losing established customers -- is the "back door exit" that often offsets all of the gains made with prospecting and new customer acquision efforts. You can read more about how often this happens in Fix Attrition to Improve Prospecting.
Curing attrition problems requires two kinds of knowledge. First, you need to know which specific customers are moving towards the "back door" -- and know this soon enough to win them back. Retention - Closing The Back Door discusses an objective data-driven technique that identifies the customers who are at risk of leaving. This tool is easy to use, affordable and very effective.
The second thing you need to know is what offer might re-energize the loyalty and spending of each "at risk" customer. Cross-Selling - The Fast Way To Raise Revenue explains more how to know this. This tool is moderately complex, but it is also very effective for steering sales teams towards "low hanging fruit." A couple of real-life examples of how cross-selling can help are showcased in Cross-Selling Overcomes Mature Market and Steering Salesmen to Speedy Success and A Turnaround in Just 6 Months.
WHAT'S THE BOTTOM LINE?
Whether you just need to turn around sliding sales trends or rescue a company in serious difficulty, these three data-driven tools quickly boost revenues and cut costs. Not only do these tools produce results quickly, they also can be implemented quickly and at very reasonable cost. The payoff is high, the leverage is good and the downside is minimal... so start your turnaround with these tools first.
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