The current environment has Executives and CEO's considering where they can optimise costs. Close to 70% of Board Directors indicated the profitability was now their top priority, in a recent survey by law firm King & Wood Mallesons (1).
Usually the standard place to start is by reviewing your cost structures and understanding what has been driving an increase in costs.
So let's explore some opportunities that exist beyond this pure cost focus.
Better serve existing customers - Can we better serve our 'existing customer' needs? This should always start with understanding how your customers want to be served and any needs that are not being met
Customer retention and churn management - How good are we at keeping our existing customers and not loosing them? (New customers minus lost customers = churn). Surprisingly there are many data points across any organisation that indicate what is really happening here
Cost to serve - What does it cost us to serve our customers? Ideally you can categorise them by customer type. Are we over servicing our customers in certain areas and can we improve the processes by which we serve them?
Revisit supply agreements - If you don't ask you don't get. Categorise your spend, look at volume, determine if a strategic supply arrangement is required and ask for a better deal
Revenue /profit composition - Analyse your product and services. Is their a trend? Do the top products make the majority of profit? What is the tail (the long line of products or services that don't contribute much)?
Improve specific headaches - Are there specific processes that are letting you down and causing the majority of headaches. This might be an onboarding process for new customers, your stock management reporting processes, your team resource management process etcf. These are ripe for the picking! A focussed lean or six sigma process improvement project is required to turn these around, measure where you are at, find improvements and continuously track the performance of these processes
Lastly, develop a coherent plan for optimising profit, commit to it and follow it through.
References
1. https://www.afr.com/policy/economy/boards-get-back-to-basics-abandon-woke-capitalism-20230901-p5e1a8?btis