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20 common profit leaks in small businesses

20 common profit leaks in small businesses

September 07, 2011 by Bryony Thomas

Dripping tapIf your bottom line could do with a boost, it can often be far more effective to plug some profit leaks than it can to plough your cash into doing something wholly new.

In no particular order, here’s a run down of 20 leaks we see in small businesses almost every day:

  1. Poor on-boarding: The first few minutes, days or weeks of using your product or service are essential if you’re going to reduce customer defection. Having a smooth transition from sales into service that makes it easy for customers to get started with your products and services is key to customer retention.
  2. Forgotten customers: Your customers are other people’s prospects. Just because you’ve taken their cash does not mean you’ve got them forever. Keeping in touch with your customers in a friendly and helpful way will increase retention, cross-sell and up-sell.
  3. Low impact marketing: Marketing that nobody notices isn’t worth a penny of your hard earned cash or a second of your precious time. If you’re putting something out there, make sure it stands out.
  4. Information overload: Giving someone too much information too soon will often turn them away. It can feel like a bit of slap in the face. You’re much better off having a trail of steadily increasing quantities of information for buyers to work their way through.
  5. No proof for your promises: If you make a promise of any kind, you need to back it up with some evidence. A customer quote, an appropriate case study, or third party review, placed alongside your product literature will help keep people in your pipeline.
  6. Someone puts them off: A person’s ready to buy, then they turn to their boss, their wife, their golf buddy… who puts them off. You need to identify your buyers’ influencers and do what you can to keep them on-side.
  7. Missing a channel: If your buyer mistrusts the internet, but you have no other way of taking payment – or they’re researching on Google and you don’t show up, you’ve missed a trick.
  8. Information in the wrong format: If your buyer has asked their PA to print a “read on train” file and your material doesn’t look great in hard copy, you’ll look poor by comparison.
  9. Missed timing: Busy senior people seem to do quite a bit of their internet research and social media interaction in the evenings – are you there when they are?
  10. Not known by referrers: My sister posted on Facebook the other night asking for a lawnmower repair shop in her area. Three people gave her some names, and she has since used one of them. Not being mentioned by the person your potential buyer asks is a missed sale.
  11. Don’t know you offer that: This one is really galling. You find that someone, maybe even an existing customer, has bought something from elsewhere that you sell. You ask why they didn’t choose you and they say they didn’t know you offered that. Popping your full product list on the back of invoices, on email footers, etc. can avoid this one pretty easily.
  12. Un-used marketing muscles: Peak and trough marketing activity means that every time you come to do something it takes longer and costs you more than if you did something little and often.
  13. Starting from zero: If you go quiet for a prolonged period, you’re effectively starting from scratch – which is harder and more expensive. A consistent low level of awareness activity will avoid this.
  14. Doing the wrong kind of work: Accepting work that’s not really up your street can be demoralising as well as the opportunity cost of using precious resources on less profitable work.
  15. Expensive exhaustion: Having an uneven sales pipeline, usually linked to an uneven marketing activity plan, will put enormous pressure on you and your team at peak times. You can plan and perform better if you generate a more predictable workflow.
  16. Un-prepared operations: You have a great marketing idea and put it out there generating a load of extra demand, but you’re not quite ready to deal with it all. A more nurtured, steady, sales process can give you time to ramp up for demand coming down the pipe.
  17. An unanswered question: Every time a customer has a problem or a question, you’re effectively winning them again. Because, if you can’t answer it, someone who can is never usually more than a click away.
  18. Too slow to respond: If a sales call or email comes in, the buyer is usually investigating more than one potential supplier. Leave it too long and someone else may already have got their sale.
  19. Too fast to advise: Over eager sales people can often suggest a solution before really understanding a problem, or rich commission on a specific product can lead them to advise something that’s not quite right. Slowing down, listening more, can often pay off better in the longer term.
  20. Wrong tool for the job: Buyers are looking for different types of information at different stages of their decision. If you don’t have it to hand, or you turn to the wrong tool at the wrong time, you can lose the sale.

Naturally, your business won’t have all of these leaks. If you’re in business and paying the bills, then clearly you’re doing a lot right already. But, I’m willing to bet that one or two of these struck a chord. And, even those that aren’t high on your list to address, might benefit from a little tweak here and there and could have a healthy effect on your bottom line.

And, that’s what watertight marketing is all about.

Bryony Thomas is an expert contributor to Marketing Donut and a marketing consultant, speaker, and author. Her first book – Watertight Marketing – is available Summer 2012.

Comments

very helpful but quite scary at the same time.

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