Profit Maximization
Cutting one's way to success is appealing to many, but rarely is it that simple.
Too often we see profit initiatives done in haste, which lead to counterproductive results. For example, a head count reduction in customer service that results in lowered customer satisfaction, reduced retention rates, and minimal follow-on sales is likely to be a false economy.
Stanton Associates has a more thoughtful, yet rapid and effective approach. We analyze the five key dimensions of the company to achieve dramatic improvements without compromising the potential for long-term value creation.
Profit maximization is achieved not just by cutting expenses, but by examining all the functional drivers of profit and maximizing them within the time period selected. (Usually 12 months is selected, but even with less time much can be achieved. Obviously, with more time much more can be done.)
The functional relationships are expressed as follows:
ƒ(PM) = ∑ [R(↑) + E(↓) + CSat(↑) + OpEff(↑) + PerfCulture(↑)]
where R = revenue
E = expenses
CSat = customer satisfaction
OpEff = operational effectiveness and efficiency
PerfCulture = the performance of management and the workforce
Our approach involves the following:
- We apply the appropriate initiatives from our revenue acceleration product, choosing the steps that are more tactical and deliver a rapid boost to revenue.
- Expenses are reduced to the acceptable minimum using our six steps program.
- Customer satisfaction and (most notably) profitability are improved using our customer value creation model.
- Operational effectiveness and efficiency is maximized, with a commensurate impact on profits, via our 11 steps-to-success program.
- Performance Culture is created through the alignment of departmental and individual goals, and incentive compensation plans, with explicit, measurable profit-oriented action-tasks, based on our four “performance generator” steps.