I wrote yesterday on how profit is hot again. Whether we like it or not, businesses need to shift their focus on finding profit levers that can be pulled without slowing down growth too much.
That’s why I created a cheat sheet to the six major areas any company can use to increase profit. Not every area will be relevant but the best find two or three and exploit them deeply.
An obvious starting point. Simply raise your fees or find a way to decrease costs. Some companies find it easier to raise fees while others are dealing with highly sensitive customers. There’s a Japanese ramen place near my house that raised their prices by 20% overnight a few years ago. The demand dropped slightly but most people came back. Instant boost with minimal downside.
Many companies are offering all kinds of value to customers and they aren’t being compensated for it. Free audits, onboarding support, ongoing help and other things can be put behind price walls. The goal isn’t to nickel and dime customers but to capture as much value as possible.
Another obvious and hot area right now. Better technology can reduce the need for human involvement. Think of how many people no longer visit a ticket counter to get their airline ticket and simply use their phone.
An underrated area for many companies. There’s plenty of customer segments which could have a higher ability to pay for your services. For example, think of all the baby boomers who are being forced to cash out their retirement funds and are ready to spend it.
A stronger brand makes it easier to raise fees, retain customers and drive growth. Airbnb recently realized that they don’t need to spend so much acquiring traffic because their brand is synonymous with vacation rentals.
Releasing new products or improvements is another way to drive growth. PetSmart added multiple new ways to buy their products including curbside pickup and Autoship (automatically shipping orders).
In every area, rate your company on a scale of 1 – 5 in terms of how much you think you’re currently exploring profit opportunities. Many of my clients have plenty of room to explore at least a few of these areas.