Transcription
If you want to maximize your profits and kill your competition, then this video is for you. Here are nine game-changing strategies that have helped more than 5,000 of my clients implement, and they've seen exponential growth in their profit margins. So, let's start with the first strategy: eliminate dangerous customers.
Essentially, these are customers where your effort to sell to them is extremely high. They take a lot of time to make the decision, they put up their price in making the decision, they like to control the bargaining power in their favor. They get you to do 10,000 things before even they give you the order. They almost squeeze the juice out of you. But while the effort is high, the returns from such customers are extremely low. These are customers who tend to delay payments, default in payments, complain for the sake of complaining, criticize for the sake of criticizing. They are not at all appreciative, even if you do good work, and they drain a lot of your time and energy. These kinds of customers need to be eliminated from your portfolio.
The rule with dangerous customers got to be that even if they buy and you realize they are dangerous, you return their money and say, "Sorry, we are not the right partners for you," and you walk away graciously. Let me give you an example. I had a client who was a pet products distributor. 70% of his revenue used to come from dealers who used to buy pet medicines from him, but he had the typical challenge of a dangerous customer from these dealers. They used to take a lot of time in making decisions, they used to delay in payments, sometimes default payments, and sometimes even return the unsold inventory by blaming the distributor that the medicines have expired. Now, if the distributor was not willing to oblige, they would threaten that they would not procure further goods from him, and in the process, he would forego off payments just because of the fear that he shouldn't lose the set of customers.
Now, for a business whose 70% of business is coming from dangerous customers, it's a huge decision to eliminate them. But this business owner understood the rule that with a dangerous customer, you cut off, you stay away because you rather use your energy to focus on amazing customers or breadwinning customers. So, here's what he did. He said no to the dangerous customers, stopped working with dealers who are only buying pet medicines from him, and instead started focusing on nurturing those dealers who are buying pet toys, pet clothes, pet accessories, and pet food products from him. Now, when his energy was focused on the amazing set of customers, naturally his business grew, his profit margins grew exponentially. So, eliminating dangerous customers is the first step in increasing your profit margins.
The second strategy to increase your profit margins is to eliminate time waste of products or services. Look, I know you are a business owner, and I know you love every single product or service that your business is producing or churning out, but the truth is this: you got to be objective in your decision-making. You cannot be emotional in this. Many of times, I've seen business owners fall into the trap of making money from one product or service and losing money in another product or service, and they are not willing to stop that product or service where they're leaking money and wasting their time because they're just emotionally attached to that product or service or infatuated with that idea. Please, please be objective in your decision-making. Look at your range of products or services, identify the hero products, and focus on them, and eliminate the time waste of products or services because the time waste of products or services are high effort and low return products or services.
I'll give you an example. I had a client who was in the manufacturing of millet-based snacks. Now, in his range of snacks, he had more than 25 different varieties, but the market, the customers were always inclined to five out of those 25 varieties. But this person was so infatuated with the idea of all these 25 snacks that he spent so much of his production time, effort, energy, and resources on producing all 25 without even evaluating that which is the product which is actually giving him the return and which are the products which are draining his profits. The moment we did this simple exercise of evaluation with him, and he made the decision to eliminate time waster products, his profit margins went through the roof. So, that's another step for you to take.
The third strategy to optimize your profits is to have clarity of your offer price and boundary price. Look, accept reality. Today, we live in a world where customers, irrespective of who they are, expect a bargain, they expect a better deal than what you've quoted to them. Now, when you understand this behavior, this psychology of your customer, it's important that you create clarity of an offer price, which is the price that you will quote, and a boundary price, which is the price below which you will walk away from the project. When you have clarity of these two price points, you know exactly what is the range of negotiation you're willing to offer, and at what price it doesn't make sense for you to go ahead with a project because it's going to erode into your profits. You want to understand the simple psychology in a negotiation: your customer needs to feel like they got a better deal than what you originally quoted. So, having clarity of your offer price and boundary price helps you protect your profit margins because if a client is going below the boundary price, then you know without any regret, you can walk away from that deal.
For example, I have two clients who are in the business of wedding films and photography. One who understands the customer psychology and the need to get a bargain, and the other who stuck about being right about their price. Guess who makes more money? The photographer who understands that customers want to feel victorious, customers want to feel that they've won a better deal than what you originally quoted. Because what this agency does is, when they pitch their services for wedding films and photography to a client, they quote a premium price of 15 lakh rupees and they give themselves a range of say, 9 lakh rupees, below which they will walk away from the order. But on the other hand, the other client of mine, who's in the same business, who's righteous about their price, quotes clients 5 lakh rupees and keeps a very small window of 50,000 rupees for negotiation. Now, what happens naturally is more people close the deal with the first client of mine because they are making their customers win. And the latter one actually loses deals because the window is so small, and people feel that this person is so rigid that they're not allowing them the opportunity to win in the deal. Remember, if you want to make profits, you have to make your customers win as well.
Now, talking about making customers win, here's how I want you to win. In the description below, I have attached a link of a 40-minute intensive training that has helped more than 2,85,000 business owners build a profitable and scalable business. I am willing to give you this training link for free so that you are able to learn and grow your business. So, make sure you watch that video right, right now after this video and take action based on the principles I share in that video.
The next strategy to help you improve your profit margins is to do research and development actively and launch new products or services. Now, I understand you're a micro, small, or medium enterprise business owner, and you may not have the team, the capacity, the bandwidth to do R&D every day. But here's what I'm saying: even if you're a small business, at least once in a year, launch a new product or a new service. Because when you launch a new product or new service, two things happen. Number one, you attract new customers. People who've not bought your existing products or services, but they find your new product or service relevant for them, become your customers. Second, you make more money from your existing happy customers because your existing customers know you, trust you, like you, and respect you. And when you launch a new product or service which is relevant to them, they prefer to buy it from you, therefore helping you increase your average billing value per customer. When you increase the lifetime value of your customers, automatically you are reaping a higher profit margin because the investment to acquire those customers has already been incurred. So, whatever you are able to upsell to them now is a bonus and an optimization of your profitability on the acquisition of that customer.
For example, in my case, while we've been providing one-to-one business coaching to business owners since 2016 and have impacted the lives of more than 5,000 entrepreneurs through personalized one-to-one business coaching, we also do a lot of surveys and understand what do our clients want. And one of the things we realized that a lot of our clients wanted beyond one-to-one coaching and handholding was experiential learning processes where they can go out, travel, and along with travel, we facilitate a deep transformational experience for them. And that's how we recently launched a new service called Unknown Expedition. And guess what? The moment we launched it, saying that we'll take a small group of people to an unknown location where they will not know where they are going till they come to the departure airport, and it's a premium experience because it's done in small groups, we saw massive interest from our existing clients to a point where today we have to put people on a waitlist for the next 2 years for our upcoming Unknown Expeditions. This has contributed in us optimizing the returns on the investments we've incurred in marketing so far and helped us increase the lifetime value of our customers while we continue to add value to them.
The next strategy to help you improve your profit margins is consistent marketing. Now, as basic as this sounds, the reality is this: when you're not marketing consistently, you do not have a pipeline of leads. When you do not have a pipeline of leads, you do not have confidence and conviction to hold your price and hold your profit margins. And that lack of confidence turns into desperation, and in that desperation, you end up underselling your products or services, undervaluing your capabilities, and feeling guilty about not being able to make enough money while you're working so hard in delivering value to your customers. The truth is this: when as a business, you have a consistent marketing engine set up, you have a consistent pipeline of leads, and those leads give you the confidence to hold your price and hold your payment terms. Think about it. This is economics 101. It's a game of demand and supply. When the demand is high, but supply is limited, then the bargaining power is in the hand of the supplier. But when the demand is low, and the supplier is ample, then the bargaining power is with the customers. So, you want to put your business at an advantage position by building a marketing function which is able to add value to customers consistently, build curiosity, establish credibility, and nurture a relationship. When you do that through marketing, you have the confidence because you have the pipeline of leads to hold your pricing.
For example, one of my clients who runs an IT services business started creating consistent content on platforms like LinkedIn and emails where he started adding value and educating his target audience on the best practices in IT development, the best practices in gaming development, how gaming can be leveraged by brands for better customer engagement, for higher recall value. Now, when he started churning out content and adding value to people through this content, his positioning shifted as an expert in gaming solutions, and he started generating a consistent pipeline of leads within 6 months of doing this marketing activity consistently. As a result of that, he's no longer treated as just another IT vendor or supplier by his target customers. In fact, because of the pipeline he's been able to create, he's been able to take his pricing up by 24% from what it was in the past without giving any room for negotiation. And guess what? Customers are willing to pay because they see that confidence and conviction because they've tested this person's capability by consuming his content. Marketing is one of the most underrated methods of actually improving profit margins or even protecting profit margins.
The next strategy for improving your profit margins is to have strong reporting systems and strong data tracking systems. Now, again, as basic as this sounds, this is the most ignored activity by many business owners. Here's the reality: people like, numbers don't lie. And when you have a data tracking system and a comprehensive reporting system, and you're able to see numbers on an ongoing basis, you are able to see the truth about your business and the truth about the projects you are executing. Many of times, I've interacted with business owners who perceive that they are making money because they are busy handling projects, but at the end of the year, when they sit down to actually put together the data of their financials, they realize that they have not made money, they've leaked money. Businesses like real estate, construction, IT development, in these kind of businesses, it's an absolute necessity to track not just data of overall financials of the business, but track the investments in a project as well. You just cannot get away with having a monthly profit and loss statement. You need to have a project-based profit and loss statement so that you know exactly how much money are you investing in a project and are you operating within the boundaries of the budgets because the client's not going to pay you higher just because you ended up investing a lot higher in producing that product or delivering that service. So, a simple practice like having project-based profit and loss statements will help you keep a check and eliminate leakages and protect your profitability.
The next strategy that a lot of my clients have used to improve their profit margins is to build loyal vendor relationships. Look, I know the perception is that why should we rely on only one or two vendors? Why don't we de-risk ourselves and outsource our supply requirements to as many vendors as possible? But this is a flawed thesis. When you work with too many vendors for the same set of supplies and procurement of your business, you're not earning the loyalty of any one of them. You rather focus on building loyalty with vendors and leverage that relationship for better payment terms, for better pricing, so that you can reduce your cost of acquisition of your raw materials and increase your profit margins. When it comes to offering competitive prices to customers, look, you can either make money from your customers, or you can make money from your suppliers. And if there is a possibility for you to build loyal vendor relationships where the volume of procurement from your end will be high, that can be leveraged by you to get the cost lower and make a profit margin at the procurement level itself.
The next strategy that you can explore to improve your profit margins is to explore exporting your products or services. Now, this is where as a business owner, you need to take off your horse blinders. You need to start seeing that the world is your market. It's not just your town, locality, or city, not even just your state or your country. The world is your marketplace. And this is where an opportunity lies for you to leverage the low cost of labor, especially if you're in a country like India, and produce goods and services for the world. And honestly, cracking deals in overseas markets is not as intimidating as it looks. All it takes is some amount of focused, proactive networking, visiting exhibitions and expos of industries, meeting industrial bodies and organizations, and building connections proactively. When you start initiating that activity, you will see that people are way more welcoming in some of the overseas markets and value the value of your products, your services, and your expertise.
For example, one of my clients who is in the textile manufacturing business for more than four decades had started hitting a roadblock in his existing facility in India. He felt the growth opportunity in India had died because the competition had tremendously increased, and also he was nearing his age of retirement. So, he wanted to make sure that he plays a more conservative and a more cash-rich and profitable game rather than a capital-intensive game. So, one of the things we helped him build beyond his existing manufacturing facility was a consulting practice where he could use four decades of his expertise and work as a consultant with textile manufacturers in parts of Africa and other parts of Asia like Bangladesh and Vietnam. Now, his expertise and experience is something that he's leveraging to charging a premium by exporting it to overseas markets who are willing to pay that premium to him. So, remember, the boundaries and the borders lie only in your head. The moment you see the world as your marketplace and you become proactive about networking and building relationships, you open up new possibilities to build in India with the costs of India but earn from the world.
Now, this brings me to the final strategy for you to improve and optimize your profit margins. The final strategy is focus on customer satisfaction. As elementary as this may sound, the reality is this: when you have happy customers, they bring you more customers. And when you create a positive customer experience, then people become your marketing team and your sales team, and your cost of acquiring customers reduces. Therefore, your opportunity to increase your profit margins increases. Look, the most fundamental reality of business will never change. When you add massive value to people, you create a delightful customer experience, and you make sure that people trust you, like you, respect you, that is the biggest leverage you can have to grow your business and grow your profit margins. As simple as it sounds, it's a critical aspect of your business that you got to pay attention to every single day and measure every single day.
So, with that, I come to the end of this video of nine impactful and practical strategies to improve your profit margins. So, if you found value in this video, make sure you click on the subscribe button of this channel and watch this next video where I share five strategies that you can implement in marketing without spending any money.