Are you running the rule over your carefully crafted business plans looking for “buried treasure” to help you improve performance this year?
Perhaps you are already confident about your prospects for this coming year but need a contingency plan just in case?
Maybe you are concerned that your stretch targets for your product sales are too ambitious?
Or you have concerns about the timing of your product launches? Or worries over increasing competitor activity?
Either way, it would be good to have something up your sleeve to give you a real boost this year.
There’s a chance that there is buried treasure for you to uncover if:
1. You focus all of your commercial efforts on selling your core products and services
If this is the case, you have the opportunity to bundle products and services. Not only does this increase the initial transaction value, it also enhances your core products. What’s more, it may even lead to additional business in the future.
Under the right circumstances bundling works well. For example, I’ve recently bought some matching branded accessories to go with my new MacBook and a 2-year VAG service plan for my car.
If these bundles had not been offered, I doubt whether I would have purchased the computer accessories. Almost certainly I would have waited until the service light came on before taking my car in for an inspection. Moreover, I may not even have taken it to a manufacturer approved service agent.
So, whatever you do, offer your existing customers additional products and services whenever you have the chance.
2. You market your products and services through resellers only
This gives you the opportunity to sell directly to your customers. By doing so, you can often offer them a wider choice than mainstream retailers. Best all, you increase your own profit margins in the process.
You may not be so bold as to disintermediate as organisations like Dell have famously done.
That said, there’s nothing to stop you “cutting out the middleman”. This is especially so when looking to sell novel, niche or end of line products, which resellers may be reluctant to stock or promote.
There are some great examples of well-known brands like Hotpoint discreetly selling products directly to consumers through their Privilege Purchase Club while continuing to very actively support trade distributors and retailers.
So, if you already have the infrastructure in place, perhaps now is a great time to try it? After all, there is no better way to truly understand your end customers than to transact with them directly.
3. You view after sales service primarily as a cost to control rather than a source of revenue and profit
This gives you the opportunity to invest strategically in further developing your service offerings to increase your penetration of the aftermarket.
This does of course increase costs in the short term. However, margins in secondary markets such as spare parts and extended warranties are generally higher than in the primary product market that your company is probably better known for.
By leveraging the power of your brand, it is possible to grow revenues and margins very strongly and very quickly, As you do this you also increase the quantity and quality of your interaction with consumers.
By partnering with independent experts such as Domestic & General for extended warranties you can also add entirely new activities where regulatory barriers mean B2B2C business models are best employed.
So, if your service division is not profitable, now is the time to review your strategy in this area.
For advice on how to increase your service profitability please download our free guide.
Whether you are still planning for the coming fiscal year or are actively reviewing your strategy for the current calendar year, now might just be the opportune moment to look for that buried treasure.
* This post, originally published in 2015, has been extensively revised for 2020