Change Your Paradigms and Leverage Your Profit Centers

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Change Your Paradigms and Leverage Your Profit Centers

Written by Leanne Hoagland Smith

Research continues to reveal that the cost to acquire a new customer is seven to 10 times greater than the cost to retain a current customer. During down economic times, it is imperative that all employees understand how they are profit centers and how all these profit centers are connected to the bottom line.

Certain paradigms exist within each business culture. These paradigms are philosophical frameworks from which generalizations are formed.

For example, during down economic times, the paradigm is to cut back on all expenditures and especially in marketing and training. The generalization is we cannot afford the non-essential expenditures.

Another paradigm is people (employees) are a liability instead of being the greatest capital asset. This framework leads to the generalization that other assets such as technology, operations, information or financials all have greater worth.

What would happen if each business or organization switched to the following paradigm?

Each employee is a profit center.

Of course to embrace this change in thinking would require the executive management to truly communicate the following:

• Where is the organization going or its vision?

• What behaviors or demonstrated positive core values are acceptable?

• What key goals (mission) need to be achieved to realize the vision?

From my 30 plus years of business experience, I have observed very few employees who truly come to work to make it a bad day for their employers. These individuals truly want to do a good job. However their lack of knowledge creates inconsistencies at all levels resulting in:

• Missed targets from revenue to profits

• Poor quality in the many daily actions

• Wasted time from production to customer service

When employees cannot connect their actions to the bottom lime, the inherent What’s In It For Me (WIIFM) is diminished to removed. Daily work becomes routine and this may actually affect work ethics.

Theodore Hesburgh said “No one can blow an uncertain trumpet.” Uncertainty will reduce profitability because second guessing to procrastination kicks in. Then the formerly well oiled machine (the business) comes to a grinding halt.

For example, a company employs 30 people. The average salary includes benefits is $60,000 for a total annual payroll and benefit package of $1.8 million. Other direct and indirect costs account for another $1.2 million for a total of $3 million. Each employee is responsible for generating $100,000 just to make payroll and keep the lights on. To keep up with future growth goals and to return an investment to the owners or stockholders actually requires each employee to generate $120,000.

Maybe that employee is thinking “I am doing what I need to do to make my salary of $45,000.” Yet this paradigm is $55,000 short to make current costs and a whopping $75,000 for future growth and stockholders’ return on investment.

The Challenge for Management Teams

Employees because they are thinking and cognitive individuals can understand how they truly are the profit centers when this paradigm is actively communicated. The challenge is very few management teams actually take the time to share with the employees what is specifically required of them and how this can be connected to daily behaviors.

For example, a patron of a local breakfast diner received bad service several days in a row. He only spent $5.00 per week. Yet that weekly $5 expenditure equaled $260 a year. The average life of a restaurant customer is 20 years and that lost fin has grown to $5,200.

Businesses can never afford to lose customers. In today’s now global marketplace, this is even more true. So maybe now is the time to change your paradigms and begin to leverage all your profit centers.

Click here for The Keys to Unlocking Sales Success, an ideal book for sales and marketing professionals.

Leanne Hoagland Smith
		About the author:
		Leanne Haogland-Smith has over 25 years in sales. Her true joy is selling and helping clients unlock the results that they want. She holds a core belief that the majority of answers are within each individual or organization and, sometimes, people just need an outside perspective to help them discover those answers. Leanne has written more than 1000 articles on sales and process improvement. Learn more about Leanne at www.processspecialist.com .