Productivity and Profit

I have an interest in a number of things. One of the matters that I mull over is the profitability of a business.

In a recent article written by Greg Savage (see reminded me that sometimes we grow a business and forget about the costs involved, and what this can mean for the longer term company survival.

Growth for growth’s sake – can lead to bad outcomes and not the ones we expect. Some time ago, I was involved with an organisation that had a reasonably high turnover. That organisation did not make money and continued to increase its losses as it gained new business. There was a simple reason – the costs of maintaining certain customer accounts were greater than the revenue gained.

The answer was simple yet a little painful for some. Each customer was analysed to match the cost of the service to the revenue gained (this included the service costs and employee time involved). This was an enlightening process. It highlighted that there was a lot of work in certain accounts which meant that those customers were expensive and unproductive to maintain. The result was that these customers were advised of rate increases to bring them in line with the costs.

And what do you think was the result? Some customers left; revenue came down by some 30%; but the loss was turned around to a profit. This increased profitability was a good result; but just as important was the fact that the employees were now productive – they were working on customer satisfaction for quality clients and able to get about better promoting the continued services. They were now looking after the future of the company.

Satisfaction for both employees and customers improved productivity and profit. And I would express my thanks to Greg Savage of reminding of this.

What are you doing to increase your employee and customer satisfaction. Why not check out today as see how it may fit into your future productivity and profitability.