Exec Brief #6: New Model For Marginal Accounts
•business model •executive briefingWednesday, June 1, 2016—Creating a New Model for Marginal Accounts
Randy MacLean presents another video in the WayPoint Executive Briefing series with this discussion of creating a new model for marginal accounts.
In this video Randy tackles the industry-wide issue of businesses that have large numbers of small accounts that are marginally profitable or even unprofitable. As a whole, this group can add up to profit opportunities, while individually they do not have a great effect on the bottom line. Conversely, if this group is unprofitable they can have a negative effect on the business. When considered together, these accounts can have as much impact as some high potential accounts.
Randy provides an overview of the Regular Accounts report, with a focus on the Reg+ (money making) accounts and the Reg- (money losing) accounts. These accounts lend themselves well to policy solutions. Therefore, in order to create profit you must build a proper service model for this category and properly apply this model efficiently in the group.
Business Model Generation
Executives should understand the importance of creating a profitable business model around each segment of the business. A properly planned business model will give you a set of parameters around what you do and don't do for customers in the segment so that you remain profitable.
Randy's years of experience evaluating distribution companies reveals that every chronically money-losing segment is lacking a proper business model. This is usually because a cookie cutter approach has been used as the relationship scales. The point is that you cannot treat every customer the same, and as business owners you must challenge and question how you do business to guarantee that every segment of the business is a money-making segment. This is the roadway to high profitability. Randy's experience reveals that most companies are 3%-4% to bottom line, but those who have invested in proper business models have increased to 10%-13% to bottom line.
When considered as a whole, your regular accounts are interesting and important enough to follow. Join Randy in learning how to tailor your business and change the nature of these accounts, turning them into a profit-generating segment of your business.
For more information about Randy MacLean, visit: www.waypointanalytics.net
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