- Core Customers are your company’s biggest fans. They love the products or services your company sells, and they’re willing to pay a fair price for them. Core Customers are loyal, easy (and inexpensive) to deal with, and stick with your company even after a promotion ends.
- Must-Have Customers are potential customers who look a lot like your company’s Core customers. They’re already buying products or services that are very similar to what you sell, and they’re paying similar prices. Must-Have Customers are the ones you need to convert to Core Customers.
- A Super Sweet Spot is a power niche that will enable you to successfully compete — and win — against the strongest competition. In Super Sweet Spot companies, every element of the business is crafted to serve a very specific group of customers in a specific way. This means that every decision you make, such as what products or services to sell, which employees to hire, and what advertising to run, supports your customer-relevant Super Sweet Spot.
- Does your company have a Super Sweet Spot that sets it apart from your competition?
- Does every decision you make reinforce your company’s Super Sweet Spot?
- Do you know your Core Customers’ rules for doing business with your company?
- Are your Core Customers spending more or less with your company?
- Are you turning Must-Have Customers into Core Customers?
- Are you getting better at hiring the right people for your company and putting them in the right jobs?
- Are you losing your best employees?
- Are you listening to what your best employees are telling you about how to improve your business?
- Is your advertising becoming more effective with your Core and Must-Have Customers?
With a little luck, your profitability audit will show that you’ve set your company on a steady, forward path and that all you need is a little tweaking to optimize your results. You’ve created a Super Sweet Spot that would-be competitors can’t touch, you know your customers’ rules, and you’re turning Must-Have Customers into Core Customers. You’ll be able to implement plans for your company built on this information, and you’ll have a significant competitive advantage that will be difficult to overcome. You’ll also provide reassurance to your employees and shareholders, if you have them, that your company, division, or business unit has a profitable and bright future.
If you’re not quite that lucky, the audit will reveal exactly what you’re doing wrong and will highlight the specific problem areas you’ll need to correct. If this happens, don’t feel bad — it’s a rare company that doesn’t identify at least a few areas that demand some significant improvement. You’ll need to analyze the data you’ve gathered (or gather some if you haven’t already), and adjust your strategy so you can achieve your goal of building sustained, profitable growth.
The profitability audit is a process that never ends. Companies committed to continuous improvement realize that standing still is actually sliding backwards. Change never stops.
Competition never stops. Your customers’ rules don’t remain the same. So make profitability audits an ongoing part of running your business. You’ll be glad you did.
About the Author
Robert Gordman is president of The Gordman Group. He is the author of The Super Sweet Spot: Building Sustained Profitable Growth and The Must-Have Customer: 7 Steps to Winning the Customer You Haven't Got, the latter of which was named one of the “10 books you should have read in 2006” by Ad Age magazine. His clients have included senior management of Fortune 500 companies including Berkshire-Hathaway Retail, IBM PC Company US, IBM PC Company Canada, Kmart Corporation, KPMG, Saks Inc., VF Corporation, Weight Watchers International, and Whirlpool Corporation.
