Written by Simon Zust, BSP Advisor for the Canterbury Region.
You might provide a number of different products or services, but they'll likely give different returns - and you should consider more than simply dollars of profit.
Here's a quick way to score each of your product/service offerings.
Split your products/services into broad categories - we'll use a garage as an example, since I work with one as a client and we recently completed this exercise.
Services:
WOFs
Euro servicing
Engine overhauls
Tyres and suspension
Score each service out of 10, across the following 3 areas:
Personal Fulfilment
How much do you and your staff enjoy (or dislike) providing this product or service or dealing with this type of customer?
Value to the marketplace
How much satisfaction does this type of customer (The market) get from buying this product/service?
Profitability
How profitable is the work you do to provide each product/service - be sure to look at net profitability here, not sales volume. Remember, it's not about the turnover, it's all about the leftover.
Here's the scoring from my mechanic client:
WOFs | Euro Servicing | Engine overhauls | Tyres and suspension | |
Personal fulfillment | 5 | 8 | 6 | 8 |
Value to the marketplace | 5 | 7 | 6 | 8 |
Profitability | 5 | 7 | 4 | 10 |
Total score out of 30 | 15 | 22 | 16 | 26 |
From these scores, we learned:
Tyres and suspension are the clear winner, so we've shifted our marketing spend and targeting toward these services.
WOFs score the lowest - but taken into context they bring in a lot more work, so the owner is happy to keep doing them.
Engine overhauls score low across all areas, so we've made a decision to refer any customers that need this service, to a reputable specialist engine overhauler, that we know and trust.
The above exercise alone has boosted net profitability for my client by 14% in the past 3 months!
Not only this, but the staff are happier, more engaged and more productive... because they're working on jobs that they themselves ranked as being more satisfying - this is why we look at more than just profit $.
