Sniffing Out $150,000 Under Your Nose – Revenue Driver Analysis – Client Case Study

Let me start with the bottom line here… Level4Growth generated an additional $150,000 of revenue over 4 months on a business line typically making about $3MM per quarter.

Yes, that’s a 5% revenue increase… But even better is that this additional revenue came with no extra expense, so this went straight to the bottom line for a 25% increase to Net Profit! If the company maintains the activities uncovered then they stand to continue raking in about $50,000 of profit every month!

Not everyday can I speak to that kind of success, but this one came as a result of realizing my client was haphazardly assembling their team on a monthly basis with a frantic exercise… “we’ve got pressure from corporate and need to think of ideas to grow our revenue/profit”. After a couple of these fire drills, I outlined all the standard revenue drivers for the business on a P&L model to display top line and bottom line results for each quarter.

Matching the list of revenue drivers to the company's primary Key Performance Indicators (KPIs) identified a mismatch in directives. What was interesting was a “quality” metric being celebrated by my client and their end customer was actually covering up inefficiencies in the workflow. It took some discussion with their end customer, but we finally came to terms that the celebration of that KPI was causing unproductive activity from my client.

Expectations were changed with the end customer and activities were changed within my client company that led to $150,000 incremental revenue for my client. Another $50,000 per month is on the table ongoing as my client satisfies the abundant end customer demand.

Confidentiality and respect prevent me from speaking on the exact details of the opportunity, but I do want to speak to the take-aways from this achievement.

Take-Aways You Can Apply

I’ll write other case studies that speak about expanding to other markets, additional revenue lines, and getting greater share of customer spend by offering additional products/services, but this case study is framed under the scope of documenting and improving performance of your current revenue drivers.

First

Identify where your revenue comes from. Note there are multiple ways to slice the pie:

• By site/location

• By sales person or production group

• By product line (get creative here because there may be more ways to slice this than you think)

• By production/revenue driving activities

• By performance tiers (i.e. bottom, middle and top thirds; or otherwise)

Second

Track weekly, monthly, quarterly going forward, but also get your business analyst / accountant to provide a historical breakdown. Graphical charts really help to identify trends and other revelations.

Third

Create improvement goals, but don’t just pull them out thin air. Are there industry standards to compare to? Other sites to learn from? Make sure your goals are in line with your vision… if you want to be world class then set audacious goals; if you want to beat the guys down the street then benchmark to them. Just know where you want to go and why, then goal set appropriately – ahhhh, I just encroached on the subject matter of another blog post to come based on Vision-Goal-Strategy-Tactic-Activity planning… stay tuned for that one.

Strategic questions to ponder:

• Can we leverage activities around different revenue drivers?

• Can my lower tier elevate to the level of my middle tier, my middle tier elevate to the level of my top tier, and my top tier reach new heights?

• Is there compound interaction between various revenue drivers?

• Do I have goals set, are we meeting them, can a little more (or different) effort or resources change the trajectory?

• Are my goals appropriate?

• Am I measuring performance the right way? Can the data be sliced a different way?

• THIS ONE IS BIG: Are there activities/lines/resources that are detracting from performance in other areas? Yes, addition by subtraction is very real!

“We improve the quality of what we are doing by reducing the quantity of what we shouldn’t be doing” – Doug Cooper

Step Away – But not too far

If you are like me and love eating leftovers, you know how much better soups/stews taste on day 2. I can’t tell you how many times a revelation has occurred when I have intentionally (and unintentionally) given myself a breather from the exercise above. Let the questions and initial thoughts marinate; but you must be very intentional about reengaging the data and evaluation.

Augmenting the Results:

Calling on a higher power

An effective practice for me is to

1) Write out my intention,

2) Speak it out loud,

3) Meditate on the desire to have greater vision revealed to me.

With strong desire, faith, and repetition it is typical that a power much greater than me alone finds a way to provide monumental vision and opportunity.

Reaching out to other sources

2 is better than 1, and 3 is better than 2. Diversify your strategy review group. Involve your line workers, sales, marketing, engineering, quality control, purchasing, and other key business functions.

“Two heads are definitely better than one and by sourcing ideas from each other you have a better chance of coming up with a strategy that will allow your business to overcome a setback or challenge.” – Richard Branson

Be honest though… do you think the best knowledge and solution is within your four walls? Or even worse, just between your two ears? It actually is if you and your team are smart enough to understand that the team expands beyond the people in uniform on the field. So I can’t stress this enough --- collaborate with outsiders!

Customers and vendors for one, but also look to your trusted advisors like accountants, lawyers, mentors, consultants, and a mastermind group of peers. Worthwhile advisors come with invaluable experience of other clients and perspectives. Consult with them regularly as your results will be magnified, costly mistakes will be avoided, and timelines will certainly be accelerated.

All the best applying these concepts to your revenue driver analysis! And may you be able to replicate the 25% profit growth we achieved with one impactful analysis and execution through Level4Growth.