Services Case Study
From Self-Inflicted Profit Wounds to Behavioral Shifts that Transformed the Bottom Line
This simple example illustrates that the profitability problem is often well-intentioned behaviors which become self-inflicted wounds, and this was completely hidden and an accepted way of doing business until they had their AHA! Moment. Best of all, the conversation about the level of service uncovered a new sales opportunity the company hadn’t been aware of.
The President of an acclaimed “Best Companies to Work For” HR Staffing firm was hungry for profit to fund a new line of business, developing HR Management Software. However, despite belonging to not one but two CEO-mentoring groups, nothing she was trying was delivering bottom line results.
When they kicked off ProfitU™, the 11-person cross-functional team immediately discovered that their biggest A-list client was actually costing the company more than they were worth. The VP of Sales blustered that it was impossible, but one by one the team members made their case using the analytics scoreboard, until it was clear that their assessment was correct.
It was a common problem experienced by many businesses – because of the size of the account, they had been over-serving the client, providing five qualified candidates for every position rather than the three they were contractually bound to present. Top down directives to “do what ever it takes” to take care of a large client, are not uncommon, yet are rarely backed up by evidence that the approach makes economic sense or drives customer loyalty or retention.
Not surprisingly, not only was it was costly for the company to find those extra couple of candidates, but it was also costly for the client-side hiring team to interview extra candidates as well. The firm’s desire to service the client was actually leading to the opposite result, from the client’s perspective.
The team immediately developed a plan to simply ask the customer what they would prefer, as part of a structured Value Creation Conversation: five candidates at a higher fee schedule, or three qualified candidates at the current fee schedule as originally intended. The client chose the level of service they wanted, which was three.
This was clearly win-win-win. Less effort for the company, a more time-effective solution that was welcomed by the client, and bottom line impact for both as a result of the time and cost savings.
In less than an afternoon, the Customer Profitability Diamond not only showed us that we were losing money on our biggest customer, but more importantly, how to fix the self-inflicted wound that was causing it! When we worked with the client to do so, we were immediately rewarded with an additional $300K in new business that we didn’t even know was there. That quickly more than paid for this work.
CEO, Executive Search & HR Technology Development