Where Opportunity Lives – Part One
by Dan Walsh
“Your margin is my opportunity.”
My division at work held a brain storming session yesterday. The goal was to discover and plan for Q1 growth opportunities. As we took turns sharing I noticed that everyone’s ideas came from the perspective of their daily responsibilities. Developers had ideas for speeding up our database. Sales folk wanted to sign more advertisers or increase revenues from our current advertisers. I launch sites and buy traffic, so I had ideas about new sites based on (hopefully) lucrative traffic opportunities. It makes sense, right? We’re all tuned in to our particular expertise, so our ideas should grow from the knowledge that exposure brings. We all innovate from our unique perspectives. But what if you could innovate from someone else’s perspective?
As we continued around the table I noticed the ideas could be grouped into kinds of innovation. Yes, the specific tactics were different, but there were common threads that could potentially be applied to any area of business. The opportunities hidden in database optimizations could be applied to sales. And perhaps the suggested sales opportunities – that way of thinking – could shed light on further development optimizations.
It occurred to me that there are places one could specifically look to find growth. Like looking under a rock for worms, opportunity tends to live in certain nooks and crannies. Part one focuses on maximizing current operations and part two highlights opportunities for expansion.
Part One – Maximize Current Operations
1. More Volume
This sounds obvious, but can you sell more of the same product? Can you get more people in the door? Maybe the new volume comes from new marketing channels. Where haven’t you advertised? Can you appeal to larger markets by tweaking the product or changing the price-point? Uber is expanding to new cities and offering cheaper options to their expensive town cars. More volume can also open up new economies of scale.
2. Optimize Conversions
Can you get more people to buy? Even if they don’t buy, can you generate revenue anyway? Online shopping carts are notoriously ripe for optimizations that will increase total sales. Customers get confused and don’t buy. Look for places where customers get stuck and try to reduce that friction. Make it as easy as possible for them to give you money.
3. Eliminate Waste
Are you inefficiently using or underutilizing resources? Maybe you pay to much for hosting fees, rent, or product packaging. Pursue cheaper alternatives, especially when they don’t effect your product. UPS saves roughly $9,000,000 a year in gasoline by eliminating left hand turns.
4. Maximize Profit
How can you make more profit per sale? Can you create more margin by negotiating better rates with vendors or charging more for a product or service? Perhaps you can reduce the cost of raw materials by buying in bulk. Economies of scale are important to remember, as they often create savings or other favorable terms that increase profit margins.
Can you make anything faster? Can you produce the product faster? Can you onboard new customers faster? Can you ship faster? Interesting things happen when business speeds up. Economies of speed increase product development cycles, user retention, and user lifetime value.