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Cutting Costs to Keep More Cash

(August 2008) posted on Wed Aug 13, 2008

Trimingham describes how creatively reducing expenses can allow you to earn more in the long run and keep your valuable workforce on the payroll.

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By Thomas Trimingham

We’ll use an example company model called XYZ Screen Printing for the purposes of this review. This model may not fit your business exactly, but it should give an idea on how to work through the different areas of the process. You can then convert the suggestions in each division to what makes sense for your own review.


Lead generation

XYZ Screen Printing relied primarily on ads in the telephone directory and word of mouth to generate leads. Its one-man sales force spent the majority of his time on servicing existing customers and dealing with walk-ins. The challenge in this area was the same as in the rest of the company’s systems—the need to reduce costs and increase results within the same amount of time, using the existing labor force.

XYZ started with the most important technique—to envision the end results. Using this type of destination thinking would then trickle backward into the support areas that needed to be adjusted to make the changes happen. XYZ wanted a 25% increase in new business and a steady growth of 20% on existing customers in a year. Realizing this goal would require some significant changes.

The first step was to organize. They started to sort all of the incoming leads and define how they were generated. They could use the information to find the average cost per lead and see where adjustments to the lead-generation process were needed. A review of just two weeks worth of charted leads displayed some surprising results. The most important conclusion of the research was that no leads came from the ads in the phone book! In fact, the majority of the leads were from referrals or highway signage.

XYZ, armed with this information, was able to better address cost cutting in lead generation. In this case, saving money meant minimizing the cost per lead. XYZ couldn’t generate a true cost per lead from what the shop spent because the phone book didn’t generate any leads at all. Instead, the business changed its focus to make the reduction in money invested yield some measurable results. The adjustments included the following:

1. Change immediately to the least costly ad in the phone book or to just a simple line listing.


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