02 December 2018 Events

Renewal can follow the customer cull

Gardeners know that pruning encourages growth. Businesses should think like this too.

Jack Welch, the legendary leader of General Electric, was a known to advocate a strategy of continuous renewal, eliminating the worst performing 10% of the company’s workforce each year to keep the business refreshed and as part of a process of continual improvement. We can’t advocate printers copy the great manager. There are not enough skilled staff to draw upon in this industry. But this approach can be adapted to improve the business.

Apply it instead to the work and customer profile. Shed instead the worst performing customers, those 10% of low margin, no contributory customers. Those that are reluctant payers, the ones that find reasons not to pay in full through spurious reasons – short deliveries or damage in transit – those that in short are the least rewarding. The same can apply to job types. Rampant commoditisation makes it easy for rivals to undercut on price. It’s less easy with a touch of foil, varnish or embossing or with some other element that keeps the business ahead. It need not be production related, frictionless ordering can be just as effective.

The data to do this should be available through a well set up MIS and production workflow. This can collect production data that when analysed throws light on which jobs and customers are not worth keeping and which are the most rewarding. You might be removing a slice of turnover, but there's a reduction in costs and a gain in margin to contemplate.

Gareth Ward

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