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Learn 5 strategies to increase your business’s profitability

Learn 5 strategies to increase your business’s profitability

The commercial sector is not the only one that faces challenges when it comes to increasing profitability. The financial and service sectors also suffer serious consequences that are triggered by low returns and, consequently, profit.

Outdated and inefficient processes, lack of planning, and high default rate are some of the most common risks of companies. When not corrected and managed, they can affect business survival.

Considering this scenario, we’ve listed the main causes of low profitability and some actions that can be implemented to increase this index. Keep reading!

Learn the main causes of low profitability

Although unfavorable economic scenarios affect the profitability of companies, especially those in the financial sector, many of the errors related to this process are caused by internal factors. Understand what these are so that you do not make the same mistakes.

Manual processes

Manual data and information processing, physical file storage, and use of limited spreadsheets are just a few examples of practices that slow down your tasks and make it impossible to access up-to-date resources. This impacts decision-making and indicator analyses.

Excessive concern about competitors

With the rise of digital banks, consumers have more choice. This scenario increases competition among companies in the financial sector. There is no doubt that market research is essential to operate with more competitive services and rates.

However, waging a relentless and poorly planned battle with opponents can mean extremely low values, which directly affect your turnover and make the strategies for increasing profitability more difficult.

Lack of focus on the customer

The customer is the gear that makes your business work, but many managers don’t have that in mind. Strategies that do not focus on the target audience and lack of projects for consumer loyalty and satisfaction also affect your profitability, since without customer there is no turnover.

Understand how to increase profitability

The maximization of your company’s earnings is the result of efficient automated processes, a lot of planning, market knowledge, and concern with customer experience from the first contact. Here are some tips for achieving this.

1. Reduce unnecessary costs

This includes poorly planned purchases and investments that exceed the resources available to each department. So, if it is difficult to make more profit and increase profitability, start by spending less.

To do this, reevaluate employee overtime, find out what are your working capital’s enemies, and implement sustainable practices that not only help the environment, but also reduce significant costs. Some examples include:

  • Document scanning;
  • Storage in the cloud;
  • Reuse of water;
  • Use of solar heaters;
  • Use of natural light and ventilation;
  • Use of reusable cups and utensils.

Actions like these reduce costs for electricity, water consumption and the need for office supplies. Such resources may be targeted at campaigns and strategies that increase profitability.

2. Optimize and automate processes 

Process optimization simplifies workflows, improves internal communication, eliminates rework and enables greater information consistency. Automation is a process absolutely necessary and paramount for any industry and company size.

With automated and computerized tasks, it is possible to reduce costs, eliminate productive bottlenecks, and have market competitiveness, more agility in activities, data and information security, and better decisions.

To this end, it is important to deploy updated, intuitive and efficient software that allows the management of different sectors, information integration, and indicator analysis. This makes it easier to manage the company’s financial resources in order to reduce costs and devise strategies that increase business profitability.

3. Build customer loyalty

Attracting customers is required. However, retaining current and older customers is even more important and cheaper. After all, if you spend $ 100 to acquire a customer, they need to spend more than that to make a profit.

Note how the largest companies, like Apple, strengthen and build a true loyal relationship with consumers. Therefore, bring your team together and be in constant communication with the sales and marketing departments to identify loyalty opportunities.

4. Improve pricing

In addition to adapting to the new work models that the market presents, try to take care of your pricing. For service providers, such as banks and other financial institutions, it is necessary to study the rates being charged.

However, do so not in order to be the lowest in the market, as this may affect your profitability, but so that the practiced values are competitive.

The goal is to make your cash flow operate healthily and have enough resources not only to attract the customer with prices, but to provide a great experience.

5. Know and pay attention to defaulters

One of the biggest impediments to strategies that aim to increase profitability is customer default. This debit indicator, which means loss to your cash, directly affects your profit.

Debtors can be both end consumers and companies. In this sense, it is a matter of survival to implement actions that reduce the default rate, as these values are essential to your profitability.

To do this, provide settlements for debtors and train your staff to apply efficient collection techniques. Ideally, the aim is to be able to receive the amounts in debt and, if it is feasible for your loyalty strategy, keep the consumer.

Such processes need a registration and customer relationship database to ensure access to the debtor’s entire history, so as to provide advantageous options for the defaulter and their company.

To have this kind of information, which enables strategic negotiations, it is important to have good CRM software. After all, increasing the profitability of a business that is stalled and without results requires structured processes that can reduce the number of production failures, poorly planned workflows and, especially, debtor customers.

To continue your research on the subject, download our e-Book: “Do you know how to analyze the profitability of your customers?”, and learn how to categorize your services for consumers.