This post originally appeared on glassmagazine.com
Key to a company’s long term success is understanding the difference between “good profits” and “bad profits.” Bad profits may provide earnings in the moment, but good profits pay off again and again. A CFO or CPA reviewing your company books can’t tell which is which. However, there is one simple test to tell if you are achieving good profits versus bad profits. But first, let’s discuss what each look like.Bad profits come from sales on products and services that satisfy a customer, but the customer is not excited about the work that was completed. That customer wouldn’t necessarily recommend a company to a friend or colleague based on those products or services.
In such cases, it’s most likely that a company didn’t understand what the customer really wanted, and didn’t understand the goal to help solve a particular problem.
Good profits, on the other hand, come from products and services rendered when a company was able to dig into the customers’ needs and desires. The company took the time to understand what the customer wanted, and the company discovered they had an underlying need to solve and issue or achieve a goal. The company helped them reach that potential in a better way.
When it comes to good profits, the customer is excited about the results and is eager to tell everyone who will listen—even those who really don’t care. The customer becomes an extension of the company’s sales team. They are happy to provide testimonials and become a reference, and given the chance, will become a repeat customer.
So, the one simple question you need to ask yourself is: “Am I solving my customer’s issues?” Or, more specifically: “Am I working to understand the potential issues and desires for my customers and making recommendations that can help solve those issues?” If not, you might just be providing a service that is giving your company bad profits.
Chad Simkins is vice president of Pleotint and vice president of sales for Thompson IG. He can be reached at csimkins [at] pleotint.com.
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