We've found that the most profitable companies we work with have very clear business rules around the definition of their perfect customer or product sale. Developing these rules is an important element of your company’s strategy and should be based on what your company is best at and the types of customers and sales that are most profitable for the company.
It’s actually not that hard to identify and write down your rules. The hard part is having the discipline to follow them when an opportunity presents itself that does not fit your rules. Do you have the discipline to say no? To not cut your price? To not justify that marginal customer sale?
Many companies lack processes and discipline to follow their rules and just say no to marginal opportunities. What they end up with is a conglomeration of products and customers that don’t meet the economic characteristics that make money for the company. Besides lower profits, there is also a hidden cost. When you spend too much time chasing less attractive opportunities, it detracts from your ability to serve your best customers and pursue your best opportunities.
Has your company established business rules? Do you follow them? Share in the comments.