A customer calls to ask you to participate in a competitive bid in order to retain their business. This is a frustrating situation. You’ve been serving this customer, successfully, you thought. But now they are asking you to “sharpen your pencil”, “provide them with any new ideas you have”, “share with them your methods and approaches”, and “explain your cost and profit structure.”
If you think of your business like a car with an internal combustion engine, you need to be operating at an Air to Fuel Ratio (AFR) of 5:1 where air is sales and fuel is profit. An AFR of 5:1 is equivalent to 20% profit. I can already hear some of you saying “in my industry that’s not possible, on average we run on 5% margins (or some other low number).
Here’s an acid test for whether a business is getting stronger or weaker. Take earnings before interest, taxes, depreciation, and amortization EBITDA and divide it by revenue
I think this post by Seth Godin is a great take on an important issue to customer satisfaction. As we scale, how do we treat our customers and clients? The default is not good.
Let's play Jeopardy! I'll take things that are cool for 600 points Alex!
This is the city on the North American continent with the most IP addresses.
What is Columbus, Alex?