Improve WIP, Cut Your Customers In Half!

A Theory of Constraints tactic is to cut your Work in process in half, and you will increase throughput. Many people resist this thought, but it is typically easily done in most TOC projects that have been tried. I listen to the TOC consultants and many are adamant about this fact. They will tell you that it is much like picking the low-hanging fruit. It is not only done, but easily done. In the marketing world, you will have just about every marketing person tell you that you need to increase marketing in a recession. It is easily said but if you have less business and less money, where exactly is that money supposed to come from? My opinion is that why not try to decrease your Work in Process or in other words, Customers. Now, in a recession, it may be done for you naturally, but let me tell you iStock_000009560725XSmall.jpghow this may be a good thing.

In a manufacturing system cutting WIP just about always will increase throughput. Why? You end up working only on what is needed and when it is needed. You also will have less waste, less material to handle and fewer mistakes. Good things happen when you are not handling excessive amount of material. In a marketing system cutting the amount of customers in half works very much the same way. You end up working on what a customer truly needs and wants. Your marketing will become more personal, more direct, and fewer mistakes.

People may tell me I am crazy and could be headed for disaster, but I have seen it happen first hand. We decreased a marketing budget in half and increased sales by 20%. Practically any marketing that could not be measured or was not directly targeted to a strong segment of our customer base, we simple stopped doing it. We saved over 60% in advertising cost. We stopped direct mail to the masses and even reduced our e-mail list significantly. The real savings was not in the marketing expenses but in the actual time spent creating and delivering the material. The creativity even increased becuase it was easier to create copy for people that for the lack of a better word, you were intimate with.

However, I think the real secret to the success in this story is that we segmented the list. In fact, we just had another go around with segmenting the list even more. We are equating it very similar to when paralleling a project, a machine, etc, for Rapid Development. The result of better segmentation is that you will increase marketing to the right people with a much better defined need. Your true Ideal Client.

Think about this a moment, your true ideal client, your best client, HOW MUCH SELLING DO YOU DO TO THEM?

Ask yourself that question and most will answer: “Very little.” If you define that through better segmentation, will you not increase throughput or sales? If you get to spend more time with a customer, you will create a better revenue stream for yourself. What we saw happen, was a decrease in traffic, fewer sales, but a substantial increase in the sales per client.

So I guess I have to ask this question: Would you rather market to a 1,000 or to 100? My answer, is that I would rather market to 5 groups of 20! Sit back and really concentrate on your Customer Value Stream and become part of it.

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