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Guest post by: Leanne Hoagland-Smith Become an Author

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Did you ever think some business profits could be bad? Profit is supposed to be a good thing. However, during down economic times or when businesses choose not to innovate, the proliferation of bad profits is everywhere.

Bad profits are another one of those 800# gorillas many seem to ignore. From my perspective, bad business profits exist for 3 basic reasons

• Organizations are lazy and do not want to work to increase sales
• Organizations do not want to add value to their products or services
• Organizations do it because they can

Fees are one of the best examples of bad profits. From banks to governments to credit card companies to schools, fees do not add value, but exist just because the organization can. When businesses or organizations cannot honestly increase sales, they impose a fee to justify their existence while penalizing you as the customer.

Taxes are another example of bad profits. Recently I read where New York City is going to tax the downloading of “I-Tunes.” Instead of reducing costs and trimming the excess waste that exists in 99% of all governmental agencies, new taxes are added to confiscate money from those who actually make money.

Other examples of bad profits abound such as expiration dates on gift cards. Some utilities gain bad profits through demand charges that they impose on their larger business and commercial customers. In many cases, customers are clueless about these fees because they are hidden away in fine print or have become a standard practice that has never been challenged.

Another reason that this is not a good strategy to increase sales is because it demotivates your sales team. How can your sales professionals build authentic relationships when you are, in all honesty, penalizing your customers and acting like you are not?

Since the purpose of business is attracting and maintaining loyal customers as this is how organizations increase sales, bad business profits negate that purpose. Would it not make more sense to trim the fat and become a high performance organization where human capital talent management works in harmony with an environment of continuous improvement?

How to reverse this dangerous trend begins within the Values Statement of the organization. When the executive management team truly lives their core values such as honesty, integrity or responsibility, they will begin to eliminate these bad profits. Building customer loyalty and therefore increasing sales will no longer be a slogan, but daily actions that truly demonstrate how this organization wants to earn their customers’ repeat business.

Of course, organizations could continue to impose new fees and taxes without regards to the customers. However, by taking such actions, those organizations are setting themselves up for their own Boston Tea Party.

Take Action Sales Coaching Tip: Review your policies and pricing structure. Are you creating any bad business profits in your quest to increase sales? What actions can you take to authentically build good profits from good sales while improving customer loyalty?

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