Tweet

Improve throughput, cut your customers in half!

Written by: Joe Dager

Article Overview: 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.

Improve throughput, 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 how 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.

Related Articles
  Identify your Marketing Constraint
  A Little more on applying Little's Law to Lean your Marketing!
  Elevating and Repairing Marketing Constraints
  Improve your Marketing Cycle, Increase your Revenue
  The Cost of Lost Sales

Article Tags: tactic, theory of constraints, throughput, toc



Related Forum Posts
Re: Don’t worry, Enrich your life and Be happy - Hi Christopher, Welcome to the forum. I used to be a pessimist like you, one day I was in a lecture and came out with this: The glass is not half full and half empty, the glass is completely full, half water (or wine - your choice) and half air. Air is not nothing, it is everything. Since then it was easier for me to push the bad thoughts away, and my husband helped too. BTW, it was a chemistry lecture. Good luck
Re: If you had a million dollars... - Yes...these days a million dollars sounds like a lot, but actually doesn't go very far. But it would be a lot nicer to have it than to not have it! I'd probably put half of it into savings of various types - buy some safe stocks, maybe some gold, and lots of cash for a rainy day.... probably would invest in a scooter out of this half as well! With the other half I'd fulfill my dream of travelling around the US in a motor home (purchased used, of course!) and writing travel books and blogs on everything I see...that's be my idea of paradise...
Re: What would you do with $500,000 or less? - Since all my business are online, I will use half of the money to buy more websites and use the other half to buy traffic. In few months I will have more than a million dollars. When I reached the mark, i will then take half of the million to on a spending spree and put the rest back to my business and of course buy more websites and traffic
Re: The Best Method for Online Marketing - I found success with email marketing and combining it with social networking and social media tools. Alternatively, when I collected business reviews from my customers and posted them to my website, I again saw a surge of traffic. Getting active for at least half an hour everyday for blogging and forum posting, pays well too.
Re: How do you earn trust with an online business? - [quote="Kevin Lee":2wddn7w1]Hi Ros, When dealing with customers directly, sure honesty is the best policy. However, do you think you should actually make it a point to list the cons on your online business? Or will that deter too many customers/leads? For example, to earn trust, would it be better to post images of a paycheck for "$20" or "$50" for newbies? I mean most online marketing businesses will try to lure in conversions by posting pictures of successful people's monthly paychecks ("$10,000" earned in a month) and then have a tiny print stating "individual results will vary". To me, that's not really being "honest" and that's just selling hype.[/quote:2wddn7w1] Whether dealing with customers directly or on the internet, either way honesty is the best policy and if you are only telling half the story e.g. the up side of the business and then after joining the customer discovers the downside, not only have you lost them but you have hurt your reputation as well. If after hearing both sides they decide not to join, at least you still have your reputation intact. In fact you have probably strengthened it as you are proving your honesty and integrity. MichelleJ


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How To Improve Your CTA (Call To Action)

How do you keep it together on a daily basis?

Stay Employed In A Down Economy

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.