Mystery Of the Missing Profits – Part 6
Written by
Rajesh Jain
Rajesh Jain
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Mystery Of the Missing Profits – Part 6

Published : December 28, 2023 | Updated : May 23, 2024

In the fifth part of this series, I discussed why brands should pivot from a growth-at-all-costs approach to one focusing on profits and the results of such an approach. In this concluding part, I will discuss how businesses achieve profitable growth and build a Profipoly.

Getting started

How can businesses achieve growth? If businesses are already profitable, how can they boost margins to gain an edge over their competition? Here, we look at a multi-stage 90-day roadmap to implement the ideas we have discussed.

Launchpad (7 days)

  • Strategy foundry: A two-hour intensive workshop that aligns key departments like Marketing, Digital, IT, and business owners on their vision, mission, and key objectives.
  • Identify ‘the crux’: Choose pivotal business problems that must be addressed and are feasible to solve within the given timeframe.

Quick Actions (15 days)

  • Engaging footers: Ensure each email is interactive and uses AMP. These ‘AMPlets’ can gather Zero-Party Data, solicit NPS ratings, and encourage referrals.
  • Microns (Ems): Improve the open rates of emails by adopting the ’15 seconds daily’ top-of-mind branding strategy. Serve users valuable microcontent that strengthens brand recall and offers wisdom and actionable insights.

Early wins (30 days)

  • Every visitor Anon-to-Known: Gather identifiable information at every customer interaction point. Collect email IDs and link them with mobile numbers to ensure a secondary continuous engagement channel.
  • Email Shops: Explore Inbox Commerce and develop necessary APIs to enable smooth transactions within email apps, reducing friction in the purchase journey.
  • Reactivation: Partner with a Progency and re-engage inactive customers. This is more cost-effective than targeting and acquiring new ones and substantially reduces AdWaste.

Big impact (90 days and beyond)

  • Velvet rope marketing: Use CLV to segment customers and give Best customers an unparalleled experience by creating a separate Strategic Business Unit (SBU).
  • Large Customer Model and Digital Twins: Implement an ‘active CDP’ (Customer Data Platform) that leverages AI-ML to enhance personalization strategies, making predictions more accurate.
  • Consumer intelligence: Invest in tools and strategies offering in-depth insights into consumer behavior. These insights can guide marketing strategies, product launches, and customer engagement tactics.
  • Beyond: Visualize an interconnected future. Work towards a Unistack (integrated Martech 2.0 stack) and Unichannel (seamless customer engagement across push channels) strategy. This ensures holistic customer experiences and streamlined backend operations.

North Star metric

  • Drive Earned Growth: Regularly measure and optimize for Earned Growth as a testament to the effectiveness of strategies for customer retention, cross-sell and upsell, and referrals.

The path to sustained profitability

In an ever-evolving digital landscape, the path to sustained profitability requires strategic foresight, swift actions, and unwavering dedication. The roadmap I have shared is more than just a sequence of steps; it is a blueprint for businesses to thrive, excel in their digital endeavors, and solve the ‘Mystery of the Missing Profits.’

By focusing on existing customers, leveraging innovative ideas, and changing CXO thinking, organizations can achieve an era of unmatched growth, enduring profitability, and dominant market leadership. But how can this translate into creating a Profipoly?

Building a Profipoly

Here is an excerpt from one of my writings on ‘eFolly to Profipoly: The art and science of eCommerce profits.’

“The journey from eFolly to Profipoly is about changing mindsets and harnessing the potential of innovations. It requires a significant realignment of the core business philosophy and moving from relentless acquisition to a more equitable model. It is also about understanding that real growth and profitability result from transforming each customer into a lifelong advocate rather than relentlessly acquiring new customers.

Adopting this view results in a sustainable, profitable future rather than forcing a change. This shift from strategy to a way of life calls for CEOs and CMOs-turned-CPOs (Chief Profitability Officers) to think entrepreneurially and champion this transition. In this metamorphosis lies the essence of real business growth and ‘built-to-last’ endurance.”

As I had written in ‘ProfitXL to Profipoly.’

“A Profipoly gives a brand a significant advantage by monopolizing profitability and reducing the competitors’ chances of survival.” A Profipoly is more than just dominating a market segment. It’s about mastering sustained profitability in a highly competitive digital landscape. A monopoly focuses on market share. However, a Profipoly emphasizes creating unparalleled value for the business and its customers. This ensures consistent, amplified profit margins.

A Profipoly goes beyond revenue, optimizing operations, nurturing customer loyalty, and fostering innovation. This allows businesses to enjoy a unique, almost monopolistic advantage when it comes to profitability. It champions value in a world that chases volume and is the ultimate endgame and best moat in a business, guaranteeing exponential, forever profitable growth.

So far, we have discussed various ideas about profitability and growth. Here are four more ideas for businesses that want to embark on their journey to a Profipoly.

Jim Collins’ Map

Jim Collins created ‘The Map’ in ‘Beyond Entrepreneurship 2.0’, encapsulating the best ideas across his books. The Map offers a masterclass in building an enduring, great business.

Inputs
Outputs
Stage 1

Disciplined People

Cultivate
Level 5
Leadership




First Who,
Then What

(Get the right people on the bus)
Stage 2

Disciplined Thought

Embrace the Genius of the AND



Confront the Brutal Facts(Live the Stockdale Paradox)


Clarify a Hedgehog
Stage 3

Disciplined Action

Build momentum by turning The Flywheel


Achieve breakthrough with 20 Mile March discipline


Renew and extend via Fire Bullets, then
Stage 4

Building To Last


Practice Productive Paranoia (Avoid the 5 Stages of Decline)

Do more Clock Building, less time telling




Preserve the Core/Stimulate Progress





Superior Results





Distinctive Impact





Lasting Endurance
Concept
Cannonballs
(Achieve the next BHAG)
Amplified by the 10X Multiplier
Get a high Return on Luck

3B

This is similar to McKinsey’s Three Horizons framework, which I have written about in an article on ‘My Proficon Way.’ The 3Bs are BAU (Business As Usual) Better, Boosters, and Breakthroughs. It is an intricate balance of small changes and bets on game-changing innovations.

The First B (Better) is about making small, continuous improvements to a business’s daily routine, similar to the Japanese idea of Kaizen. The second B (Boosters) is about creating initiatives that can give a fillip to the business. This is done by small, cross-functional teams with timelines extending beyond the quarter. The third B (Breakthroughs) is about crafting 10X options such as a new product, partnership, or acquisition.

4M

The 4Ms refer to Magical (Product), Money (Machine), Moat, and Monopoly. I had written about them in ‘4M and Netcore 2.0: A framework for Exponential Growth.’

“The starting point must be a product that wows, giving you an experience that is out of this world. Arthur Clarke states, ‘Any sufficiently advanced technology is indistinguishable from magic.’ The product experience must convert into a money machine, generating growing sales. To sustain profits, there must be a moat that prevents competitors from attacking, creating a defensible franchise. Eventually, the product must become a near-monopoly with a high entry barrier. This leads to the creation of exponential growth and an enduring company.”

I want to add a 5th M, Multipliers. Leaders must think about catalysts that can deliver exponential returns for invested efforts.

Centennials Habits

In his book Centennials, Alex Hills discusses 12 habits of great, enduring organizations. The key message is to combine a stable core with disruptive edges. Lasting success comes from maintaining an organization’s core culture while driving change at the edges. Let’s look at the 12 habits discussed in the book.

Stable Core

Purpose

  • Habit 1: Build your North Star
  • Habit 2: Do it for your kids’ kids

Stewardship

  • Habit 3: Have strong roots
  • Habit 4: Mind the gap

Openness

  • Habit 5: Perform in public
  • Habit 6: Give more, get more

Disruptive Edges

Experts

  • Habit 7: Be porous
  • Habit 8: Shake all trees

Nervousness

  • Habit 9: Get better, not bigger
  • Habit 10: X-Ray everything

Accidents

  • Habit 11: Make time for random
  • Habit 12: Break bread

While pivotal, profits can be fleeting in a marketplace comprising established competitors and startups. This highlights the importance of a long-term vision that ensures profits are sustained, protected, and grown. Herein lies the essence of the ‘Profipoly’ mindset, a blueprint for exponential, forever profitable growth with a profits flywheel. 

Modern leaders tasked with present and future responsibilities must solve the mystery of today’s missing profits and lay down the foundations for future profit engines, thus building a Profipoly.

If you haven’t read the previous parts of this series, you can start by reading Part 1 here.

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Written By: Rajesh Jain
Rajesh Jain
Founder and Group MD, Netcore Cloud