The lost art of Revenue before Cost

One of the interesting aspects of touching on many industries and meeting many people, is getting to meet great business leaders.  Many of the best leaders come from organizations that do not position themselves as a "cost effective" or "competitive" in "me too" product offerings.

Many of them come from companies who focus on revenue before costs.  This does not mean that that all these operators are coming from premium or luxury backgrounds.  Most of them are companies who appreciate service and product quality.  The good companies achieve this focus by driving that message through all levels of the organization.  These companies are usually ones that compensate their employees above the industry average and they are usually companies that score well on employee satisfaction surveys.

Why do people people buy from an organization that might be more expensive than their competition?  There are too many factors to mention that contribute to this but it is important to state that customers like to have a first class experience and they like working with people who are happy and enjoy their jobs.  It is a bit like the law of attraction as people like to be around professional and positive people and if paying a little more means less concerns in other areas and a better experience in their lives, so be it.

Some have said that the profitability formula is to drive up the return on assets through higher relative revenue rather than by lower relative cost or lower relative assets.  The exceptional companies drive revenue through higher prices, which they are able to maintain despite competitive environments, or greater volume.

There is some food for thought for you on this snowy Wednesday in February.

Farewell,

Mike