Increase Profits? Cut Costs, Not Sizes

Last week, for the first time in years, I bought a Magnum. As I opened the foil pack my suspicions were realised, ‘MAGNUM’ had become ‘minimum’; it had shrunk. Admittedly, Magnum were huge, too big, but hey, we all managed. In January 2016 The Guardian informed us that Unilever would be reducing the size of Magnums (among others) by 33%, whilst only reducing costs by 26%, cunning! What’s even more cunning is, Unilever dressed this profit-making move up as one driven by concern for our health. ‘Yeah right!’ Meanwhile, don’t get me started on Wagon Wheels, they morphed into wheelbarrow wheels overnight.

Magnum Small Business Support My Words Work For You

Will Cutting Sizes Increase Profits?

Magnum Small Business Support My Words Work For You

Or Decrease Sales?

Not to scale, but you get the idea!

 

 

 

 

 

 

 

In a similar move, a well known supermarket beginning with ‘T’ and ending in ‘esco’ used to sell packs of 10 salmon fillets, I used to buy them. I barely noticed one day that the contents changed to eight fillets, why didn’t I notice? Well I don’t think the price changed. Was that also a move that was good for our health?

Ways to Increase Profits

I understand the need to increase profits; rising rents (I am writing from Cambridge), increased overheads, supply costs going up, greater competition, reduced custom. There are many ways to increase profits that are fair to your customers:

  • Reduce costs, there are always ways to trim your outgoings
  • Offer complementary services or products to increase sales
  • Improve efficiency, at every opportunity
  • Incentivise your staff to be more productive

Or of course, cheat your customers out of a proportion of a product/service they are paying for… Hmm, let’s talk about that one shall we?

Customer Loyalty

How did I feel as I looked down at my Magnum? Was it…

  1. Thankful to Unilever for saving me from myself? (I had just cycled 18 miles so I think I earned it)
  2. Cheated and a tad ‘miffed?

Yes, No 2 is how I felt.

These underhand tactics do nothing to increase customer loyalty, they cause ill feeling and previously loyal customers will look for their exit at the first opportunity. The truth is, I continued to shop at the well known supermarket, I have little choice; but I, like much of my fellow ‘captive market’ work hard to avoid it when I can. I have never bought the salmon since; the well-known supermarket’s canny move to increase profits drove this customer to order fish deliveries from a less well-known fish supplier.

Playing the Long Game

The aim of the game for most small businesses is to survive long term. Obviously there are key factors that need to be in place:

  • Selling a product or service that people want to buy
  • Reaching your target market
  • Running the business with intelligence and acumen
  • The ability to respond and adapt to change

More than that, to survive and thrive for the long game, you need your customers to feel loyalty towards you, to trust you and to believe in you, see my article. I can tell you from experience, that ain’t gonna happen if you cut down the size of their ice-creams!

 

About Nicola Dunklin

Experienced and proficient content writer with a proven track record of success.
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