performance institute profit maximization strategy
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TRANSCRIPT
TRY MULLERMBA CAPTSTONE
April 8, 2023
Strategies for Profit Maximization and Improved Performance
Try L. MullerCapstone
Performance Institute
04/08/20232
Objective & Content
Objective: The purpose of this project report is to identify strategies for maximizing profits and formulate an action plan for executing them
Content:
A. Problem Statement & Storyboard Questions, Statements, Data Frames
B. Conclusion I & Findings Supporting Data
C. Conclusion II & Findings Supporting Data
D. Solution & Deductive ArgumentE. Project Scope & Action Plan
Project scope, Work Break Down, Work Plan , Force Field Analysis, Best Practices
04/08/20233
A. Problem Statement & Storyboard
04/08/20234
Problem Statement & Storyboard
Problem Statement: The Performance Institute (PI) has been suffering financially over the past four years. The inability to drive revenues and minimize costs has resulted in diminished financial performance an d has the organization on the brink of bankruptcy.
Hypothesis and Supporting Questions
An overextended program offering has diluted conference attendance and resulted in the company's inability to manage costs and maximize profits
How have revenues changed over the past 12 quarters?
How has conference attendance changed over the past 12 quarters?
What is the increase in program offerings over the past 4 years?
What percentages of quarterly revenues have been allocated to conference costs over the last 12 quarters?
How does our pricing compare with competition in similar program centers?
04/08/20235
Problem Statement & Storyboard
Hypothesis and Supporting Statements
An overextended program offering has diluted conference attendance and resulted in the company's inability to manage costs and maximize profits
We have experienced a heavy decline in revenues over 8 quarters.
Conference attendance has decreased at an increasing rate for 12 quarters.
We have significantly increased our product offering over the past 4 years.
Profits have declined and costs have simultaneously increased over 12 quarters.
We overprice our competitors by at least $150 for similar program centers.
04/08/20236
FRAME IStatement I: We have experienced a heavy decline in revenues over 8 quartersStatement Support: Revenues have declined 35%
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 $-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Reve
nue (
000’s
)
Data Source: Company financial records Approach: Quarterly revenue analysis Skills: Calculating percentages Accuracy: CRM database verified
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Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q120
10
20
30
40
50
60
70
Data Source: CRM database attendance records Approach: Quarterly attendance review Skills: Calculating percentages Accuracy: CRM database verified
FRAME IIStatement II: Conference attendance has decreased at an increasing rate over 12 quartersStatement Support: Avg. attendance per conference has declined by 42%
04/08/20238
2007 2008 2009 20100
20
40
60
80
100
120
140
160
180
200
Data Source: Historical Records Approach: Counting increase in programs Skills: Calculating differences Accuracy: Difference between 2010 – 2007
FRAME IIIStatement III: We have significantly increased our product offering over the past 4 yearsStatement Support: We have nearly doubled our program offering since 2007
04/08/20239
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Reve
nue (
000’s
)FRAME IVStatement IV: We gave experienced a heavy decline in revenues over 8 quartersStatement Support: Profit margins have decreased between 25 -28%
Data Source: Company Financial Records Approach: Profitability analysis Skills: Cost structure Accuracy: Team calculation
04/08/202310
F P C S L G N$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
PI AvgComp. Avg.
FRAME VStatement V: On avg. competitor prices beat ours by at least $150Statement Support: Competitor prices beat ours by an average of about $175 for similar program centers
Data Source: Company Financial Records Approach: Competitive Intelligence Skills: Research Accuracy: Top 3 geographic competitors
04/08/202311
B. Conclusion I & Findings
04/08/202312
Conclusion I
Attendance and revenue will improve with a consolidated product offering and margins will improve with better cost management.
FINDINGS
Revenue has an indirectly proportional relationship with the product offering.
Attendance also has an indirectly proportional relationship with the product offering.
Minimizing venue and travel costs will play a large role in maximizing profits.
04/08/202313
FINDINGS: TrendsRevenue and conference attendance have an indirectly proportional relationship with the increased 12 quarter product offering
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 $-
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
$1,600.0
$1,800.0
Revenue Attendance Product Offering
Data Source: Company Financial Records Approach: Trend identification Skills: Trend Analysis Accuracy: CRM database
04/08/202314
FINDINGS: Heavy venue and travel costs We will achieve greater profit margins if venue and travel costs are managed better(Cost in 000’s)
(2010) Q1 Q2 Q3 Q4$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
ProfitMeal CostsHotel CostsTravel CostsVenue Costs
Data Source: Company Financial Records Approach: Cost structure Skills: Cost analysis Accuracy: Team calculation
04/08/202315
C. Conclusion II & Findings
04/08/202316
Conclusion II
Sales & Marketing will drive attendance with more competitive pricing, cold calling, and market visibility.
FINDINGS
Lack of brand awareness and pricing are leading reasons for potential customers not to attend a conference. This also implies that we should enter the market as a price competitor.
Cold calling should be leverage more effectively to generate sales/revenue.
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FINDINGS: Uncompetitive pricing and lack of brand awarenessCustomers are reluctant to attend our conferences due to a better pricing alternative and the lack of familiarity with our brand
33%
25%
15%
9%
18%
Pricing Brand Awarness No Budget Program Accuracy
Data Source: Survey data Approach: Market survey Skills: Survey analysis Accuracy: Random sample (n > = 150)
04/08/202318
FINDINGS: Cold calling closes a higher rate of sales An impressive 25% of cold calls are converted to sales
Conversion rate for marketing virals
Conversion rate for cold calls0%
5%
10%
15%
20%
25%
30%
13%
25%
Sales avg. conversion rates since 2008
Data Source: Sales & Marketing Approach: Interview Skills: Information gathering Accuracy: Review with sales & marketing
04/08/202319
D. Solution & Deductive Argument
04/08/202320
Solution
Eliminate unprofitable programs and devise a cost management strategy that accounts for key cost drivers. Subsequently, price more competitively and make cold calling responsible for 50% of the sales process.
Deductive Argument
We cannot compete if we commoditize our own product— it devalues our offering
The overextended product offering exceeds our cost capacity, diminishes profits and results in poor financial performance
This inhibits sales’ ability to price competitively for fear of losing profits even though customers want a lower price
We will achieve greater profits and become more competitive with a leaner product and cost structure, as well as better brand awareness.
04/08/202321
E. Project Scope & Action Plan
04/08/202322
Project Scope
OBJECTIVE
Improve profits by 5% over the next 6 quarters
OBJECTIVE
Improve profits by 5% over the next 6 quarters
Business PlanningBusiness Planning Sales & MarketingSales & Marketing Cost ManagementCost Management
Market/ Competitive Intelligence
Market/ Competitive Intelligence
Product Offering/ Planning
Product Offering/ Planning
Sales & Marketing Strategy
Sales & Marketing Strategy
Program Pricing
Program Pricing
Location/ Venue
Location/ Venue
Travel costs
Travel costs
Conference attendanceConference attendance
04/08/202323
Work Break Down
OBJECTIVE
Improve profits by 5% over the next six quarters
OBJECTIVE
Improve profits by 5% over the next six quarters
Analyze current cost structure
Analyze current cost structure
Redefine sales & marketing
approaches
Redefine sales & marketing
approaches
Strategic Planning Strategic Planning Strategy Implementation and execution
Strategy Implementation and execution
Identify key cost drivers Identify key cost drivers
Identify unprofitable
programs
Identify unprofitable
programs
Identify areas where we can
cut back spending
Identify areas where we can
cut back spending
Group collaboration
Group collaboration
Price point analysis
Price point analysis
Create sales process for more cold
calling
Create sales process for more cold
calling
Develop layout and content for
PI newsletter
Develop layout and content for
PI newsletter
Decide which
programs to consolidate
Decide which
programs to consolidate
Define cost management
strategy
Define cost management
strategy
Refine sales approach
Refine sales approach
Refine newsletter
content
Refine newsletter
content
Project Participant/
task delegation
Project Participant/
task delegation
Draft timeline and execution
plan
Draft timeline and execution
plan
Brief executive
team
Brief executive
team
Identify measures and monitor with
BSC
Identify measures and monitor with
BSC
04/08/202324
Work Plan
Work Element Dependencies Issues End Products Responsibility Timing
Overall market Analysis
Understand demand drivers
Market orientation Report on demand drivers and inhibitors
VP of Marketing - Christopher Support - TJ
3 weeks
Customer analysis Customer Preferences
Understand who the customer is and
what they want
Survey and report of how to better retain customers
Director of Education – Maria Support - Janice
3 weeks
Cost analysis Cost-mitigation opportunities
Identifying cost capacity
Report of key cost drivers and cost
alternatives
Director of Event Operations – Brynn
Support – Laura
2 weeks
Review of sales list Maximize sales opportunities
Old lists, contact information
integrity
Identify how much money we will have to invest in new lists
Director of Sales – Peter
Support – Paul
2 weeks
Analyze and eliminate
unprofitable programs
Product vitality Wasted resources on unprofitable
activities
Report on unprofitable
programs
Sr. Program Director- ME
No support
1 week
Revised product schedule
Product vitality Cannibalizing revenues
Draft of revised product schedule
Sr. Program Director- ME
Support – Melvin
2 weeks
04/08/202325
Measures and Owners
Measure KPI Owner
Conversion rate of marketing viral messages (ensure the right message is
being communicated)
17% Marketing
Customer retention for marquee events (Gov’t Performance Summit,
Performance Conference, Budgeting & Forecasting, City & County
Performance)
5% Sales
Increase in conference attendance 10% Sales & Marketing
Decrease in costs as a percentage of revenue
5% Director of Event Operations, Production Team
Customer satisfaction 4.2 out of 5 Director of Education Services, Production Team
Average program profitability
15% EVERYONE
04/08/202326
Force Field Analysis
Solution
Eliminate unprofitable programs and devise a cost management strategy that accounts for key cost drivers. Subsequently, price more competitively and make cold calling responsible for 50% of the sales process.
Worst Scenario Best ScenarioEconomy inhibits companies from spending on L&D
programs
We can’t find affordable training centers to supplant hotel conference room rentals
Demand for programs may be inelastic— we lose more money trying to be a price competitor
Our sales lists may not extensive enough to generate greater return on cold calls
We may not have the capacity (financial, human) to create the brand awareness we would like
We have relationships with big name speaker who can be catalysts to grass roots marketing
We own a well-designed conference center that will help us avoid the cost of taking programs on the road
Sales & Marketing teams possess a great level of market intelligence with over 30 years of experience
Economy is improving and business are generating profits— they may be inclined to be more liberal with their spending— sell to profitable businesses first
Marquee events still run extremely well so we can spread events out as not to cannibalize revenues