Measuring project client profitability
In their efforts to maintain business viability—and keep staff gainfully employed—some project-oriented businesses can be tempted to take on projects with narrow profit margins. They then tend to over-deliver to retain the client’s business in an aggressively competitive marketplace.
It’s a growing problem, which can be regarded as a side effect of the current tough operating climate. This trend is entirely understandable, but it is not a sustainable way of doing business.
We discuss here the value of adopting an evidence-driven approach to understanding which areas of your business and client base are most/least profitable and using this evidence to:
- Make strategic decisions about your future business direction.
- Model what your ideal client looks like.
- Hold meaningful conversations with your clients to build profitable relationships with them.
- Analyse where internal processes are undermining your profitability.
This white paper ‘Getting to grips with Client (Un)Profitability’ (downloadable in PDF form), will refer to the experience of IRIS clients, whom we thank for their assistance. Although we focus on the IRIS systems which these businesses use, a good quality Professional Services Automation (PSA) solution should be able to provide similar functionality to the features outlined.