Commerical Fire Alarms
Fire Alarm Company Hits the Wall
A regional fire alarm installer had profitably grown for five years. But now they were hitting a plateau. Sales were growing by less than 5%. Profits had plateaued as well. There was nothing wrong with the business model other than it would not allow the company to grow. They had good market penetration and market share. Their customer retention was good. This left the CEO with the following options:
- Be content and harvest the profits
- Geographic expansion
- Try harder and harder for market share in the existing geography
- Expand service offerings
- Option E?
Like most CEOs, being content was not an option. Geographic expansion was not possible as distributorships were not available. This would mean the CEO would have to buy an existing business. Analysis showed this to be too expensive for the rewards. Exerting more effort to steal market share in the current market was unprofitable. Expanding the service offerings was a viable option but was deemed to be too risky.
The CEO chose Option E- significantly changing his role in the sales process and re-engineering it with the aid of SalesMapping. I will spare you the details, but the end-result cut the sales budget by $250,000 while sales stayed constant. Once the CEO added this savings to the bottom line, he was content to harvest the profits for a while.