Issue link: https://www.e-digitaleditions.com/i/799779
March/April 2017 37 Of course, your customers will have to agree to a slight delay. But here's the leverage point: You can keep enough local stock of slow-moving products for customers who really are buying a full product line, if you have a profi t map that enables you to identify them. The customers that are cherry-picking can wait a little, or pay an expediting fee, or broaden their purchases to move into your favored-customer category. This is the power of profi t mapping in action. Traffi c Drivers The third profi t pitfall, traffi c drivers, is very common. Here's the apparent logic. Your product strategy centers on attracting customers with a "loss leader," a product or category that is priced low in order to develop further high-margin sales. Think about consumer electron- ics. The new DVDs and CDs that hit the shelves on a certain day, and the consum- er interest and attractive pricing gener- ate a lot of business. The retailer may be losing money on this category but the logic is that the company will make it up in other high-margin purchases. Almost every supplier has business that looks like this. Notice the similarity to the product-line logic analyzed in the prior section? Essentially, the company is making an investment in pricing a traffi c driver below full cost in order to gen- erate high-margin sales elsewhere. But how many companies actually track this in order to determine the real return on investment? In practice, very few. As in the case of product-line profi tabil- ity, a profi t map will quickly show which customers, over time, produce a thresh- old return on investment on the traffi c drivers they consume. Armed with this knowledge, a company can build a smart set of incentives and linkages to move customers to a desired buyer behavior, as well as develop appropriate measures to minimize losses when a customer is simply cherry-picking the traffi c driver. Profi t Logic What these three common profi t pit- falls have in common is that each seems so logical. After all, why shouldn't you take business that helps pay for the over- head? Why shouldn't you carry some losing products in order to make money on the whole line? Why shouldn't you offer some loss leaders, or traffi c drivers, to draw in customers who will buy high- margin products? The truth is that each of these profi t pitfalls has a reasonable-sounding logic. But what distinguishes profi table compa- nies from others is their due diligence in determining where the logic produces sound results. In most companies, how- ever, the policy that follows from the logic is applied indiscriminately, rather than targeted specifi cally at customers and situations where it makes sense— and not where it doesn't fi t. The power of profi t mapping is that it allows you to draw a line in the sand and make this precise distinction. In this way, profi t mapping enables you to build your Islands of Profi t, while at the same time draining your Sea of Red Ink. ECO 3 ICE THE ANSWER IS CLEAR ICE MACHINE CONTAMINATION? On the path between ice machine and consumer, there is ample opportunity for bacteria to foul what should be clean ice. Bacteria, mold and yeast are silent perpetrators of odors, "off tastes" and potential illness. They can lurk and grow in the ice machine for weeks or months between proper cleanings. EcO 3 Ice Antimicrobial Ice Protection from Franke uses a small, safe amount of pure ozone to kill bacteria in the water and ice-making path—all the way to bins and dispensers-- leaving behind only oxygen and pure, clean ice. EcO 3 Ice mounts directly to the ice machine's water supply line without special tools. Cleans silently and automatically and extends cleaning intervals, saving time and money. And the benefits to consumers are perfectly clear. For more info visit: frankeamericas.com/clear or call 877.379.3769. Wonderful means fruits and vegetables that stay fresh up to twice as long, and keep their smells to themselves. The Franke Air Purification System fits instantly in any walk-in refrigerator, plugs into a standard outlet and safely eliminates the airborne ethylene and microbes that cause odors and hasten spoilage. All of which, as you can see, make your walk-in refrigerator a very happy place to be. Cut down on deliveries and reduce food waste, all while improving food quality. Discover how: frankeamericas.com/freshx2 WONDERFULLY FRESH AND ODOR-FREE MAKE IT WONDERFUL