A bucket, a plastic container and the coronavirus
Some time ago I had a B2B client who was eager to grow his business (there’s nothing surprisingly about this). After many discussions, we created a framework around a bathtub. The client had around 500 customers although, following the Pareto rule, only 100 or so accounted for the bulk of the business. These 500 customers we considered to be water in a bathtub and they generated revenues of around $30 million per annum. There were inevitable losses from the bathtub because some customers no longer had a requirement for the product or they found another supplier they considered to be more suitable.
These losses were compensated for by new customers who came from a variety of sources. Some came from word-of-mouth, some from online searching and others from advertising campaigns. Customers were serviced from a small telephone service centre with just two people. There was very little face-to-face contact with customers. The whole of the marketing budget, including website support and marketing promotions was around $100,000 per annum. This was a tightly run ship.
The framework we created caused us to question how we could increase the depth of water in the bathtub - how could we get more business? One option was to increase promotional campaigns and increase the marketing budget. However, we didn’t think that doubling or trebling the promotional spend would make the tap run much faster. The company operated within a niche which contained relatively few potential buyers. We decided that the best way of increasing the level of water in the bathtub was seeing if we could win more from existing customers’ wallets. It meant taking on an extra customer service representative whose job was to get deeper into the water with the customers. It worked; the number of customers increased slightly but the size of each customer grew substantially. Over a period of 12 months, revenues rose by 25% and profits by 40%.
I was reminded of this framework of the bathtub just the other day. I saw on YouTube a short video made by a podiatrist. This person is no expert epidemiologist but he decided to have a go at explaining how we need to manage the resources of our health services with the flow of coronavirus patients needing treatment. What impressed me was how he captures our imagination and wins our attention on the steps of his patio with only a garden bucket and a plastic container. His framework had impact and cost nothing. Watch it on YouTube, it is really good. Did someone say "Eureka":