Most marketing plans are built around one question: how do we get more? More leads, more deals, more revenue. It’s the number everyone celebrates in the weekly meeting, and it’s usually the only one on the slide.
On a recent episode of the Next Build Podcast, fractional CFO Jeffrey Glick made a case every marketer and business owner should hear. If you want to know how to increase profit margins, revenue is the wrong place to start looking. It matters, but it can’t tell you whether your growth is worth having.
“It’s not always the top line, it’s the bottom line. Driving revenue is critical, but if you’re not making any money on it, it’s not that important.”
Jeffrey has sat in the C-suite since 1991 and has worked as a fractional CFO since 2011. He became CFO of a quarter billion dollar company at 30, and he’s spent the years since watching plenty of busy companies fail to grow. Here’s what he sees, and what it means for how you market and sell.
The 50% Margin That Wasn’t
Jeffrey told us about a window manufacturer doing two to three million dollars a year in sales. Good, solid business. The owner had studied marketing and earned an MBA, and she told him the company’s margin was about 50%. That’s what the bookkeeper reported, from an accounting system nobody had changed since her father ran the place.
So Jeffrey asked a different question. What’s your margin per engagement?
The company handled 50-odd contracts a year. A 50% average could mean every job lands near 50%. It could also mean some jobs earn 75% while others scrape by at 25%. Those are two very different businesses, and the blended number hides which one you’re running.
“You need to know why you have 25% margins dragging down the 75% margins.”
Finding out meant tracking labor, tracking materials and allocating overhead to each job. That sounds like an accounting project. Here’s the thing, though: the answers it produces are marketing and sales answers, and they’re where any real plan to increase profit margins begins.
How to Increase Profit Margins Starts With Margin per Customer
Most advice on how to increase profit margins jumps straight to raising prices or cutting costs. Both can work. Neither tells you where the money is leaking. Once you can see margin per customer or per project, patterns show up fast, and Jeffrey pointed to two common ones.
- Your incentives reward the wrong deals. Maybe all the 25% jobs were sold by the same person, and that person is paid on volume, not margin. They’re doing exactly what the compensation plan tells them to do. The plan is the problem.
- Delivery is leaking value. Maybe the salesperson did a great job, but the manager running the contract needs help. That person might know the industry inside out and still lose money on every job they lead.
Neither problem shows up in a top-line revenue report. Both are fixable once you can see them.
Track the Hours, or the Margin Math Is a Guess
Labor is usually the biggest number in that per-job calculation, and it’s the one most small businesses estimate. Materials come with invoices. Hours come from memory, a timesheet filled in on Friday afternoon, or nowhere at all.
This is where a time tracker earns its keep. Zaptime tracks how you spend your working time, points out your biggest time sink each week and works out your effective hourly rate. Run it for a few weeks and you’ll know whether the hours you quoted match the hours you worked. For service businesses, that gap is one of the quickest ways to increase profit margins, because you can’t fix an underpriced job you can’t see.
What This Means for Your Marketing
If your campaigns are judged on lead count and closed revenue alone, you can scale the wrong business very efficiently. A few practical shifts follow from Jeffrey’s point. Together they’re the most direct answer we know to how to increase profit margins without simply working more hours.
- Report margin by channel and campaign, not just revenue. If paid search brings a flood of small, low-margin jobs while referrals bring fewer, richer ones, your budget should know that.
- Define your ideal customer by profitability. The customers who look biggest aren’t always the ones who make you the most money. Build your targeting, messaging and offers around the jobs that land at 75%, not the ones at 25%.
- Align sales compensation with margin. Pay reps on volume and you’ll get volume. Paying on margin, or at least including it, changes which deals get chased.
- Close the loop with delivery. A great campaign that sells work your team delivers poorly won’t show up as growth. Share job-level margin data with whoever runs fulfillment.
Jeffrey gave an everyday version of this. Is it worth flying a New York salesperson to California every month to see customers? Maybe. If that rep is killing it and their margin is great, “you bet it’s worth them going.” If their margin is no better than anyone else’s, it isn’t. You only know which one you’ve got if the process to measure it is already in place.
Working Hard Isn’t the Same as Growing
Mason asked Jeffrey why so many companies work hard without actually growing. His answer was blunt: most owners aren’t professional managers. They might be brilliant at creative work, marketing plans or selling, but they’re missing other skills a well-rounded business needs. Without the right reporting, they get surprised.
“Instead of nipping something in the bud, it festers for months, and then they have an emergency to deal with.”
Decisions made under that kind of pressure are rarely the smart ones. Jeffrey’s fix is reporting that’s timely, accurate and consistent, backed by policies, procedures and internal controls. He admits it’s “the boring stuff.” It’s also what lets you spot a bad channel or an underpriced offer in weeks, not 60 to 90 days too late. You can’t increase profit margins on a problem you find a quarter after it started.
It’s an Investment, Not an Expense
Setting up job-level tracking takes time and some money. Jeffrey’s view is that owners need to stop treating it as overhead.
“It’s not an expense, it’s an investment, so you can run your business better.”
For a marketing team, that investment pays back quickly. When you know which customers, campaigns and offers produce real margin, you stop buying growth that costs more than it earns. And if you ever plan to sell, it counts twice. Jeffrey pointed out that buyers usually value a company on free cash flow, so if you want to increase your profit margins before an exit, the time to start measuring them is years ahead, not the quarter you list.
The Short Version on How to Increase Profit Margins
Stop judging growth by revenue alone. Measure margin per customer, per job and per channel, pay your team for profitable work, and track the hours that go into each engagement. That’s how to increase profit margins without just chasing more volume.
Jeffrey and Mason also cover how the CFO role has changed, what AI is really worth to a business, and how owners can get their companies ready to sell. And if you want a marketing plan built around profitable growth rather than lead counts, talk to our team.
“You have value in your company. You just haven’t found it yet.”Jeffrey Glick