1 Simple Question can be Applied to Streamline Your Business

by Jan 30, 2018Budget, Business, Entrepreneur, Growth

As a leader inside an organization, there is a fundamental question you should be constantly using when it comes to making decisions: Will your customer pay for it?

Asking this question is a particularly elegant way of helping you streamline your organization by eliminating anything that may not be adding value to your customers.

Imagine how this works in an area like product development. You might have an innovative engineering department that is constantly churning out super cool and technical features that they find very interesting to work on. But all that work can be worthless if it doesn’t address the key issue if whether your customer is willing to pay any more for those new features. Are they truly adding value?  And more specifically, “Will the customer pay for it?”

That’s why applying constant vigilance to the question of whether a customer will pay for new features always has to be top of mind for both you and your engineers. This is where a sales or product management team that serves as a liaison between your engineers and the customers can be valuable in understanding the customer’s needs and tossing things that don’t have value. Otherwise, you can wind up with bloated feature sets and products that no one finds any value in.

But asking the question of whether your customer will pay for something also goes much deeper into your organization than just products. In fact, asking the question of whether a customer will pay for something applies to just about every process and system inside your business.

Whether it’s processing orders, payments, or shipping products, you should always be asking whether that task or action is adding value in a way that your customer cares about it and is willing to pay for it.

For example, if you keep duplicates of all of your orders both electronically and in paper form, ask whether that’s something your customers care about. If it isn’t, then you’ve uncovered a valuable opportunity to streamline your organization by pruning out an unnecessary task and eliminating the paper.

The same principle even applies to your hiring decisions. For example, we recently worked with a company that employed a customer support team. Each customer service agent (CSA) on the team was charged with serving a certain number of clients.

The manager of that team decided that, with a mission of better supporting their customers, she wanted to double the number of CSAs on her team–which would have meant making a sizable investment in manpower, training, and equipment.

While that noble idea sounded good in principle, it didn’t hold up when the CEO asked the question: Is this something our customers are willing to pay for?

It turned out that the customers already felt like the service was adequate and that a marginal increase in that level of service was not something they were willing to pay more for. That made for an easy decision by the CEO, who let the manager know why they didn’t need to add to the size of his staff.

So, when it comes to thinking about the processes and systems inside your business, don’t get hung up on always doing things the way you always have or doing things because they sound good on paper. Rather, put them to the test by asking them the ultimate question: does it add value to your customer in a way that they want to pay more for it?