left Xtraordinary Living At Its Best: Minimizing expenses vs. maximizing benefit

Monday, May 07, 2007

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Minimizing expenses vs. maximizing benefit

I'm fascinated by how individuals and businesses are often obsessed with minimizing expenses. They use terms like "streamlining", "simplifying" or "eliminating waste." ." However, in the end it seems to be about minimizing the expenditure of resources - time, money or people

While this is not inherently bad, I often find that people do this out of reaction and "throw the baby out with the bath-water." I believe their mindset is certainly a contributing factor. By focusing on minimizing resources exclusively, they simultaneously minimize benefits. In the long run, this is approach ends up being far more costly.

Seth Godin shares an example of this in his article Even governments market.

As an example, I received a call from one of our clients who had been participating in the "QuoteActions" daily call program for six weeks and wanted to cancel. Their reason was: "Even though I really like the program and have really benefited from it, I am not using the 'QuoteActions' like I thought I would."

I was really interested in what they meant. The client explained that they had only been doing an average of two actions per week (instead of five.) Because of this, they felt they were wasting money by not taking full advantage of the program.

I then asked them how they had benefited from the program. They gave me three different examples where the "QuoteActions" had prompted them to take an action that had really made a difference in their day. As a matter of fact, one of those actions had a profitable direct result. An action led to a conversation with someone, which then led to earning an additional $250. Money they wouldn't otherwise have earned.

So here is a program that requires an investment of less than 1 minute a day and $10/month. The program had already proven it's value and had paid for itself for the next two years. And yet they wanted to cancel.

The concern I have with this reactionary approach is that they were only looking at what they were "wasting" and not at what they were "gaining." An incomplete picture for sure. Once they viewed the entire picture - cost vs. benefit - the decision to cancel didn't look quite so good!

The next time you're thinking about minimizing expenses, be sure you look at the "big picture."

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