Efficiency is oftentimes used frivolously and with minimal regard as to what it really means in a real-world business setting. Many business owners, when asked about how efficient their operations are, would proudly say “Yeah our business is very efficient – we’ve hit our sales target this month!”. 

Sales and the “success” of an organization may not always be a sign of efficiency. But when their business processes are examined thoroughly, it becomes apparent that there are a lot of areas for improvement in efficiency. Either they’re too busy to notice since they are “profitable” or have never really seriously considered what efficiency truly means for their business.

In this article, we are going to look at efficiency from a different albeit important perspective: the customer’s perspective and why it matters.

Efficiency at the end of the day wouldn’t mean much for your business if it doesn’t improve the delivery of your services or products. After all, who consumes, uses, or purchases your products and services? That’s right – it’s YOUR customers.

What Does Efficiency Mean for Businesses?

To get things started, let’s go ahead and define what I mean by efficiency. In my own words, it means achieving maximum productivity with minimal expense. It’s a smart way of accomplishing objectives in the simplest way possible. The primary goal of a business is to take its product or service from point A to point B in the fastest and most effective way possible – that’s efficiency.

Another great interpretation of this is that efficiency is the quality of being able to do a task successfully without wasting time or energy.

Businesses all have processes and procedures to follow. Let’s use the example of an e-commerce business engaged in selling clothes online. Let’s say you want to order a shirt from their website. You will likely browse through their online catalog of clothing and then add items you like to your online cart. Then, the final step would be to checkout the cart through a purchase.

Imagine if the site’s buying process didn’t have a logical procedure in place. What if you had to pay first before choosing your size? That wouldn’t make any sense right? Processes are an essential part of any business but the problem there is when these processes aren’t optimized for efficiency in consideration of a customer’s experience. 

The Tennis Ball Analogy

Picture a tennis ball placed at the end of a long tube. The tube represents your customer’s journey in relation to the service or product you are offering. The beginning of the tube is the initial kickoff point and the end of the tube is the point where the service or product has been received by the customer. That ball should move through the tube in a straight line and as fast as possible.

Each bend in the tube represents steps in the process and for every additional bend in the tube, the more time it takes for the ball to reach the opposite end. In the same vein, each step that a customer has to take represents an additional time for you to fulfill the service or deliver the product. The more steps a client has to take, the less satisfied they are.

Here’s another example that perfectly illustrates my point: Let’s say you’re in the market for a new POS system that will help modernize your small grocery store’s cashiering system.

So you go online and find a website that offers POS systems. You look around and there are no pricing options for the systems they sell, so you send an email to the email address. After one day you receive a response from customer service “Hi! Thank you for your email, we’ve forwarded this to the sales team”. After another day, the sales team finally sends an email but they’re asking for more information like gross annual sales and location before they send the “quotation”. So you comply and send them the information.

After a few more back-and-forth exchanges of emails, you finally get the price only to find out it’s outside your budget. Painfully frustrating right? This may seem like an exaggeration, but how many times has something similar happened to us?  This could have been avoided altogether had all the information been available online so the customer did not have to pass through hoops just to get what they needed.

The point is this: customers, like you and I, want to get things done as quickly as possible. No one has the time to wait nowadays. Make them wait enough and surely your competitors will be out there waiting to lure away your dissatisfied customers. 

Customer Satisfaction is at the Heart of an Efficient Business

All businesses serve customers. Read that again and let it sink. Regardless if you are direct-to-consumer or business-to-business, we as business owners all fundamentally serve a customer or client. 

Viewing your processes and procedures through the lens of a customer and their journey inside your business dramatically helps you understand their pain points. Having a seamless and efficient experience in your processes results in an overall improvement in customer satisfaction and, ultimately, your bottom line.

Needless to say, countless research and studies show that customer satisfaction is one of the most significant factors that affect business performance. Efficiency in your front and back-end processes plays a key role in delivering your products and services. I’m not preaching anything new here but what may surprise you is that sadly, many businesses still fail to grasp this concept. 

The True Cost of Inefficiency

 

Small losses in productivity that are unnoticed may not have an immediate impact. But, these add up and have a compounding detrimental effect over time. 

Inefficiency in a business is often masked by scale. A larger business operation may not notice the effect of small choke points in its processes as compared to a smaller business whose sales volume is significantly smaller. Let’s picture it this way, imagine having a small bucket filled with water. If you punch a small hole in it, the time it would take to drain the bucket could be about 5 minutes. Now let’s take that bucket and pour it into a large 50-gallon water drum, the time it would take to drain would tremendously be longer compared to the smaller bucket.

Efficiency loss in your business can be as small as the hole in the bucket or a small hole in the water drum. Punch enough holes in the water drum and you’re bound to notice the losses. Depending on your size and scale, these losses in productivity can amount to hundreds to even millions of dollars.

An ideal business is a business without any holes, there are no leaks, it’s solid, and there’s nothing going to waste because it’s often the sum of the small losses in efficiency that significantly make your operations inefficient rather than just one big inefficient step.

The D.A.D Principle: The 3 Simple Steps Towards “True” Efficiency

In order for your business to be truly efficient, you must first conduct an in-depth analysis of every process in your business. Think of it as trimming the fat of your business. The goal is to make it as lean as possible.

Outlining and diving deep into processes is an extremely tedious and time-consuming process, and that’s why many business owners have not really truly achieved full efficiency. Let me show you a simple set of guiding questions to help you identify where the leaks, gaps and chokepoints are in your business. 

For every process, task or step in your business, ask yourself these three questions:

1. Is this activity necessary?

You need to have an objective and honest evaluation here. What are the effects on my business if I take this step out? If the effect is unsubstantial, most likely it’s unnecessary. Removing unproductive steps and actions helps cut out most of the “noise”.

2. Can this be automated? 

Does a person need to do this task? Are there automation or machines that can make the work faster and more reliable at a fraction of the cost? We also must be aware of the limitations of machinery. If a person is required to do it, can you delegate it to someone else so that the higher-value work is done by your core team members?

3. Can it be simplified? 

Making things simple does not mean compromising on quality, but rather the focus here is to reduce the complexity of a task, activity, or step so that it becomes faster and easier to accomplish. This is so important, especially for customers.

Ideal Businesses Make Its Customer’s Life Easier

A truly ideal business has efficiency at the core of its operations. Unfortunately, many businesses consider themselves efficient but fail to realize that the processes they have in place have become too complicated often at the expense of the customer.

My challenge to you today as a business owner is to analyze your business and find out where the choke points are. Where’s the friction? What can be trimmed off? Place yourself in your customer’s shoes. The goal is to get them from point A to point B as fast as possible – your business will thank you for it.

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