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When Is Less More?

Henry Ford

Why do we prune?
When I owned a house, I loved to prune my lilacs. One year I pruned the lilacs so much my neighbors believed I had killed them. However, soon their branches sprouted and bloomed more than ever before.

Pruning strengthens lilacs—and a business. Like lilacs, any business must prune its less profitable items and save the cost of manufacturing, distributing, and promoting them. The business can use the savings to improve its more profitable items.

Brand managers often fight to protect their brands as if their careers depended upon it. They reinvent brands, launching “new improved versions” even though the brands deserve a respectful funeral.

Businesses often confuse their customers by offering too many choices. According to Malcolm Gladwell, author of the bestseller, Blink: The Power of Thinking without Thinking, customers buy more when there are with fewer options. For example, Henry Ford cut costs by offering the Model T Ford in “any color so long as it is black.”

Herman CainHow much should we prune products and services?
Most of your products and services are not very profitable. In fact, you can predict that 99% of your items produce less than half of your profits. Thus, one out of a hundred items brings in the majority of your profits.

A wise business delights its key customers by offering them treasures and by discontinuing products and services they do not treasure. A business can prune features, options, or product lines.

Many manufacturers and software developers simplify their features. For over sixty years IBM has put popular functions on drop down menus and relegated unpopular functions to less conspicuous locations.

Godfather’s Pizza had a confusing array of pizza toppings, but its President, Herman Cain, eliminated options that were rarely requested. He credits a single overriding principle for his success —“focus, focus, focus.”

Sea-Doo, the personal watercraft brand of Bombardier Recreational Products, has product lines that appeal to different types of customers. Its Luxury line appeals to wealthy couples who provide a fleet of upscale Sea-Doos for their guests. Sea-Doo could increase its profits by upgrading its reputation and discontinuing its less profitable product lines.

Luxury customersWhat should we offer?
The key is to offer your most profitable customers what they treasure. They are willing to buy a ridiculous amount from your business. Develop a premium package just for them and keep their hearts loyal to your business. Treat these customers as if they are laying golden ostrich eggs.

Pensar a lo grande de verdad
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