Retailers may not realize it, but one is actually an extremely powerful number. At 33 degrees Fahrenheit, water is liquid. When the temperature drops just one degree, it becomes ice. Heat water from 211 to 212, and it goes from hot to boiling. Small changes can have a significant impact, and not just on the properties of water. Retailers can greatly improve their bottom lines when they learn to harness the power of one.
Why A “Small” Approach Is More Fruitful Than A Big One
Some organizations may think that taking this “small” approach is ineffective. Those retailers want to make a big impact in their bottom line in one swoop rather than increments. Unfortunately, there is no magic formula to do this. Big changes are energizing and exciting, but one big effort isn’t necessarily more effective than the power of small, but steady, improvements.
Small change doesn’t mean an organization is short-sighted or setting the bar too low. Quite the contrary. It means that the organization is taking small steps to create a big impact on the bottom line.
What Can “One” Mean For Retailers?
In many instances, striving for a big, ambitious goal proves impossible to achieve for retailers – and the results can be disappointing. Instead of aiming to affect massive change in one department, the theory behind the Power of One suggests that smaller, achievable changes across the organization can accumulate to powerful results.
Whether it’s improving the organization’s attrition rate, increasing an email response rate, decreasing “one and done” store credit card users, or increasing a retailer’s number of known customers, a “small” 1% increase can mean millions of dollars in additional profits or in savings. For example, the profitability difference between a known customer that a retailer can market to and an unknown customer can be 30-50%. If the average unknown customer spends $200, simply identifying and communicating to them could drive a $60-$100 increase. This may not seem like a lot but with a customer base of 1 million people, if you increase your known population by just one percent (10,000 customers!), it can translate to a $1million increase in sales. It may be impossible to improve any one feature by a huge percentage – but not only is 1% achievable, it still has a profound impact.
These small changes are more effective when combined. If a retailer makes multiple 1% changes across the organization, it could result in greater profits, reduced costs – or any number of other benefits, across the whole organization, instead of in just one department.
Strategic Goals Yield Better Results: The Power of One
Rather than aiming to overhaul a department with massive changes, retailers should adopt a strategic approach of analyzing critical data points and targeting the “low-hanging fruit” to bolster the entire organization; the Power of One can provide great returns, often by expending less effort and fewer resources. With this strategy, retailers can make impressive changes in any – and every – department of their organization.