3 Ways to Wow Your Customers with LessLowering costs and simplifying services can give your small business a competitive edge.
Is it possible to spend less while innovating more? According to a new book by Stephen Wunker and Jennifer Luo Law, it’s not only doable but can take your small business to new levels. They call this approach “Costovation.”
“Lowering costs and simplifying services can be a deliberate innovation strategy,” Wunker and Law wrote in “Costovation: Innovation that gives your customers exactly what they want — and nothing more.”
When most people think about innovation in business, they imagine adding something new to the mix — more products, features and options. But costovation is about cutting costs while still wowing customers.
“It’s about meeting or exceeding customer expectations with less,” the authors explained. “Costovation defies this established thinking and suggests that big innovations can come from decluttering how you think, the way you do things, and what you offer.”
In the book, Wunker and Law share numerous examples of how businesses have leveraged costovation strategies to outsmart and underspend competitors. Here are three ideas that may help you do the same.
Simplify the product
You’ve heard the saying “Less is more” — well, that can also be true when it comes to the products and services your small business offers.
Take the gym franchise Planet Fitness, for example. Instead of trying to win over customers with amenities and services — such as towel service, childcare, basketball courts and fitness classes — the company’s bare-bones approach keeps costs at a minimum. By passing these savings on to their members, Planet Fitness meets the needs of consumers wanting a no-nonsense gym experience with a reasonable price tag.
“The natural progression for any business is to add, add, add,” Wunker and Law wrote. “But there is great costovation opportunity in simplifying your products and services to what matters most to your customer and subtracting what they are willing to make calculated trade-offs for.”
See if this approach would work for your business by focusing on the features of your products or services that really matter. Take time to periodically re-examine your offerings to ensure they are staying true to your intended purpose.
Let customers participate in operations
Most businesses keep operations hidden from the public eye, but sometimes letting outsiders participate in a product’s production can create a new demand in your target market while cutting costs. Wunker and Law gave the example of the Build-A-Bear Workshops found in many shopping malls.
“Build-A-Bear Workshop shows how shining a spotlight on operations can excite customers in new ways — while also streamlining its supply chain, reducing the bulky items needing transportation, and carving out a niche that could withstand fickle toy trends,” they wrote.
This costovation strategy is great for brands in highly competitive and commoditized markets by tapping into customers’ emotions.
“Build-A-Bear’s key insight was that the toy experience didn’t have to be limited to just the joy of the object itself: rather, the making of the toy could be a unique bonding experience between parent and child, or limitless entertainment at a birthday party.”
Give waste a purpose
Another way businesses can costovate is by turning trash into treasure. Wunker and Law suggest brainstorming how byproducts can be put to new uses or recycled back into the final product to minimize waste.
For instance, Nestlé crushes up imperfect Kit Kat bars and uses them to fill other Kit Kats. Similarly, French supermarket Intermarché cut back on food waste and won the hearts of sustainably minded consumers by selling “ugly” produce at a 30 percent discount.
Creatively thinking about your waste can also result in new revenue streams, the authors noted. The California Cedar Products Company, or Cal Cedar, found a use for wood scraps in the DuraFlame firelog.
“The brilliance of the DuraFlame was that it combined two industrial byproducts — sawdust and petroleum wax — to create a new product that exceeded its traditional log competitors on multiple fronts, while also satisfying pain points for sawmills,” the authors explained. “Sawmills were more than eager to part with their ever-growing piles of wood scraps; in fact, they often paid others to haul away their sawdust. In Cal Cedar’s new business model, the company was being paid to receive its primary raw material.”
Think creatively about how your small business could possibly turn waste into profit centers as well.
Remember, costovation is more than simply stripping down offerings for the sake of cutting costs, said Wunker and Law.
“A key part of this kind of innovation is creating something new for the customer. It is easier to stay true to that if you commit to being customer-centric. Constantly ask yourself how the changes you propose will deliver new value for your customers.”