Now of efficiency as a favorable input-to-output

Now that you’ve seen some examples of digital efficiency and we defined what this concept means, here are three key things that you should know. First, efficiency comes in many forms.

Efficiency is a broad concept. It can mean different things to different people. I like to think of efficiency as a favorable input-to-output ratio.

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When something is efficient, the amount of input required is low or the amount of output is high. For the purposes of our discussion, we’ll focus more on the input side. Now, most activities in life require us to input at least one of three things: money, time, or energy. Sometimes, we have to input all three of these scarce and valuable resources.

For example, installing a toilet requires a substantial investment in time and energy, and also money to think about the opportunity cost of your time. If the inputs of these investments can be reduced or made more efficient by digital tools, we’ll see examples of digital dominance. For example, digital toll reading technologies like the I-PASS provide considerable savings in terms of money and time for the governments that manage tollways since they save costs of not having to process cash payments which are expensive and very time-consuming endeavor. Likewise, for many products, shopping on, usually requires less money, time, and energy than shopping at a analog retailer. Second, twice as nice.

One neat feature of efficiency is that this approach usually provides benefits to both the buyer and the seller. This is a win-win for both sides of the exchange transaction. For example, the instructions posted on Instructables clearly benefit the people like me who download them by enabling them to do things they couldn’t do before. However, they also benefit the people who upload these instructions by giving them visibility and a sense of satisfaction from helping others. Likewise, I-PASS provides savings in terms of money and time for drivers but also a large reduction in cost and a wealth of information to the Illinois highway authority.

Thus, efficiency is twice as nice. Third, addition by subtraction. Have you heard the phrase “addition by subtraction?” The basic idea behind this phrase is that sometimes, things get better and we take something away. This stands in contrast to our typical assumption that the more we add to something, the better it gets. I often use this phrase when I’m evaluating academic papers which are usually too long in proportion to their value.

This phrase could also be applied to the concept of efficiency. Indeed, many examples of digital efficiency add value by subtracting a component of an analog product or service. For example, I-PASS subtracts the need for physical coins or currency.

Likewise, Amazon subtracts the needs for physical transport to a physical store. As we’ll discuss shortly, subtracting something that people are used to having or doing is not always easy for them to accept. It may take a while for them to get used to.

Now that you know what digital efficiency is, here are some tips for successfully leveraging this concept to enhance your marketing efforts. First of all, be patient. I have a question for you. Actually, it’s more of a joke. How many professors does it take to change a light bulb? Who said anything about change? As suggested by this joke, most professors don’t like change. That’s true. However, my guess is that we’re not alone. Many people seem to be reluctant to change especially changes that require them to alter their behavior.

For example, my wife spent years trying to convince me to switch from a typical low-tech toothbrush to the electronic sonic toothbrush. Now that I’ve been using this brush for several months, I really like it. I can’t believe I actually used to use one of these old-fashioned brushes. It just seems so barbaric. This reluctance to change behavior is a challenge facing many offerings that seek to employ an efficiency approach. As we discussed earlier, the digitization of analog products or services often entails the subtraction of things we commonly take for granted. This change may take customers some time to get used to.

For example, although Amazon was founded way back in 1994, its sales didn’t begin to take off until 2010, over a decade later. It took a while for many people to adopt the new routine of buying things from a digital store rather than an analog one. Take a look at this chart. Amazon went public in June 1997 and the stock price remained at less than a hundred dollars a share until October 2010. Today, its stock price is about ten times that amount.

This is evidence that behavioral change takes a while to take hold. Thus, if you employ an efficiency approach, you need to have a long term perspective. And also, your customers may need some time to get used to a new way of doing things. Second, let’s make a deal. Changing our behavior is hard to do. One way to encourage behavioral change is to offer a financial incentive. Thus many, although not all, efficiency initiatives offer some sort of financial deal, typically in the form of either a discount or a freemium model. An example of a discount approach is I-PASS’s home page, which broadcast that I-PASS customers pay 50% less than customers who pay cash.

That’s quite a savings. Instructables is a good example of a freemium approach. Although this website requires you pay a monthly or yearly subscription fee to download a PDF version of their lessons, anyone can access the web-based version for free. So if you’re considering employing an efficiency approach, a good way to start is by offering your customers some type of financial incentive to give your offering a try. Third, provide options. As we discussed earlier, one of the features of the digital world is the ability to present a tremendous amount of information. One important type of information when employing an efficiency approach is info about other options that a customer can access in case the options that they select isn’t available or doesn’t work. This ability to readily provide a set of various options is a feature that is harder and more costly to provide in an analog setting.

A great example of this is Amazon which provides a set of related options for every product that you select. For example, this fluffy blue chair caught my eye and I was about to purchase it. Unfortunately, it was out of stock. However, Amazon gave me several other options such as its green and purple brothers. Likewise, when I drive to Chicago, I sometimes forget to bring my I-PASS. So I have to drive through the tolls without paying anything. Fortunately for me and for the Illinois highway authority, I can easily pay these tolls when I get back home by simply pressing this button. Thus, if you employ an efficiency approach, be sure to take advantage of this feature by providing your customers a few good options.

Fourth and finally, share stories. You have to think of the digital world as full of all sorts of cool technologies like the Internet, 3D printers, and smartphones. Indeed, these tools are very cool and without them we wouldn’t have the digital revolution in the first place.

However, the digital world is also about people. It’s about connecting with people who we wouldn’t have connected with before and it’s also about hearing their stories. Thus, most successful digital initiatives are full of stories. As humans, we like to hear stories and also tell stories.

For example, at its essence, nearly all social media platforms are just places we can share our stories, either in words or in pictures. Successful efficiency approaches are also platforms for storytelling. Amazon’s a great example of this. Its product pages show not only details about the product’s feature like its weight, color, or price but also stories usually in the form of reviews about what others who have bought this product think and feel about it. Likewise, even I-PASS encourages its customers to share your I-PASS story. What is even more interesting than asking people to do this, for something as basic and as utilitarian as a tolling transponder, is the fact that some people are very willing to share these stories, and actually appear to have a very strong emotional connection to this plain vanilla digital device. For example, here’s what Jamie had to say about her I-PASS, “This makes highway driving such a breeze. I head into the city pretty much all summer long.

The I-PASS saves me a lot of time and money, which is especially important in these tough economic times. I love my I-PASS.” Well, as you can see from Jamie’s testimonial, these stories can be quite powerful and help give digital offerings a personal and authentic vibe.

Thus, when you plan on employing an efficiency approach, don’t forget the feature, not just your product offering but also the stories that people are telling about it. But I hope you enjoyed this exploration of efficiency that it gave you some new insights about marketing in an analog world.


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