Learn How To Become More Efficient — Part 1: Defining Efficiency and Calculating the ROI
This is the first part of a blog series. I will be publishing a new post on efficiency tomorrow.
The good news? You were actually born with the instinct to be efficient. As soon as you are born, you start learning and gaining experiences. You begin to do things faster. First you crawl, then you walk, then you run, then you bike, then you drive a car. You begin to multitask. You teach others what you’ve learned so they can become more efficient. This is true in your private life, and it is true in your professional life.
This is good news because today, we are in era of efficiency. Our society is hyper focused on it. We are obsessed with our own efficiency, our team’s efficiency, and our company’s efficiency. All the time!
As we’re entering that time of year when we plan for the next, here at Betsson marketing, 2017 is going to be all about efficiency. How can we achieve more without spending more? How can we achieve 10 times more by spending 2 times more? In this two-part blog series I’m going to break down what efficiency actually means, why it is crucial in life and business, and how to ensure you’re on the efficiency fast track.
Part 1: Defining Efficiency and Calculating the ROI
Efficiency is an equation; it is a percentage that can be calculated by dividing the output (result) by the input (effort), multiplied by 100.
Efficiency = Output/Input x 100
Let’s look at an example — you fill a bucket with 10 liters of water at the well. The bucket is leaking, so by the time you carry it home, you only have 8 liters left in the bucket.
Efficiency= 8/10 x 100 = 80%.
Efficiency is when results improve, while the expenditure, time and effort to achieve them remain the same. If your next walk from the well left you with 9 liters, you’d be more efficient.
AMAZING efficiency is when results improve, while the expenditure, time and effort required to achieve them are on the decline. So, if your next walk from the well left you with 9 liters, but took half the time because you put the bucket on wheels, you’d be amazingly efficient.
Now, how to measure our efforts? In marketing, we keep an eye on efficiency by calculating the return on the marketing investment. We divide total revenue by total cost and we end up with a number which is the ROI.
ROI = Revenue/Cost
Higher ROI = Higher efficiency.
Better results ( ex: revenue, total number of active customers, newly acquired active customers, percentage of mobile users vs. desktop, churn rate, net promoter score) achieved with less resources ( ex: overall marketing spend, cost per acquisition, headcounts, shorter period of time).
Efficiency encompasses a number of different meanings. Think productivity, potency, resourcefulness, proficiency, economy, capability, expertise, or powerfulness. The most relevant right now is scalability. The digital era has increased our opportunity to scale. You can achieve one today, that’s great. You need to think about how you’re going to achieve ten tomorrow, without multiplying costs and workforce by 10. How? Find out in my second blog post coming soon!