Every little bit doesn’t add up

Back when I had my law firm, we would sometimes take business that didn’t really seem ideal for our practice. Either it wasn’t the right type of client, or they didn’t really have enough money to truly be able to afford us, or something else was wrong with them. But in the end, we would compromise our principles. There was always pressure to bring in more revenue. We had to pay the rent, the payroll, and other expenses. You couldn’t have too much revenue.

Every little bit added up.

And that’s what a lot of people say when they’re trying to justify doing the wrong thing. “Every little bit adds up.” The only problem with that is, it’s not true.

Every little bit doesn’t add up.

Taking on business because it’ll bring about a marginal amount of revenue even though it’s not the right type of client for you is a bad approach. Sure, it’s true that incremental amounts of revenue add up to more revenue. But what that fails to take into account is the hidden costs of taking on bad business.

The time you spend doing the wrong kind of work or doing it for the wrong type of client is time that takes you away from the work you really want to do. And when professionals are doing the wrong kind of work or doing it for the wrong kind of client, they tend to be unhappier. It becomes harder to do the work. Quality suffers. Morale suffers. Yes, every little bit of revenue adds up. But too many professionals fail to account for the emotional costs of doing this incremental work. And they justify it by saying that every little bit adds up.

All kinds of companies make this mistake. For example, look at this rate card from a Las Vegas hotel. I’m not going to name the hotel, because I’m staying there in the near future. But it’s one of the largest hotels in the world. They do a robust business, and they make plenty of money. And yet they have this rate card of incidental charges connected to its business center. This is serious nickel-and-dime nonsense. Eight dollars for the first page of outgoing faxes; a dollar per page for incoming email. (Of course, who even uses faxes anymore?)

hotel price list
While I am not privy to the strategies and mindset of this particular hotel, I am certain that someone there reasoned that every little bit adds up. If they can make a little bit of money on every fax, email, and package received, it will add up to a lot of money. But what they fail to take into account are the costs associated with that. I’m not talking about the actual expenses of receiving packages or sending faxes. Those costs are negligible anyay. I’m talking about the emotional cost of ticking off its customers. Nobody likes to see this sort of nonsense on their hotel bills.

Look at the airlines, and their growing tendency to nickel-and-dime passengers for almost anything they can charge them for. What used to be covered in the cost of buying a ticket is now an additional charge. Baggage fees and change fees are the biggest offenders. Last year, American Airlines took in half a billion dollars in baggage fees and change fees. Arguably, this mitigated its $2 billion net loss for the year. You could say that this is an example of the mantra “every little bit adds up” coming true.

That is, until you look at Southwest Airlines. Southwest is the only major airline to show a profit. Not coincidentally, Southwest is also one of the few airlines that eschews baggage fees and change fees. By avoiding the emotional costs that those nitpicky charges exact on passengers, they run a more successful business.

I’m sure that the bean counters at American Airlines look at the revenue that comes in from baggage fees and change fees and say, “Every little bit adds up. If we didn’t have these fees, we would have suffered an even larger loss.” But I believe that if American were more like Southwest, they might actually make money from flying passengers rather than charging fees.

Another area where the “every little bit adds up” mentality comes into play is in cost-cutting. A lot of companies believe that if they skimp on certain things, “every little bit” that they save will add up to substantially lower expenses and higher profits. But that mentality is misguided.

At one point, someone at my law firm raised the suggestion that we start using less-expensive paper. The paper that we had been using was an expensive, heavier bond that was brighter, whiter, and more substantial than what most other law firms used. It was also much more expensive. And over the course of a year, we spent thousands of dollars on paper. If we switched to cheaper paper, we would save money. Every little bit would add up.

But I wasn’t willing to compromise on that. To me, the written documents that we filed in court or sent to opposing counsel or delivered to clients represented a major part of the value we provided. Sure, it was the words on the paper that mattered, and not the paper itself.

But there is an emotional quality that attaches to the physical documents and to the paper. The paper sent a message that our firm cared about the details. That we cared about how our documents looked. That we put a lot of effort into making sure that our documents were just right. That’s why our documents used a carefully selected font rather than Times New Roman. That’s why our document design was painstakingly developed, rather than merely relying on the default settings of Microsoft Word. And that’s why the paper we used was expensive Hammersmith rather than the bargain Staples generic copy paper. Because every little bit didn’t add up.

Now don’t get me wrong about expenses. Paying attention to important expenses is good business sense. You can make a much bigger difference by saving money on expensive office space rather than using chintzy, generic copy paper. It is the major expenses that actually add up onto you bottom line.

But enough about expenses; let’s go back to revenue, where most professionals have difficulty.

I’ve been there. I know what it’s like to worry about where the next bit of revenue is going to come from. I know what it’s like to not have enough in your firm account and have the rent or the payroll due. It is very difficult in times like those to turn away any client that comes in with a pulse and a checkbook. But trust me: it’s worth it.

Here’s what you can do to help get through it:

  1. Tell the client that it’s not a good fit. Turn away the work politely. If you can, refer them somewhere else.

  2. Figure out how much attention you would’ve had to pay to doing that not-right work.

  3. Commit to spending that time and attention doing tangible things that will lead to getting the right work and the right clients. Get a speaking gig. Teach a continuing-education class. Get an article published. Write a couple posts for your blog. If you don’t already have a blog — hey, it’s 2012: time to start a frakkin’ blog.

Do these things and you will soon find that you’re doing more work that you want to be doing for more clients who you want to be working with. Because here, every little bit does add up.

The Result Triangle: Getting people to do what you want

You know how hard it is to get someone to do what you want them to do?

It’s pretty hard. And you know what? We make it harder. We get lost in the details. We fuss about incentives and penalties and policies. We overcomplicate problems.

So if complexity is our problem, then it stands to reason that simplicity is the solution. We need to figure out exactly what we’re trying to do and how best to do it. Well, that sounds fine. But how do we actually make simplicity solve our problems?

To find out, I went through nearly two decades of case files, looked at thousands of business interactions. Where had I messed up? Where had things gone smoothly?

And a pattern emerged, where complexity caused problems and simplicity led to success.

That same pattern appears in hundreds of business books, in all kinds of business interactions. This pattern teaches us the best way to get someone to agree to do something. It comes to down to three simple points. And these three points make what I call “The Result Triangle.”

The Result Triangle works in every business context: negotiations, sales, customer service, management, litigation, pricing. Whatever field you’re in, you can use the Result Triangle to simplify your problem and get someone to do what you want them to do.
The three simple points are:

  1. clarify the goal
  2. show you care, and
  3. address the fear

The Result Triangle

These three points help you figure out what you want … and how to get it. Let me give you 3 quick examples to show how they work in real life.

Clarifying the goal

I usually fly Southwest Airlines. And many of you know that on Southwest, you have to check in early so that you don’t get stuck with a middle seat. Southwest doesn’t do seat assignments. Instead, you check in and get assigned a number. Get a lower number, get a better seat.

Why does Southwest do this? Because their goal is to keep their planes in the air as much as possible. Open seating, flying only one type of jet, and even “bags fly free” all lead to more time in the air. And more airtime means more profit.

Planes make money in the air, not on the ground. Their planes spend 30 percent more time in the air than their competitors’, and they’re the only airline making a profit. By clarifying their goal — “planes in the air” — Southwest gets their people to focus on doing what’s most important.

We tend to take our goals for granted without giving them a lot of thought: To close the deal. To win the case. To make the sale. But a goal needs to be more precise. Clarifying your goal — boiling it down to its essence — is the first step to achieving it.

Show you care

The second point is “show you care.” Let me give you an example:

My dad had this winter coat that he loved and he wore it until it finally fell apart. Turns out my brother was planning a trip up to L.L. Bean in Maine, so my dad asked him if he could pick him up a new coat while he was there.

So my brother brings the coat to try to exchange it and of course he has no receipt because my dad bought it so many years ago. And the folks at L.L. Bean can’t find the same coat. So instead of sending him away, they give him a different one, brand new, without any hassle. Because L.L. Bean cares so much about customer satisfaction.

So my brother gets back and gives the new coat to my dad. And my dad says, “Thanks. But I didn’t get it at L.L. Bean!”

And you know what? L.L. Bean must have known that, but they gave him a new coat anyway. Because they were focused on showing how much they care.

Showing that you care makes people want to do what you want them to do. Because of the coat, my family keeps coming back, and we’ve told this story to hundreds of people. By showing they care, L.L. Bean gets people to keep shopping there and tell others how great they are.

Address the fear

The third point is “address the fear.” I was at a Denver steakhouse recently. Great food, fantastic service. This place focuses on a great experience. When it came time to order, we picked out our steaks and we were trying to settle on a side dish to go with the steaks. The waiter recommended this fancy Brussels sprouts dish.

Now, I like Brussels sprouts as much as the next guy, I really do. But this dish sounded a little too daring for me. The waiter said, “Why don’t you just give them a try? If you don’t like them, I’ll whisk them away and replace them with anything you want, no questions asked.” So we tried them, and you know what?

They tasted like feet.

But even so, we didn’t ask him to replace them. We just moved them around on our plates. Because we didn’t want to ruin the experience. The waiter had addressed our fears about not liking the Brussels sprouts, and that made us happy, even though our fears actually came true.

People’s fears are what keeps them from doing what you want. By addressing those fears, you help people get past them. Even if you can’t prevent those fears from coming true. Simply addressing the fear helps make them want to do what you want them to do.

And that’s the Result Triangle:

  1. Clarify the goal
  2. Show you care
  3. Address the fear

You can start using it today. Anytime you need to get someone to agree to do something, whip out your trusty Result Triangle. You’ll be amazed at how this focuses your efforts.

When you do these three things, you simplify the problem you need to solve and you improve your chances of success. People will want to do what you want them to do.

Download a handy PDF of the Result Triangle Worksheet that you can use right now to help solve whatever problem you’re facing.

Want to learn more?

Get in touch with Jay today