I was working with a large manufacturing firm who had an important decision to make. They were trying to make the right decision between two plant upgrades. They needed both of them, but each required a time commitment from management that ensured they could only do one at a time.

The first upgrade would generate a 5,000% return on investment. The second upgrade would produce a 200% return on investment. With that information, could make your decision?

Everybody reading this right now knows that you couldn’t make a decision with just that information. You’d need to ask the most important question, “What are the costs and time commitments?”

In fact, choosing the first upgrade over the second would have been pretty silly. The reason? The first upgrade would only cost them $10,000, but it would take six months of their executive team’s time, and produce a total return of $500k. The second would cost $3M, for it would produce a total return of $9M, and only take three months of their executive team’s time.

Now you can instantly see the difference here. If we only focus on one piece of information, it’s too easy to make the wrong decision. It’s not a profound concept, but understanding it can lead to some pretty major improvements for your business.

Wait, what? That concept is so simple, how could it lead to profitability improvements? Yeah, Noah, we know – more information is better, don’t make decisions on a single data point. That’s like me claiming “Understanding that water is wet will have a profound impact on your business!”

This is critical because I can guarantee that many (maybe most) of your customers will focus on a single data point, and not ask any of the relevant questions. That data point, of course, is price.

Ask any of your salespeople why their numbers are down, and they’ll tell you “Our price is too high. The customers beat me up over price.” As much as we might not like to admit it, we often make decisions without all of the right information – sometimes without even thinking about how we’d find the right information.

Sometimes you’re quoting a project for a prospect without establishing the total value of success to them first, and they get sticker shock. Other times, you’re considering between multiple corporate investment opportunities, and not sure which one to make.

In these cases, one of the most helpful questions you can ask is also the simplest: Why do I want to do this in the first place? What is the outcome that I want? What are the inputs I need to maximize the probability of getting that outcome?

You should always seek to get very clear about the business outcomes for yourself or your potential customers. As described in the second stage of The Customer Loyalty Loop, sometimes you need to slow down the process to make sure you capture this for your prospective customers or take the time to define the outcomes.Now let’s bring this back to something we all want. We all want more loyal customers. That’s the output. But to get that, you need the inputs. You need specific processes in place to create a loyalty customer.

You’ve heard me say this before, but you can’t make banana bread unless you mix bananas, sugar, flour, eggs, and baking soda. A recipe is a process. Loyalty is a symptom, and your retention process is the cause.

The Customer Loyalty Loop was officially released for publication yesterday and inside you’ll find it packed full of pragmatic processes and procedures designed to help you create the outcomes you want. There are three points I want to drive home today.

1. Always make decisions based on the whole of the information and not parts of it, or at least with the best information you can get.

2. When working with your prospects and clients, ensure that you are helping them focus on the outcome they want, before talking about the input (your price/fees).

3. Without the right process in place, it’s nearly impossible to get the result you want. Think about the outcomes and then figure out how to get there. Every company can increase profits by understanding this. By identifying the parts of your company that generates the highest profits and best return on your investment of time, energy, and money – while also identifying the resources generating the lowest profits and returns and either stopping these activities or making dramatic improvements.

Your Weekly Challenges:

Look at your sales and marketing material. Are you letting your prospects / clients get away with focusing on price alone?

Consider the last major investment you made in your business. Did you base your decision on the outcomes or the inputs?

Consider an investment you’re about to make. Is there an alternative available that might yield a greater result?