Vinayak Mahtani is the CEO and cofounder of bnbme Holiday Homes.
As an entrepreneur, I’ve seen my business ventures undergo changes at all levels since I started my first business in 1998. But the insight I carefully cultivated over the years is that what seem like large changes are usually nothing but a sum of smaller changes that have taken place over time. This borrows from the Japanese “Kaizen” technique that focuses on commitment to smaller improvements over extreme, revisionist changes. This realization has revolutionized the way I approach all things business—and life. In fact, James Clear mentions in his book Atomic Habits that improving by 1% each day can lead to a 37% improvement over the course of a year, and that, to me, is life-altering.
Here are some simple yet impactful ways in which 1% improvements can wield long-term sustained growth for your business, as well as help you develop a progress-oriented mindset as a leader:
Sales
Make continuous improvements in different aspects of sales operations. For example, make the website more user-friendly by consistently improving loading time by 1%, fix UX-related issues, increase the number of monthly follow-up calls and emails, quicken response time by 1%, improve email click-through rates by refining the pitch enclosed, schedule follow-ups and track your sales pipeline. These small steps can go a long way in boosting sales.
Operations
Optimize processes to improve efficiency. For example, in my work at a rental property management company, striving to improve customer satisfaction scores by even 1% after each checkout can have far-reaching outcomes. For instance, if in a given month, these scores are at an average of 7.5, and the hospitality teams work to improve these scores by a mere 1% with each stay, they can go from 7.5 to a staggering 10 within one month. This improvement can be achieved in many ways—top-notch service, maintaining high standards of tidiness, prompt redressal of customer grievances and seamless check-ins and checkouts. These can collectively lead to improved customer satisfaction.
Marketing
As far as marketing is concerned, improving the likelihood of conversion from impressions to leads through various media by 1% each quarter can result in a reduction in customer acquisition cost (CAC). For example, if your starting number of impressions is 10,000,000, of which 1,000,000 (10%) are qualified and 10,000 (1%) are actually signed, considering a revenue of $500 coming in per signed lead, the total revenue would stand at $5,000,000. Improving this by 1% will increase the signed leads to 10,100 (1.01%), resulting in a total revenue of $5,050,000, i.e., a profit of $50,000. Assuming all other costs remain the same, this increase in conversion by just 1% lowers the CAC, as now fewer leads are required to be generated to close a potential customer.
Finance
When it comes to finances, the 1% incremental change is extremely impactful. If you improve your gross margin by 1% every month, this can significantly improve your business’s bottom line earnings annually. This can be done either by increasing the average order value or by reducing cost of production on each unit. For example, if your revenue is $1,000,000 with a gross margin of 30% (i.e., $3,00,000 gross profit), a 1% increase in gross margin would mean $3,10,000 in gross profit. This $10,000 directly flows into net profit.
Let me delve into some non-business related examples that can trigger large-scale improvements in your life:
Sports
Sir Dave Brailsford, sports director and former cycling coach, is credited with leading British cyclists to win 178 world championships, 66 Olympic or Paralympic gold medals and five Tour De France trophies. He did this by breaking down each aspect of the bike riding process and made relentless 1% improvements—what he referred to as “the aggregation of marginal gains.”
From having riders switch to indoor racing suits that made them more aerodynamic and rubbing alcohol on the tires for improved grip to redesigning seats for maximum comfort and using massage gels that ensured maximum recovery, he did it all. And more. And consistently. And the results are unmistakable.
Well-Being
Developing habits that slowly but surely improve the quality of your life can lead to long-term mental and physical well-being. For instance, if you consistently lose 1% of your body weight every few weeks, having started at a body weight of 100 kg, you will have cumulatively lost approximately 23-25 kg at the end of the year.
The improvements contributing to such weight loss include reducing your portion sizes week by week, increasing time spent exercising, gradually increasing the intensity of your workouts, continually improving your sleep cycle, eating nutrient-dense foods most suited to your genetic constitution and managing work-related stress.
Takeaway
The key takeaway here is to keep working at these seemingly insignificant changes daily, whether in business or personal life, to drastically improve output and quality. While gradual improvement is not linear, what’s important is being patient and sticking to your routine—it’s a guaranteed path to microexcellence. I encourage you to analyze and identify areas in your business practice that would benefit from such incremental changes and apply this principle to achieve compounded results.
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