Too often, innovation in the business world is viewed merely as a product-based arms race. Business owners think it’s just about staying ahead of the competition, and trying to create something bigger and better than the other guy. And while that may be true on the most basic level, there’s so much more to innovation than that. In fact, in many ways, innovation has a very direct impact on your company’s bottom line.
As a business owner, you’ve likely heard time and time again that it costs more to land a new client than it does to keep a current one. And though you may not realize it, your company’s ability to innovate can have a direct impact on your customer retention rates. If your company’s products and processes stagnate, your current customers are more likely to search elsewhere for more innovative products.
Similarly, innovations in your customers’ experiences with your business can help to drive up customer retention. This may include a more user-friendly interface to your software, faster customer service processes, and other innovations that make it more enjoyable for customers to continue working with your business.
You can take this one step further by actively including your customers in your innovation management programs. Seek their input, and actually put their ideas to use. If your customers feel that their ideas and feedback are valued, then they’ll become more loyal to your business. And according to research, the probability of selling to an existing customer is 60-70%, while your odds of selling to a new customer are only 5-20%. You can see how this might impact your bottom line in the long run.
Product Creation and Improvement
When thinking about innovation, creating new products is likely the first thing that comes to mind. And while there are many other types of innovation (as we’ve already mentioned), this is still an important one. Customers’ needs and demands are constantly shifting, and an effective innovation management program can help you stay on top of those changes and keep you ahead of the industry curve.
Of course, this can be difficult to do if you have only a small group of individuals providing ideas. As stated on Qmarkets.net, modern innovation management instead focuses on “leverage[ing] the power of collective intelligence and gain[ing] insights directly from your potential market” as well as “utiliz[ing] the knowledge and experience of your employees by involving them directly in your decision-making processes.”
By gathering input directly from consumers and employees, you’ll be better suited to predict trends and directly address consumer needs. Allowing these things to guide your product creation and improvements is more likely to drive up your sales and have a positive impact on your bottom line.
In addition to improving products, an effective innovation management program can help you find ways to improve business processes and increase efficiency. According to The Shelby Report, “Whether it’s through duplication of efforts, tedious manual professes or employee productivity, inefficiency can cost your business anywhere from 20-30 percent annually.” That’s a huge chunk of your profits that are being flushed down the drain.
But how can you prevent this loss? To put it simply, ask the people who are enduring those tedious processes every day—your employees. As already mentioned, utilizing your employees’ knowledge and experience is a vital part of innovation management. They can see the redundancies more easily, because they’re on the front lines of these processes every day.
With an effective innovation management program, you can gather employee input and find ways to improve efficiency and increase your profits substantially.
In addition to helping you retain customers, effective innovation management can help you retain quality employees as well. How? By allowing employees to actively improve the business (and their own jobs), you’ll drive up employee engagement, and engaged employees are more likely to be loyal to your business, and are also more productive. Both of these contribute directly to improving your business’s bottom line.
So if you’re looking to drive up your profits, take a look at your current innovation program and ask if it needs improvement. Putting a little time into this aspect of your business can have significant, long-term benefits for your company.