Yesterday I was relaxing by the pool at my sister in law’s place. And as I was flicking through the newspaper I read an interesting article which mentioned something called the Hawthorne Effect.
Anyway, I was curious, so I jumped onto my iPhone last night while I was flicking between the tennis and the cricket (both disappointing games) to discover how it came about.
Anyway, as it turns out – and I quote Wikipedia…
The term was coined in 1950 by Henry A. Landsberger when analysing older experiments from 1924-1932 at the Hawthorne Works (a Western Electric factory outside Chicago). Hawthorne Works had commissioned a study to see if its workers would become more productive in higher or lower levels of light. The workers’ productivity seemed to improve when changes were made and slumped when the study was concluded. It was suggested that the productivity gain was due to the motivational effect of the interest being shown in them.
Now here’s my take on “The Hawthorne Effect”…
I believe that when anything is measured and observed, it will improve for the simple fact that when we start seeing the numbers it forces us to start to think about them and hence improve them.
So let’s bring this down to the practical level.
How many leads did you generate last week… how many of those leads did you convert into sales… how many existing customers have returned to purchase off you in the past 12 months?
Knowing numbers like these is especially powerful. And I believe one of the single biggest keys to success in business is…
KNOWING YOUR NUMBERS
And being to break them up in a number of different ways.
For instance, if you know what the lifetime value of your customer is – you can then identify how much you can afford to invest to get that new customer.
And if you are making more than it is costing you to get that customer from a lead generation campaign, guess what?
You can continue to market extremely hard because you know you are profitable.
And that is the key to building a successful business.
Advertise conservatively… get a profitable model running… and then step the foot on the accelerator.
But you’ve got to know your numbers.
And that’s where the Hawthorne Effect kicks in.
By creating your own experiment, you start observing everything your business is doing. And as a result, you notice you are being observed and start seeing the results…
And you naturally think of how to improve them.
Want to know how to identify the average lifetime value of a customer… and how to analyse the true profitability of any advertisement you run? You’ll find everything you need in chapter 3 and pages 70-71 of my advertising manual.
Elite athletes observe themselves and their results all of the time. But amateur athletes don’t. I am guessing it’s the same in business – if you want to be the top of your field start measuring all your numbers today.
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