Low Hanging Fruit Principle |
| Credit: Smart Sync Services |
Meaning
The low-hanging fruit principle in business refers to the approach that some executives take to focus on the most easily attainable goals. Typically, these goals lead to the quickest results. This principle can apply to many aspects of a business, including:
• problem-solving;
• marketing;
• sales; and
• growth.
For example, one might choose to reinvest into an already popular product rather than exploring a new product line.
Use of Low Hanging Fruit in Business
• Opportunity Cost: Opportunity cost refers to the benefit that one could have received but gave up when chose to take a particular action. For example, let's say you had $1,000. After contemplating whether to put the money into marketing or buy new equipment, you choose to put the money into purchasing more equipment. If investing in marketing would have increased your revenue by $10,000, that amount is the opportunity cost that you forfeited.
• The Cost-Benefit Principle: It refers to the process of summing up all the direct and indirect benefits and costs of a particular decision. The cost analysis should include any potential opportunity costs or risks. Using the analysis, one should only proceed with the intended action if the benefits exceed the costs.
• The Law of Diminishing Returns: It refers to the rule that as we increase a particular input, the amount of output slowly decreases. In the above example, if you had an infinite sum of money to spend, the question would then be how much capital you should purchase. Applying the cost-benefit principle, you should continue to purchase equipment until the costs outweigh the benefits that it provides. If you applied the low-hanging fruit principle, you would use the first piece of equipment in its most productive area, the second in the next best productive area, and so forth. As you continually increase the amount of capital, the production you receive in return diminishes.
The risk is that it is easy to assume that buying more equipment will lead to more revenue. However, these principles show that you will eventually reach a point where the costs balance with the benefits of adding another unit of capital.
Result
• The low-hanging fruit principle's primary advantage is promoting efficient gains. Businesses that concentrate on this principle will be able to:
1. hit targets faster;
2. make quick decisions;
3. close more sales;
4. have a steady flow of leads to the business; and
5. achieve more rapid growth at least in the short term
• In many instances, the low-hanging fruit principle may not work with your organizational strategy and goals. Your focus may move away from achieving major milestones to choosing the quick and easy option.
Examples
The low-hanging fruit principle applies to many aspects of your business. For example, it might include:
• reusing marketing campaigns that have previously worked for your business;
• retargeting former customers to increase sales;
• focusing on existing product lines before expanding your offering;
• expanding your business into multiple states and territories using the same business model;
• targeting your social media followers or a subset of your existing customers with a special offer;
• cross-unit collaboration between teams, as opposed to hiring new people with the same skillset;
• collecting emails in return for content on your website;
• making decisions on quickly solvable problems before tackling more complex ones;
• updating and republishing evergreen content; and
• recycling content.
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