The Purpose of Business Is To Attract and Keep Good Customers
Here is a scary thought for a Monday morning: many CEOs have lost sight of the importance of customers.
Oh sure, they do know that customers are the folks buying their products and that such sales are important. However, with a focus on quarterly sales and profit figures, head counts, share prices, mergers, cost structures, and other financial ratios, too many corporate leaders have lost the customer insights required to develop and maintain market leadership.
My long-held suspicions on this were confirmed in an article in Inside 1 to 1, the publication started by the Peppers & Rogers Group. Appropriately titled “Dear CEO: Don’t Leave Customers in the Dust,” the authors Don Peppers and Martha Rogers write that they are “amazed at the number of CEOs who give interviews on how to grow their companies, or even more fascinating, the CEOs who tell the media how they are going to save their failing companies, and yet make no reference to customers whatsoever.”
The authors tracked one month of interviews on business news channel CNBC and reported that “23 CEOs discussed their companies’ strategies and only six used the word customer” in their responses.
The authors also cite a Deloitte survey of 50 technology CEOs, which found that only six percent said building customer loyalty is their biggest challenge to sustaining growth. This was well behind other “more important” issues such as bringing new products to market (27%), hiring salespeople (18%), and developing strategic relationships (15%).
I have noticed this trend for several years in my own reading of business publications. Senior executives are more willing to talk about how they are cutting costs than about the steps their organizations are taking to better understand the changing needs, wants, and desires of customers.
Rare is the executive who claims “we are going to be successful and grow our business because we are listening to our customers and aligning our future products and services with their future needs.”
Fortunately, such executives are only rare, not yet extinct.
It is sad to watch stellar organizations go through cycles of poor leadership, wrongly placed focus, and lack of direction simply because senior management decides to take the corporate eyes off customer needs.
This happened to one industry-leading MNC in Southeast Asia, when several changes in management led to cost cuttings, reduction in staffing, and automation replacing humans at key points of interaction with customers. This company was previously the benchmark for customer service in its industry. Today, customers constantly comment that “they used to be the best, but now they are the same as everyone else.”
Not surprisingly, this company has also seen massive staff turnover within its middle management ranks, something that was unheard of only a few years ago.
As the legendary Peter Drucker wrote, “the purpose of business is to attract and keep customers.”
This phrase should be posted on the walls nearest every CEO desk.
And next to it should be a poster saying “My primary role as CEO is to ensure we build loyalty with our customers and our employees.”
Customers. Employees. Operations. This is what CEOs should focus on, and in the same order as the letters in their titles.
The ones who do this are the ones who will build sustainable and profitable businesses over the long haul.
KEY POINT: senior management should focus on customers first, employees second, and operations third.
TAKING ACTION: review your last dozen public or internal pronouncements on your organization’s business strategy. How many of these include comments and directions on customers and customer needs? What priority is given, if any, to customers and customer needs?
Ask yourself, how much time per month do you spend in internal meetings? How much time do you spend attending to operational or financial issues? Then calculate how much time you have remaining for meeting customers and coaching employees. If you are not happy with the results from these calculations, what steps do you need to make immediately to give higher priority to customers and employees?
Go out and meet with customers. Conduct account reviews with your large and high potential customers. Gain insights into their current and future needs. Ask them questions about their business and where their industry is headed. Ask them how they view their relationships with your organization.
Bring together your leadership team for a full-day discussion on customers and customer needs. Enforce this rule: no discussions on sales forecasts, profit projections, cost structures, or internal constraints. Simply discuss your customers’ current and future needs. Then discuss how you can profitably provide solutions to these needs.
This article is excerpted from our book The Best of the Monday Morning Marketing Memo, available at Amazon in paperback ($13.88) and Kindle ($3.88) formats.