Customer Relationship Mastery: The Jaw-Dropping Opportunity to Compete on Customer Value
Does a business not exist to serve customers?
To me, ‘business is for customers’ is the most accurate and productive truth.
I can certainly understand how some may (initially) believe that ‘business is for owners’ – if the people operating a business do not benefit from doing so, it is illogical to continue.
However, with time, the difference between the validity of these two views becomes obvious:
When a business operates to create value for (serve) customers, owners inherently benefit.
When a business operates to create value for owners, customers do not inherently benefit and owners are unlikely to benefit for very long.
For example, between 2011 and 2016 managers at Wells Fargo opened millions of new banking and credit card accounts for customers without their knowledge in order to meet aggressive sales quotas. These managers acted to serve owners (i.e. shareholders) in a way that destroyed value for customers and owners alike.
After a mere five years of hollow business benefits, Wells Fargo was found out, fined billions and suffered lasting damage to its reputation.
On the other hand, American express launched a “Pay It Plan It” service so younger, less established customers could split up large unexpected expenses over time. It was a challenge for American Express because of regulatory and technical complexity. But once they did, it took off with more than just their younger customers, generating $4 billion in purchases in the first year.
The natural conclusion is that both customers and owners benefit much more for much longer when ‘business is for customers’.
New Territory’s stance is that creating customer value is the singular apex purpose of any business and by living up to that purpose (sustainably) the owners of the business will rightfully benefit at least as much as customers.
Yet, especially in recent years, business has habitually ignored customers:
In 2010, the cost of waiting in a call queue to the American economy was estimated to be $38 billion (USD) per year. Certainly, customers would rather do something else with these 13 hours they spend stewing in anger.
In 2017, one consumer survey revealed over three quarters of consumers were less than satisfied with their customer service experience.
In 2018, the merging and gutting (cutting $2 billion in costs including the elimination of many jobs) of Heinz and Kraft resulted in declining sales, poor prospects for the future, and dramatic declines in share price at a time when the market was way up. Why? Because the now anemic enterprise did not have the capacity nor the competencies required to address changing customer needs.
In 2021, PWC reported that 44% of customers stopped buying from a business due to a lack of trust.
Last July, Channel Daily News reported that one quarter of small and medium sized businesses (SMBs) were looking to replace their Managed Service Provider (MSP) due to a “litany of frustrations.”
Last September, the same outlet reported that twice as many leaders aimed to consolidate vendors in 2022 than 2021 because they were increasingly dissatisfied with operational inefficiencies and wanted to get more value from their products.
Last year, PWC reported that although 87% of executives believed consumers highly trusted their company, only 30% of consumers actually did, recommending leaders engage in open dialogue with customers, listen carefully and actively invest to foster trust. (How radical!)
The cost of poor customer service and relationship management overall has risen so ridiculously high that it’s created a new deal-with-customer-service-as-a-service market.
Consumers are now willing to pay someone else to hold companies accountable on their behalf. In other words, this one company will “Karen so you don’t have to” at a pretty price point.
What these few examples of a much larger problem add up to is a massive opportunity.
Any business in a truly competitive industry has the opportunity to grow substantially and sustainably by developing systems and skills that maximize customer value.
First movers will capture more market share, more profitably and leave laggard competitors behind in a precarious position they may not be able to survive.
One study on the impact of better service found that customers who simply received a response to a complaint were willing to pay $6USD more per month for their wireless plan compared to those who did not receive a response.
Even without a resolution, they valued feeling heard.
When a resolution was included in the response, this willingness to pay increased to $8USD and when the response came within five minutes, the boost more than doubled to $17 USD per month.
The point here is that there is a lot of money to be honourably made by simply serving customers better.
But this massive opportunity won’t last forever as the cat is very much out of the bag.
In 2019, a roundtable representing many of the largest U.S. firms, issued a formal declaration that the purpose of a corporation was to create customer value and shareholder value equally.
New Territory’s stance is that creating customer value is the singular apex purpose of any business and by living up to that purpose, owners of the business will rightfully benefit.
This is why we proclaim Customer Relationship Mastery to be the most practical strategy for any business and have stressed for years its usefulness to the profitable growth of the many small and midsize businesses in Canada that make up a large proportion of our economy.
Business strategy is about optimizing the use of limited resources for greater outcomes.
Business strategy comes down to making trade-offs: making informed decisions about what will and what will not be prioritized, pursued or practiced.
There are many facets of operating a business that a typical Canadian Enterprise could justify deprioritizing or just plain ignoring. Creating customer value is not one of them.
Does your business prioritize the creation of customer value above virtually all else?
How does your organization define customer satisfaction or customer success?
How does your organization define customer loyalty? Have you ever quantified it?
How well has your organization performed against these definitions in recent years?
Are you relying on a handful of random customer interactions from recent memory to draw conclusions about whether your organization is meeting customer expectations (and keeping the competition at bay) across the board?
As the saying goes ‘what gets measured gets done’.
If your business is one of the many Canadian Enterprises that have not established a formalized process for tracking and improving performance in meaningful ways, perhaps it’s time you did.