I don’t think you will find a CEO who wouldn’t say ‘the customer is our number one priority’. Yet very few businesses ever achieve a true customer focus, and this failing places a ceiling on their success.
Active Knowledge Question:
How does your business achieve a relentless customer focus?
‘Of Course, They’re Number One’
You will hear it all the time in various forms. ‘The customer is number one.’ ‘We always put the customer first.’ ‘Customer service is our number one priority.’ And so the list of expressions can go on.
But is there actually any real substance behind these sayings? What does it actually mean to make the customer number one? And how does this priority sit against that of maximising profit?
While every business leader believes their customer comes first and is critical to their business’s success, there is a catch and that is the profit motive. The customer is held up as being the top priority because they are critical to achieving profit maximisation.
‘We need to put the customer first so we can achieve the profit result we are chasing.’ But then comes the choice of having to decide between offering more value to the customer or more profit to the bottom line. ‘If we cut costs back, can we sustain and grow sales and thereby improve profit this quarter/year?’
When a profit-first motive leads a business, the customer can, at best, only ever be number two. With many businesses taking a short-term focus on profit results, I am not even sure the customer comes second. Instead they are just part of the formula that is manipulated to deliver the promised profit result.
Herein lies the reason why very few businesses ever achieve a true focus on the customer and the performance results that can go with it.
What Is Customer Focus?
Obtaining a customer focus within your business is a lot more than customer service, customer personas or simply saying ‘our customers come first’.
A customer focus reflects the way you think, organise the business, and the basis upon which decisions are made. It reflects its purpose for being.
A customer focus reflects motive and basically says ‘we as a business are here for a purpose’, and that purpose is to meet ‘these stated needs’ in the marketplace. We compete around the value we are able to deliver to the customers who have those needs. If we compete well profit will follow. Profit is important as it allows us to meet those needs and to invest in the future, but we do not exist just to profiteer.
This view of the purpose of business and the role of needs is a significant paradigm shift for many businesses, especially publicly-listed businesses who have become accustomed to quarterly profit reports and the mantra of ‘more profits’. But as we have seen over the years with many businesses – the most recent example being Facebook – a veneer of the ‘customer being number one’ and a motive of profit can come unstuck very quickly.
A customer focus is born out of purpose and is sustained by a motive to compete. The right mantra is ‘better every day’ and being better at delivering more customer value.
Why was your business originally formed? What needs did it seek to fulfil? What value did it intend to deliver to its customers to allow it to compete effectively? How has that need and the value delivered evolved and grown over the years? Is there still a cornerstone of purpose that resides in your business? Or has that been lost as your business has chased growth in the pursuit of more profit?
These are the questions you will find yourself asking if you seek to recapture or establish a customer focus in your business. Here are a few well-known examples of how businesses have expressed their purpose, in turn, allowing them to develop a customer focus.
- Google’s is ‘to organise the world’s information and make it universally accessible and useful.’
- Apple’s statement was initially ‘to make a contribution to the world by making tools for the mind that advance humankind.’
- Facebook has re-expressed theirs to ‘bring the world closer together.’
However, where business models are developed to drive profits a customer focus can quickly be lost.
What Do You Compete Around?
Do you believe that in today’s markets we compete around the value delivered to customers, as seen through their eyes? If so, then a relentless focus on the customer is a must for your business to remain competitively fit.
It starts with understanding customer value, including:
- What is the customer need that your business is seeking to fulfil?
- What gives rise to that need and how is it best met/satisfied?
- What is evolving/changing in the world that may impact that need?
- What is evolving/changing in the world that may allow you to deliver greater value?
- Where do opportunities exist for you to improve the value you deliver to your customers in meeting their needs?
- Where do opportunities exist for you to expand the scope needs you presently meet?
This understanding of customer need is not superficial, rather, it is could be described as intimate. So close that you know it well, but at the same time you can step away from it to understand change, impact, evolution and opportunity.
By this, I don’t mean an opportunity to profit but an opportunity to deliver greater value to more customers through being more competitively fit. And from which more profit will be earned.
This distinction where the customer, and competing to deliver greater value, comes first and from which profit is earned may seem semantics to some but it is a vital and distinct approach.
A Relentless Focus On The Customer
A business that has a relentless focus on the customer is one where its sole reason for existence is meeting its customer needs. Everything is geared to delivering more value to the customer, and from which great profits will be earned if done well. Profit is merely one outcome of competing effectively and is certainly not the most important outcome or measure of success.
In a business where a relentless customer focus has been developed and is being sustained you will likely see:
- A sense of purpose that is clearly connected to the specific needs of customers.
- A motive to compete overriding a profit-first motive.
- That customer need is the focal point of the business and all activity.
- Metrics measure the effectiveness of delivering value.
- Rewards are based upon contribution to purpose.
- Decisions are made and assessed by their impact on customer value.
- Growth opportunities are assessed against alignment with purpose.
- Profit performance is measured against that required for sustainability, reinvestment in future customer value, working capital requirements and the cost of capital including dividends. And not against maximisation.
A relentless focus on the customer provides the cornerstone for the enduring success of a business. It ensures the business never loses sight of their customer’s needs and what the business must do to remain competitive. It also delivers a continual path for growth with new opportunities always emerging.
It also ensures the business is not distracted and chases various possibilities for growth and profit but rather keeps it anchored and compounding on its strengths.
A relentless customer focus is the making of great businesses.
An entirely new level of performance.
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All the best in the success of your business,
Richard Shrapnel
