Customer Companies That Grow in Good Times and Bad
Jeanne is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Companies that have grown in this economic downturn did so because their customers become an army of advocates who grew their business for them. They “earned the right” to their customers’ raves and the growth that ensued because they deliberately made decisions that moved their operation in the direction of their customers and employees.
Here are 10 companies worth watching and learning from -- their growth is insulated from market conditions because they build their business on these principles of doing business.
1. Believe in the integrity of your customers. The majority of business policies and rules are created to protect business from the minority of customers. Be bold, like Connecticut Griffin Hospital, which began sharing hospital records with patients and saw claims against the hospital drop by more than 43%! Take a leap of faith and believe that trust is reciprocated by customers when they feel that you trust them. Find one rule or policy to relax and watch what happens.
2. Invest in employee trust. Show your employees that you believe in them. Beloved companies Wegmans and The Container Store invest in their employees by training them in the skills that remove rules, regulations, policies and procedures that pen employees in. This enables Wegmans to throw away the rule book and live by this: “no customer goes away unhappy.” As a result their margins are higher and profitability more steady because they turnover only 7% of employees versus the average in their industry of 19%.
3. Practice democratic decision making. Make sure the best ideas of your company have a way to see the light of day. Give good ideas a chance to prosper no matter what rank they come from inside your organizational chart. Innovation and marketplace differentiation comes when employees are respected as part of achieving a mission greater than their set of tasks, and that their voice counts. W.L. Gore has become a $2.7 billion company; named by Fast Company as “pound for pound, the most innovative company in America;” and earned a place on Fortune Magazine’s best companies to work for list since its inception because of how it unleashed the spirit and ideas of its people.
4. Grow and invest in customers as a primary asset of your business. Talk about customers lost and gained in real numbers, not percentages, to bring home the vast number of lives your business impacts. Understand what drives customers out your door, and begin the relationship by investing in your customers by realizing their long-term potential. Zane’s cycles in Connecticut has experienced 23% growth every year for 29 years, with 45% percent margins because they never lose sight of the fact that their average lifetime value is $12,500. And the company manages relationships bearing that in mind. Valuing customers makes it easy to make decisions about how to treat them.
5. Know your power source for bonding with customers. Regularly connect with customers as they experience your products and services. Surveys and reports are great – but the beloved businesses are also avid “customer watchers.” Take a page from Trader Joe’s, which uses employee taste buds at their testing kitchens to determine what items should first make it to their shelves, but employs customer “tasting stations” inside their stores combined with sales to determine what items stay. This closeness contributes to Trader Joe’s ability to generate $1,300 in sales per square foot – twice the supermarket industry average.
6. Have clarity about how you uniquely serve customers’ lives. Unite your operation to ensure that decisions connect to deliver an experience customers want to repeat and tell others about. This ties cross-silo decision-making together and releases the organization from excess bureaucracy. IKEA, for example, designs the price tag first because they know that they serve customers who have less money in their pocket than sweat equity to put together their items themselves at home. Across IKEA, the understanding that the price drives design, innovation, and what they will and will not do drives their growth…sales that increased even in 2009 by 7.7 percent.
7. Deliberately walk in your customers’ shoes. You need to know your customers' life to serve their life. Yet as people rise through the ranks or even join organizations, orientation is often more about process and policy than learning about the customer at the heart of the business. Be deliberate in establishing a process for new hires, such as USAA, which requires new ‘recruits’ to wear the flak jacket and helmet many of their enlisted customers wear and to read their letters. All this is done so that at USAA when calls come in, they begin with connecting with the customer first then the process of the business second. 98% of their customers stay with them year after year.
8. Hire partners – make employee selection one of your most important decisions. Select your employees as you would customers – for lifelong value. At Chick-fil-A, operators and employees are selected based on their values, ability to build, grow, and sustain partnerships in all areas of their lives, and then their technical skills. As a result, Chick-fil-A has operator turnover of just 5 percent, and they just achieved 43 years of consecutive sales growth. Hire people who you want to become a part of the story of your business and then watch how your social media story improves.
9. Proactively solve mistakes when they occur. When mistakes happen (and they will) get out in front of customers and admit the flaw – then make peace with your customers. Repair the emotional connection, reduce the concern, and solve the problem. Southwest Airlines (NYSE: LUV) reviews every flight every day to know when they interrupted their customers’ lives, whether it was their fault or not. And they contact customers to explain what happened and, when warranted, send out LUV bucks for a future flight. Being proactive earned them a net revenue increase from those bucks of $1.9 million in 2010. What can you be proactive on?
10. Accept the order and the accountability. In a world where customers are holding a megaphone in their hand where they broadcast on the internet the experience you are delivering, invest in reliability. Don’t make the customer wonder where the order is, how long ‘til it gets there, or what happens when it backorders. If a customer can’t tell another customer what they get from you, how they get it, or how they feel when they receive it, they you don’t have a story to tell (at least one you want heard). Invest in reliability…earn the right to grow.
Beloved companies never lose sight of the people affected by everything they do. Their reward is an army of beloved customers who urge friends and colleagues to try these companies and embrace them as well.
ABOUT JEANNE BLISS:
Jeanne began her career as a customer service pioneer and went on to serve as the Chief Customer Officer at Coldwell Banker, Allstate, Microsoft, and Mazda. She is now the president of the consulting firm CustomerBliss, with clients including AAA, Johnson & Johnson, Costco, and Symantec. Jeanne lectures around the world and is frequently quoted by major media. Jeanne’s site is www.customerbliss.com and her Twitter is @jeannebliss.