The Customer is Always Right
William is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” ---Sam Walton
When I was younger I used to spend the summers in South Carolina with my grandparents. One day my grandfather decided to take me to a store, unknown at the time in my home state of West Virginia, known as Wal-Mart (NYSE: WMT). It was around 1987 I think. I was 11 or 12 years old; I really can’t remember at this point. What I saw in there stuck with me until this day. On the right side of the door there was a desk set up with a chair. On top of the desk was a plaque with the phrase at the top of this page. That made me think. Here is a business that realized that if you didn’t shop there then they would be gone. The CEO’s job would be gone; the employee jobs would be gone.
Wal-Mart and its subsidiaries have always seemed to strive to bring what you want at a low price. Their focus on the customer has paid off; its stock price has soared 125,300% since going public in the early 1970s. Years later I went to work for my uncle at a Winn-Dixie in South Carolina. He told us under no uncertain terms that mistreatment of a customer was a firing offense. He meant it too because he fired a couple of people while I was there for that very reason.
This reinforced a very valuable lesson: The Customer is the Always Right because they pay the bills.
The Five P's
McDonald’s (NYSE: MCD) has 5 core principles in its business: People, Products, Place, Price and Promotion. A newly remodeled local store near where I live shows its focus on these principles.
People: When you go in you are greeted by friendly and professional employees. They also have you in and out of there in an efficient fashion. This is new, they give you a number to better identify your order so you won’t go to the table with someone else’s food. I guess this an element of the Product Principle as well and it minimizes waste and maximizes customer satisfaction.
Place: The new angled parking lot makes it easier to pull in. The newly remodeled building looks more upscale and ultra modern. I also like the lid dispenser that opens up and gives you exactly one. I think this is more sanitary, increases customer satisfaction and minimizes waste. Previously when you went in there you saw lids lying all over the place. This is a vast improvement. Also there are now two parallel drive thrus making it easier to handle more customers.
Price: The price has gone up in recent years but so has the quality of its product. McDonald’s still has great value in their value menu.
Product: The products are high quality and worth a small incremental price increase. I always said that I much rather raise the price then keep the price the same and lower the portions. They have expanded their product lines to include healthy choices like oatmeal and new drinks such as the berry chiller.
Promotion: They also have new monitors in the restaurant that show you new items in bright colors that make you want to buy.
McDonald’s is a Motley Fool Caps pick of mine and has done well on the stock market. Its stock price has increased 139% vs. 1.78% for the S&P 500 as of this writing on 07/10/12 since September 12, 2007. No doubt they achieved this by scaling the nuances listed above.
The Infinite Amazon.com
Jeff Bezos of Amazon.com (NASDAQ: AMZN) is famous for being customer centric. He views customer complaint calls as a failure. He cuts back on employee perks so the savings can be passed on to the consumer. Over the years he has acquired technologies to make it more convenient for the customer to well …buy. Not only can I get whatever I can think of by simply typing a search query, but it also gives me recommendations for other items. Jeff Bezos is an online version of Sam Walton. This company has given up a 12,900% return since going public 15 years ago.
Final Word
Customers are the ones that buy a business’s products. They pay the bills. Companies that truly focus on them and give them what they want are duly rewarded.
Foolish Bibliography
Motley Fool Caps @ caps.fool.com
The Customer is the Boss @ www.youngentrepreneur.com
Inside Amazon’s Idea Machine: How Bezos Decodes the Customer @ www.forbes.com
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