I happen to think Mr Drucker was partially correct but would extend it somewhat to include the lifetime value of a customer.
I also happen to believe that if a business focuses on creating customers and keeping them happy over their lifetime, shareholder value will naturally follow albeit later on.
I’ve already suggested that creating new customers is likely to be costlier the keeping existing customers happy to spend more with you.
So, I wonder why companies invest so much time, money and energy in finding new customers and what appears to be a lot less in keeping existing customers happy?
I came across this blog post recently which provides 50 Facts about Customer Experiences and has cited the sources.
The post covers;
Rather than reinvent the wheel I thought it might help if I directed you there so you can see for yourself;
I once worked at a distributor, a lovely company to work in aside from a problem. A problem which I think may be all too common.
In this particular company there were a number of individual and departmental targets. The outcome of these targets was the creation of silos.
Individuals within each department were always happy to help and assist other departments but their various targets often got in the way of the natural willingness to co-operate.
As an observer, I’ve noticed that the underlying structures will always tend to drive behaviour.
It all sounds so innocuous doesn’t it! Until one realises what happens with limited amounts of control.
Underlying Structures Drive Behaviour
In my case, the use of individual and departmental targets created situations which became competitive and not cooperative. And this was despite the willingness of people to try and help because everyone was stuck.
I was in sales and each year my profit target would go up. This in itself isn’t a problem as such but it becomes a problem when one’s target is limited by another department’s targets.
In this case, the accounts/resellers I looked after had utilised all available credit available to them. The credit control department had their own targets which meant I was indirectly restricted in what I could do.
They either increased the credit limit and helped me hit my target or they didn’t in which case I would very likely fail.
Fortunately, they were open to persuasion and did increase credit limits, plus I was able to create a situation in which my resellers were encouraged to use their available credit to buy products with higher margins. So I made more profit and almost everyone was happy.
I say almost everyone because some of the product managers who did of course have their own targets lost out. Moving resellers away from buying low margin PC’s to higher margin networking helped my commissions no end but didn’t help the PC product managers.
Working in a business isn’t normally life threatening as such but in some cases it may be.
This is one such example of a life threatening target regime. It relates to the NHS in the UK and would encourage you to take a look because it’s quite thought provoking.
Why have principles in the first place?
I think principles provide for utilisation of a rare resource called common sense.
So much of business is bound by processes and there’s nothing worse than an inflexible process which has failed. I’m not saying don’t have processes because they are a vital component in all sorts of areas of life. But have processes which understand the dynamic and changing nature of systems which inevitably relate to each other.
“Rules are for the obedience of fools and the guidance of wise men.”
The quote from Douglas Bader sums up a type of philosophy which I hope may be helpful to you.
Matt Watkinson in his book, “The Ten Principle behind Great Customer Experiences,” made some excellent points which I’ve bulleted for you;
With that said let’s take a deeper look at some of these principles in a follow up post.
A Tennis playing father of two. The two in question are at an age where everything they do is correct and anything I suggest is stupid! Luckily business is a tad easier... Once I start to understand the challenges and the hoped for vision, I can usually plot a way forward. Understanding and Discovery are my two watch words.
Customer Experience – Washing Machine Blues
Customer Experience is Tested – Short Video
Your Customers Experience and the Ten Principles
Learn Scrivener Fast – Customer Experience Written Report
Learn Scrivener Fast – Customer Experience Video
Why Customer Experience Principles?
The Principles of Human Customer Experience
Customer Experience and Increasing Average Life Time Value