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At Tacticware, we discuss challenging and meaningful subjects for today’s business leaders. On its whole, we suggest that leadership, culture management, and strategy set the boundaries for growth.
Cultural challenges and leadership have no Silver Bullet. Every customer transaction is impacted by the culture and leadership of the organization and its employees. The impact of culture directly influences financial growth.
But keep in mind our dialogue is not about basic business mechanics; it’s about communication and developing quality employees to gain customer satisfaction.
Customer Relationships- Do We Know or Assume Our Customer Relationships?
Quality customer relationships drive sales revenue, earnings, and vision. Often times company management assumes positive customer relationships exist. They take the approach no complaints equate to satisfied customers.
Many companies rely primarily on sales departments to maintain customer relationships. Sales department reporting and steady orders are the primary source of information regarding customer satisfaction. When a salesperson reports a customer relationship is fine, and the customer continues to order, then management moves on to fight larger fires.
Assumption is an action word for some management teams. Assumption is an indicator of the level of company leadership. Leadership teams focused on facts rather than assumption walk a different path. Leadership relying on assumption generally exists in a world of financial dysfunction.
Service and retail industries survey (B2C) customers to determine customer satisfaction with every transaction. The consistent question is, “Did we perform well or not?” Without sounding negative, how many of these companies actually improve their customer practices from survey data? As a customer, what is it like to contact the company or complete a survey and never see any improvement?
Business to Business (B2B) companies should maintain a top to top relationship with their customers. Interpersonal relationships between company sales employees and customer supply chain procurement is a given. But what about including president to president, and officer to officer? Leading from the front lines connects management, customers, and employees.
Business relationships are never perfect. There are very few companies operating with 100% product fulfillment, product quality, or customer service? When companies can’t get it right with their largest customers, how do B and C customer fare?
Top management should be refining customer expectations at every opportunity. What business defined as expectations yesterday is not acceptable today. The real fact is owners and officers should be engaged with customers. Customer engagement is not something to delegate because of company departmental silo’s.
Departmental silo’s tend to hide challenges rather than resolve them. The victim is the customer. The larger the company becomes, the more complex the structure of its departmental silo’s. Company departments are sometimes territorial, predatory, and resistant to improvement. They align to symptoms rather than the sources of challenge.
The other challenge to consider is employee attrition. When employees leave the company, so does the relationship. If the employee is toxic, then it’s probably good. But when a quality employee leaves the company doubt builds. Single source customer relationships contribute to loss of trust and confidence in the company. Excessive employee turnover invites scrutiny and competitive review.
The Price Myth
The notion that most customers leave because of price is myth. The real reason a significant number of customers leave is because of poor company communication and business practices. If a quality relationship existed with the customer, resolution could have occurred.
Effective leadership manages the customer relationship. It listens, becomes involved, and resolves customer challenges. It assumes nothing. Challenges instead become transparent and are everyone’s issue, not one department.
Pivot Your Thinking
What if executive and management compensation incentives were tied to customer satisfaction and loyalty? How satisfied would customers become? How would customer loyalty be influenced? How could market share and competitive advantage be maximized?
The real truth is some management teams have forgotten about customer retention, penetration, and innovation. Key management quit doing what made them successful. In the beginning the business started out in a small office or a garage. The customer came first no matter what.
Nothing has fundamentally changed, interpersonal customer relationships are the heart and soul of business sustainability. As companies grow, top management becomes isolated from customers. Other duties have taken priority over customer relations.
There are relevant companies and those becoming irrelevant. Relevant companies realize effective customer relationships and best practices set the stage for healthy discussion. Quality customer relationships open the door for collaborative innovation and greater perceived value.
Non relevant companies are losing out to competitors. If they expect to retain customer satisfaction and future transactions, interpersonal communication is critical. If they expect to innovate, customer collaboration is imperative. Non relevant companies face a slow slide because they fail to value customer relationships.
What is your customer attrition rate? Normal attrition for your industry might be two to three percentage points. Every percentage lost above normal attrition is a sign of company and customer challenges. Any loss greater than two to three percentage points should cause alarm. The leadership team should investigate the real reasons for customer attrition.
Too Big to Fail
Thinking your company is too big to fail? For the record, there is a list of large publicly traded companies failing to meet growth expectations. The days of relying on acquisition for growth, as compared to organic growth, is a systemic risk. It’s also evidence of flawed leadership.
Financial buyers of business should certainly review inefficiencies and work to improve them. But they should also place strategic value on the people and best practices that made a brand successful. They should work to retain those qualities. The culture is the brand. Without culture the brand ceases to deliver value.
Objectively speaking, it can be helpful to employ an unbiased observer to help your organization when considering customer analysis and improvement. Oftentimes an outside, objective ally can assist in determining all sides and pieces of the puzzle, giving a honest view of culture with no play of politics.
Paul Fournier is President of Tacticware Resource Group. Tacticware is a Business Management Consultancy firm offering leadership, cultural management systems, strategic planning, continuing education/training, and 360 Cultural Assessments. We assist clients nationally. Learn more about transforming your business by contacting us.
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