Putting Customers at the Center
Fred Reichheld
Bain Fellow, New York Times Best-selling Author/Speaker on Loyalty, CX, Customer-Centric Strategy; Creator of the Net Promoter Score and System
In this, the second installment of the newsletter, I thought I would share a few interesting ideas in the news.
On July 24, the New York Times published a piece by Harvard economics professor N. Gregory Mankiw, provocatively titled “CEOs Are Qualified to Make Profits, Not Lead Society.” I completely agree with one point Mankiw makes—that executives need to focus their decisions on just one group of stakeholders. But while he defaults to the old-school view that shareholders deserve primacy, I believe today’s most successful companies put customers at the center. The evidence: In industry after industry, companies with the highest customer Net Promoter Scores rack up better growth and shareholder returns.
Mankiw’s piece is in part an argument against the movement toward broader corporate purpose embraced by the Business Roundtable last year. He makes a compelling case that leaders cannot serve multiple masters. How true!
But Mankiw and I part ways when he argues that executives are the wrong people to manage the complex issues facing society. Yes, the challenges are daunting, but that's all the more reason that leaders of all types of organizations—corporations, nonprofits, schools, hospitals—must pitch in and help. No matter how competent our elected leaders, can we really expect them to solve everything we face right now?
Some of the very best communities I have encountered were built by corporate leaders who believe that the primary purpose of their company is to enrich customer lives. Creating communities of accountability around this mission provides not only a better world for customers, but also meaningful careers for employees and superior returns for investors. And I suspect most businesses are more responsive to feedback than the typical elected official. (Long before many governments had their act together, large companies including Apple, Costco and others required that both employees and customers wear masks to protect the community from Covid-19.)
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“Everyone seems to hate America’s giant tech companies these days—except the hundreds of millions of people who use their products.” That’s how the Wall Street Journal editorial board opened its critique of the recent interrogation of big tech CEOs on Capitol Hill. Unfortunately, the article didn’t dig into the value of customer voice.
Last December, I contributed a piece to LinkedIn’s Big Ideas 2020 project. My idea was that regulators should tap into the increasingly rich vein of customer data when weighing whether companies are so big they require breaking up. The happier their customers, the weaker the argument for antitrust action, I think.
Do you agree?
Process Assistant at Amazon
4 年The number one goal for a company is achieving customers expectations. Right?
People. Work. Customer.
4 年Apparently professor Mankiw never watched Schindler's List.
? Top Client Retention Expert in US? Expert Legal Witness for Client Retention? More Than 5% of Clients or Employees Leave = Retention Problem? Keynote Speaker & Consultant? Predictive Data Analytics ?Change Agent ?
4 年I do not think anti-trust laws should be ignored. There are numerous problems when any company has a monopoly. It negatively impacts healthy competition, gives more power to the company than perhaps it deserves, distorts the perceived future value of the industry, and inhibits the industry's growth from startups. I am an avid follower of you after I saw you present in 1992 at the Strategic Forum. My consulting firm focuses on retaining top clients and employees. So I have drunk the Kool-aid. I concur that customers' delight needs to be taken into account in anti-trust situations. It could become part of the evaluation of anti-trust cases. We are in unusual times and I know usually new and fresh ideas are needed to guide us through these times.
Holistic Financial Advisor | Wealth Management | Life & Health Financial Risk Management | Legacy & Estate Planning
4 年Government attempts to solve human organization issues, conflict and coordinate among competing interests. Businesses solves "gaps" the government misses/overlooks and provides goods and services beyond the basics negotiated in a social contract between the governed and governor. Then you have a hybrid of government and private enterprises. But that's a different story. The market will decide if a business will succeed or fail. Financial reward is only a result of a satisfied customer. In basic economics classes we learn that demand creates supply. However, it seems like some firms are able to "create" a supply first, then attract demand. Another way of seeing it is: the demand was always there and an innovative firm was able to identify those demands. Frankly, I don't know which follows which anymore with so many companies that defy conventional market and economic theories. However, what I do know is, no matter what we do, be it a brain surgeon or a delivery person or a driver or a financial planner; we are here to solve other people's problems. Everyone's got problems ... it is up to innovative firms/people to figure out the easiest, simplest, least expensive, highest quality and quickest way to deliver.
Visionary IT executive with 20+ years of success driving digital transformation, optimizing global infrastructure, and leading high-performing teams to scale innovation, cybersecurity, and enterprise technology solutions
4 年Fred’s last line is telling, “The happier their customers, the weaker the argument for antitrust action, I think.” Do you know if your customers are happy? My answer: spend time with them. Dedicated time. Measure outcomes using NPS. “Our country was founded on the understanding that if we were going to make it, we would need to make an unusual commitment to one another. When our founders wrote, ‘we mutually pledge to each other, our lives, our fortunes, and our sacred honor,’ as the last line of our Declaration of Independence, they were also declaring our interdependence,” Compassionomics (2019). We depend on companies – big and small – to keep us as happy customers.?