Businesses don't exist without customers, but many take their customers for granted

A business doesn’t exist without customers. Start-ups are reminded of this every day. They fail if their product doesn’t meet a fundamental need of a group of people. If people don’t want to buy it, there’s no sales, and no business.

Small businesses likewise. A coffee shop or butcher would soon go out of business if they treated their regular customers with contempt or didn’t deliver to their expectations.

Big business is the same. And some of the most famous and enduring businesses have had a sharp focus on the customer, an approach that existed before they sold something, as they sold it and after the sale. Paris’ Hotel Ritz espoused that the customer was never wrong, Selfridges that the customer was always right. And US dairy store Stew Leonards that there were only two rules around the customer – the first that the customer is always right, and the second that if the customer is ever wrong, re-read rule number one!

So it’s surprising to hear some well-known Australian companies recently relaunched their businesses to have a “customer-first” approach. It raises the question as to what they were doing before - and why they took their focus off the customer in the first place? 

Even more worrying are those industries that continue to de-prioritise the customer in the long term in favour of pleasing their shareholders in the short term. The annual reports of ombudsmen in the telecommunications, financial services, and energy sectors make sobering reading. Telecommunications complaints were up 28.7 per cent, financial services complaints by 16 per cent. 

And while the energy ombudsman only had to deal with 27,000 disputes, the energy companies themselves received close to 800,000 complaints. Telecommunications customer complaints reflected the other industries – disputes around charges and fees, unsatisfactory responses to issues, and poor service quality.

A recent global EY report into customer-centricity in the insurance industry only confirmed this, and more. Its customer survey highlighted four dimensions where insurers were failing to meet customers’ expectations: service quality, rewarding loyalty, communication and product transparency.

The naysayers will point out that the customer isn’t always right and is not a subject matter expert. And in the case of the energy sector, only 3 per cent of the complaints needed to go to the ombudsmen for dispute resolution. The counter-argument is that something is broken around the customer experience when there are 800,000 complaints in the first place.

Others will highlight successful companies who have an employee focus first and customer focus second. But this is really just empowering your employees to deal with customers the way the CEO or founder would.

The latest statistics are backing up what seems like common sense. In 2016, KPMG and Forrester determined that “almost 90 per cent of companies expect to be competing on the basis of customer experience alone”. And that the top 25 customer experience leaders in the US were achieving almost double the revenue growth of the top 25 Fortune 500 companies.

It is true that in today’s digital and technology-led world, delivering to customers’ expectations is not as simple as it once was. Some customers want to deal with a company face to face, others on the phone, some via email or text, others via a chat bot, some via social media and others via a website. And a few by multiple means. One customer might be more interested in getting information before buying, another might just want a seamless and quick sale process, and a third is more concerned about the customer service they will receive after purchasing. It is a complex mix of human and digital interactions. And the customer expects you have all of their data at your fingertips, at whatever point of that journey they’re on.

External expertise in this space is growing rapidly. Consulting firms, accounting firms, advertising agencies and technology companies are battling it out with independent customer journey mapping and customer experience companies. Internally, organisations are appointing chief customer officers, and trying to break down the siloed structures and rigid processes that often lead to disjointed and frustrating experiences for customers.

Similarly, boards are starting to realise they need someone at the table representing the needs of the customer. In the US, only 2.6 per cent of boards have a marketing expert. How different might the banking royal commission have been if boards had a customer-centric director to balance those more focused on short-term financial returns for shareholders?

As legendary marketer Peter Drucker said many years ago, “The purpose of a business is to create a customer”. It seemed so obvious. Yet somehow it drifted from being the focus of many companies’ agendas as the customer became taken for granted. Tomorrow’s successful companies will have it firmly back on their agendas.