smith+co on
customer experience
Shaun Smith
  • By Shaun Smith
  • May 23 2011

Leaders need to lift their gaze from their numbers to their purpose…

As we emerge from the recession, business leaders will once more be thinking of revenue growth rather than cost cutting, market share rather than share price, and finding the right people rather than ’right sizing’. Well that’s fine then, we can put the recession behind us and resume business as usual. Well no, not really. The economic crisis and failure of banks like Lehman Brothers; the environmental crisis and criticism of major brands like BP; the explosion of social media and the emergence of brands like Twitter, Google and Facebook; all are creating seismic shifts in the world of business. A different breed of organisation is emerging in this world.

They succeed because they have the courage, confidence or just sheer chutzpah to pursue a purpose that is beyond profit. They engage, entertain and educate their audiences, and see their customers and employees as members of a like-minded community. They create an almost cult-like following around their brand – both within and without their organisation – and are not just different but dramatically different, pushing to the extremes the consequences of their desired positioning and strategy. They have a

BOLD vision and are committed to making it a reality…

So what is a BOLD vision?

What characterises the approach these

BOLD companies take to their ‘vision’? We think it is four simple but profoundly challenging things: 1. Their vision is based on a clearly defined brand/customer promise After about four years of being in business, the leaders of Zappos (the fast growing on-line retailer) asked themselves, “What do we want to be when we grow up? Do we want to be about shoes, or do we want to be about something more meaningful? And that’s when we decided we wanted the Zappos brand to be about the best customer service and the very best customer experience.” That brand promise made it possible to challenge their business model and create the success that Zappos enjoys today. 2. They are willing to trade short-term profit to achieve their long term vision Having defined their purpose as providing the ‘very best customer service’, Zappos then took the decision to stop its ‘drop-ship’ business model, whereby products were shipped straight from manufacturer to the consumer. This business represented 25% of sales and was the most profitable part of the business, but the decision was taken because Zappos could not control the customer experience and that was their priority. Tony Hsieh (CEO of Zappos) said: “We’re willing to sacrifice short-term revenue and profits if it’s in the long-term interest of our brand.” So what motivated that action? - The need to ensure their strategy and customer experience delivered their brand promise. And that takes us to our next point… 3. They align the strategy, the brand and the customer experience so they are inseparable Harvard Business Review research found that those companies whose customers believed they had become more differentiated realized a stock-gain of 4.8% on the year, whereas those that were considered less-differentiated saw a loss of 4.3% over the same period. One brand that has done this brilliantly is the Geek Squad, the technology support company. The brand has gone to enormous lengths to ensure that the customer experience, the brand and the strategy operate together to create a highly distinctive offer. Roberts Stephens (the founder) says “This is where companies go wrong; they don’t take a BOLD

enough point of view. That’s what brands are for, to make you distinct from other entities.” 4. They always use their vision as their ‘compass’ It is probably true to say that most organisations start off with a purpose - a vision or mission, an idea that drives them. However it is also true that as many organisations get bigger, the sense of purpose gets lost - trodden down by financial metrics which begin to drive the organisation instead. One organisation that has focused on its vision for the brand is Burberry. During the recent recession, the luxury retail market declined by 30%, yet Burberry continued to grow and recently announced a 30% year on year increase in sales for the second half of its 2010/11 financial year. It achieved this result by not letting go of the vision for the brand. As Angela Ahrendts (CEO of Burberry) says: “There is always this balance between hard and soft strategies, investment and intuition, but if you have a greater purpose, it becomes relatively easy to make those calls.”

Let your vision and purpose guide you

Seafarers have known through the ages that the way to navigate through dangerous waters is to have a clear course to steer - one that leads to the ultimate destination whilst avoiding immediate hazards. Unless organisations have this same clarity of purpose they will find themselves continually tossed about in the continuing turbulence ahead. The point that Richard Reed was making is that we cannot navigate our business solely through spreadsheets that are essentially records of where we have been - we also need a compass to know where we are headed to. That compass is our purpose.