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Q: In
your opinion, what big business imperative doesn’t get
enough attention? Pedro Cezar Dantas Neto, São
Paulo, Brazil
A:
Not innovation, that’s for sure. Appropriately, it’s on
everyone’s mind these days. Same for technology,
globalization and employee engagement—all burning
bushes, as they should be. Quality doesn’t get talked
about as much as it used to, but that’s probably because
it’s such a given. Same for teamwork. And strategy?
Well, in today’s lightning-paced world, people seem to
be giving it about as much attention as it deserves.
Which,
to your question, is something you can’t say about
stickiness. Of all the business ideas in the
“debate-o-sphere”—and stickiness has been out there for
years now, known by many names including “customer
retention” and “loyalty”—it still doesn’t obsess
managers nearly as much as it should. Because stickiness
can change the game: It transforms business from a
transaction-based model to a more lasting, mutually
beneficial one, in which companies improve their own
revenues and margins by improving their customers’
competitiveness.
Indeed,
the only trouble with stickiness, as far as we can see,
is that it can be so hard to create. But still, allow us
to suggest a few proven ways to go at it.
The
first, perhaps not surprisingly, is good old-fashioned
service. What is surprising, however, is just how
exceptional, consistent and relentlessly inventive
customer service needs to be to stand out these days.
Take Mitchell’s, the Connecticut-based clothing chain.
It’s managed to outperform its competition in the tough
suburban New York market by treating its customers not
only like royalty, but also as unique individuals,
offering personal productivity “enhancements” with
conveniences such as same-day tailoring and home
delivery. On a much larger scale, The Four Seasons also
wins hearts and wallets in the crowded luxury hotel
market by invariably delivering high-quality, seamless
experiences.
For
manufacturing companies, customer service is critical,
but another approach to stickiness can pack an even
bigger wallop. It requires moving from a product-focused
business to a product- and long-term service business by
guaranteeing productivity gains to customers. Now
remember, most engineers want to build new machines; the
faster and more powerful, the better. With this model,
you’re asking your engineers to focus on continuous
technology upgrades to meet the commitments that got you
the sale, and you’re betting they’re talented enough to
design and deliver those upgrades in a way that can
guarantee productivity increases over many years. That’s
a big wager, but if you’re right, it’s a huge win for
everyone at the table.
Another
option open to manufacturing companies, particularly in
commodity businesses, is to use your strong balance
sheet to take a major outlay of capital off of a
customer’s balance sheet. Specialty industrial gas
companies win long-term contracts, for instance, by
building their plants next door to customers’ factories,
providing over-the-fence, competitively priced raw
materials without the hassle of hazardous delivery.
Similarly, some plastic manufacturers build onsite silos
for their customers, essentially guaranteeing an
ever-present, cost-competitive supply. Again, their
customers return the favor by, well, sticking around.
Putting
manufacturing aside for a moment, almost all companies
can create stickiness by sharing know-how. You can
welcome customers into your R&D facilities with a “my
lab is your lab” mindset, share new designs for
packaging or demonstrate exciting products coming down
the road. If your expertise happens to be in human
resources, you can train your customers’ managers in
hiring, coaching, evaluation and the like. Many
companies that are advanced with lean Six Sigma, for
instance, send their “Black Belts” into customer
organizations to launch training programs. Such
unbridled sharing of expertise can create a real
affinity, not to mention a mutual obligation that
typically yields dividends for years.
Finally,
many businesses can create stickiness by building user
communities. Every year in cities around the world, for
instance, the software company SAP hosts conferences
where customers can meet with IT experts, software
developers and—most important—each other, to share SAP
best practices. The conferences are not sales events per
se, but you can be sure that attendees leave with a
feeling of partnership with SAP that has to be a big
part of the company’s steady share gains.
We’re
not inventing gravity here: We know that in most
companies, all or some of these approaches to stickiness
have gotten lip service. But too often that’s all they
get. The truth is that any one of these approaches
involves a major culture and mindset change, with a
management commitment of time and money, and the
acceptance of some level of risk. Basically, the
organization must come to see the world through the
customers’ eyes. Otherwise, unlike gravity, stickiness
just won’t happen.
****
Jack
and Suzy Welch are the authors of the international
bestseller Winning (Collins). Their latest book is
Winning: The Answers: Confronting 74 of the Toughest
Questions in Business Today (Collins). They are eager to
hear about your career dilemmas and challenges at work
and look forward to answering your questions in future
columns. Please visit their new website at
www.welchway.com and submit questions through the online
form at welchway.com/Contact-Us.aspx. Please include
your name, occupation, city and country. |
