‘Putting the Customer First’ Is An Outdated Strategy
If you have no customers, you have no business, so “you must always put the customer first” is the old mantra. If your business was purely driven by financial gain, you would be absolutely right. But is this still something that holds true today? Or are there other ways to make damn good money?
In recent weeks, a new bankruptcy storm raged through the Dutch landscape. A storm that is blowing harder than ever and that is unfortunately not limited to just the Netherlands. Indeed, it is not only entrepreneurs who make no choices or, on the contrary, very stupid ones. Governments also do and many entrepreneurs are now suffering as a result.
But not only that, a large number of these companies no longer had a right to exist anyway. Take BCC, an archetypal Dutch retail electronics company, founded in 1945 with 1,000+ employees; it has gone bankrupt. I personally know two of the people who were at the helm.
In 2012, as an ad-interim marketing director, I had the displeasure of watching them kill the then-BAS group of roughly the same size. It was like putting a dinosaur in a Ferrari. If you move forward at all, you’re asking for a crash.
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The agony of BCC putting the customer first:
With the rise of Amazon and the rapid growth of competitor CoolBlue, BCC was already in dire straits. But at that point, who decides to put two staid, traditional stone-age diesels at the helm? Both lacked vision, creativity, innovation, and let alone the ability to spell the word “disruption“. (Sorry, I am usually positive on this platform, but for these two individuals and the choice to put them in that position, there are no other words).
I was not there, but I can imagine the dialogue between those two. “Peter,” says Casper, “we need to innovate. Let’s put the customer first! Management guru Peter Drucker said it all in his 1954 book ‘The Practice of Management‘: companies exist to create value for customers and all business functions should be focused on that.”
“Good idea, Casper,” says Peter. “Let’s do that, then we will truly add value.” Peter wipes his glasses and starts scribbling some notes in his notepad while calling his secretary to him. “Linda, I want you to type out this note and circulate it to everyone in the company.” Linda looks at the note and says, “But boss, I’m having a bit of trouble reading it, what exactly does it say?” “It says,” says Peter, “that we will survive this crisis. After long strategic deliberation, our new strategy is that we put the customer first! I expect your enthusiasm and support. Your boss.”
“But boss, wouldn’t it be better to send that from your own name?” “Dear Linda, you know I don’t know how e-mail works, right? I can barely get that twisted computer to turn on.” Casper looks anxiously at Linda hoping he doesn’t have to either and quickly says: “I’d like to email it around too, but I don’t know how to write ‘strategy’.
Of course, this is just a ‘wrong’ joke, and personally, I have nothing against these two individuals, but there is some truth to it. And you can wonder if some people do more harm than good.
Putting the customer first is a foundation, not a strategy
At a time when yesterday’s innovation is already outdated today, you really can’t come up with a theory from 1954. You know that mandatory notice you have to put on investment products? “Past results do not guarantee the future.” The same applies to business. If you are not “adaptive to change” the race is lost in advance.
Putting the customer first is a foundation, not a strategy. Just like taking good care of your employees, offering the right value for money, living up to excellent service, and offering a product or service in demand.
These are things that should always be in good order. In addition, within retail, you want seamless integration between online and offline sales, fast delivery, knowledgeable and friendly staff, and sufficient stock. But that’s really not going to make you stand out these days. They are fundamentals. Maybe not in 1954, but today they are.
Is good branding the solution to success?
A few years ago, there was another ‘smart marketer’ who thought he could change an old retail chain called Blokker. The same Peter is a member of the board here. Millions were invested in redesigning the logo, loudly proclaiming that Blokker’s malaise would be over. Well, they still exist, but you have to wait until you open the newspaper and read the sad news.
I have been in the advertising business for 30 years, providing strategic advice, and have had the opportunity to see up close how true visionaries make the right choices. Branding has rarely been one of those choices. Of course, your brand should move with the times, just as your shop should be clean, the door should be open at the start of opening hours and you should greet customers in a friendly manner. Again, these are fundamentals and not keys to success.
While there are certainly cases where the right branding has turned a corner from loss to profit, as far as I know, this was never solely down to the branding. Often, it was entirely different strategic and visionary choices that underpinned it.
How to turn time around in tough times?
During the lockdowns, one of my favorite restaurants decided to deliver meals to your home. But not just in a cardboard box, like you get a pizza at home. No, they delivered it in a sturdy hot box, complete with real plates, real crockery, a candle, napkins with napkin rings, and more. When you set your own table with these, it looked like you were actually sitting in the restaurant. They have never had such good sales!
Turning the tide requires ingenuity, and therefore creativity as well as sense-making. Usually even a combination of both. I know of no business that has become successful without meaning.
After all, meaning is something other than a goal. It is about contributing to society while serving customers. This restaurant gave a piece of relief to customers through the way it delivered. A moment of carefree dining together. You didn’t even have to pay at the door or in advance. You just got an email or a Tikkie to transfer the amount. Above all, it was the experience and the relief that made you happy to pay that little bit extra.
Purpose as a driver of profitability
Such a chain as BCC had no clear purpose. It was probably convenient for John and Sara in their 80s, who had once bought their first black-and-white TV there: old and familiar. However, they no longer had anything to offer society. The world is no longer just about who can best sell something or has the best shopping location.
It’s about what you add to society. Or in Peter and Casper’s case, what you add to the business that gives it a purpose again.
Tony’s Chocolonely fights against the unfair prices cocoa farmers get and manages to capture a huge market share in no time. Is its chocolate really tastier than Verkade’s, which has been on the market since time immemorial? And which brand is prominent on the shelf at the checkout? Exactly, not the establishment, but Tony’s Chocolonely.
Or what about the roadside restaurant chain La Place? Which, despite its former success formula, switched to healthy snacks. That was a risk, but they wanted to innovate when the chain was still successful, not when it was actually too late.
It is always the rebels and the ‘crazy ones’ who manage to gain and maintain their right to exist because they dare to make choices that contribute to society and customer needs. Therefore, don’t just put the customer first, but meaningful purpose. How do you contribute to a more future-friendly world with your product or service? That is what it is all about and is the engine for sustainable success.
So are you only successful if you are meaningful as a company?
Just being meaningful, of course, is not enough. It is about being able to keep up with and anticipate technological innovation, find new ways to promote autonomy in the workplace, and be knowledgeable about leadership styles such as ‘Gentle Leadership‘, smarter logistics processes, and much more. But in a disruptive way, because if you only innovate incrementally in these areas too, the ship will be sunk before you reach port.
These times demand more than ever decisiveness, disruption, innovative leadership, and, above all, people who work and live by the ‘fail fast, learn rapidly‘ principle. Because if you don’t dare to fail in order to innovate, you are actually a failure in yourself as an entrepreneur or company.
Because the world is constantly changing, companies can no longer focus only on profit and customer satisfaction. It is about the bigger picture, about meaning and adding value to society. Success in today’s business world requires a combination of vision, innovation, and an authentic contribution to a better world. As an entrepreneur, it is therefore essential not only to look at the short term but to continuously ask yourself the question: ‘How can my company really make a difference?’ Only then can you be sustainably successful in an ever-changing market.