I sometimes understand — don’t per se ‘get it,’ but understand it — when companies could care less about their employees, because oftentimes employees are seen as almost transactional. They come, they do a job, you pay them X-amount of money, and they leave. That’s a general attitude. At most places, any ideas around “talent strategy” are total lip service.
But wait … there are companies out there that don’t value their customers?
But most established firms remain hesitant when it comes to this type of customer equality and mutuality. Our research on the business models of the S&P 500 Index companies (based on data from 1972 to 2013) indicates that at present more than 80% of companies employ older business models where customers are valued only for their dollars and not for their assets, insights and contributions. If your organization can break ranks and adopt this new way of thinking and acting, you will see that the more you share with your customers and the more you understand them, the more they will love you.
Um. That’s terrifying. But I wouldn’t necessarily call it surprising.
Some of the main premise of this article — it’s from Wharton’s website — is fuzzy, because it’s talking about customers “liking” you (think social media engagement, which is probably meaningless) and “loving” you. In this case, “liking” is passive — think about how teenage girls talk about boys, or about how you click like on cute photos of your friends in the Caribbean — and “loving” is active, so the theory would be … if a customer loves you, then a customer will buy stuff from you.
Seems logical, but I’m sure most old-school executives in most companies are sitting there saying: “Like? Love? Who gives a shit?!? I’ve got revenue targets to hit!”
Now go back to that pull quote above. Here’s what we’re looking at:
- Data from 1972 to 2013
- 80% of companies employ older business models
- In the older business models, a customer is valued for their dollars, not for what they can do/bring to your brand
- This is a little bit like “storytelling” (here’s our brand, come buy our shit) vs. “story-making” (help define the story with us)
The second bullet point is the key here.
I would assume the number of companies using “older business models” — definitely pre-social business models, whereby the sales funnel shifted — is somewhere between 60 and 80 percent, yes. It’s pretty obvious why, but here’s a couple of reasons:
- Change is hard for people
- Change is even harder for companies, especially if they need to focus on quarterly returns (you don’t want to change what’s working)
- Things like SEO, SEM, new ways of marketing, social media … a lot of people don’t necessarily understand those, so you need to bring in “experts”
- That’s usually a giant face-plant
- When people are nervous or scared about something, what do they do?
- They stick to what they know (if you’re scared at 7 years old, you go find your mom)
- When new challenges arise for organizations, a lot of middle managers — who should theoretically be embracing change — just cling harder to what they already know
That’s kind of the nutshell idea on “older business models.”
Here’s the problem with business journalism and articles like this: most companies are set up to chase revenue, and chase growth, like wild dogs. If that means viewing their customers as a wallet with fingers, well … that’s what they’re gonna do, if it’s working. Telling them to view them as “partners” or “on the same journey” means nothing to some dude trying to crunch numbers for the CEO and CFO. He just wants things to look good. So yes, you’re leaving money on the table when you don’t engage properly with your customers … but it’s money you never saw anyway. Out of sight, out of mind.
That’s the same reason most websites for companies are terrible — some VP is like “Gah, websites don’t make money!” and thus, no one prioritizes it. So you could be making more money, but you gotta focus on the money you are making.
Old business models vs. new business models.
Here’s another gem from the Wharton article:
Changing your relationship with your customers means changing the way you interact with them. Most companies attempt to do this through marketing initiatives and social media. As mentioned above, this is a very superficial approach. The most successful and most loved companies adapt at the level of the business model and find ways to share value creation with their customers.
It’s possible for a brand and a person to have a real conversation. Airlines are pretty good at it, even if they’re primarily doing transactional stuff like flight changes and re-bookings. You can tell real stories about your brand, how it started, why it started, how it could benefit someone else, etc. You can do that. It’s possible, and it usually doesn’t even involve another headcount.
Most marketing — a way to reach consumers — is pretty superficial and canned and needs to evolve anyway.
So look, bottom line: you making money? Great. You want to make a little more? OK. Think about your customers and the interaction points a little differently. They’re more than just wallets.