PETER DRUCKER ON WHY CUSTOMERS ARE MORE IMPORTANT THAN PROFITS (TOP TEN ENTRY)
Use this to keep you focused on what’s most important in any business – the customer.
Ask most people what the primary purpose of a business is and they’ll say either, ‘To make a profit’ or ‘To maximise profits’. Peter Drucker (1909–2005), perhaps the only true genius that the discipline of management has produced, challenges this view. He argues that:
A business exists to create [and retain] a customer.
Peter Drucker
Despite the need to win and retain customers, it is still the case that far too many organisations see customers, and their complaints, as annoying distractions from the real work of the organisation. The truth is that there are only two enterprises that can treat their customers with contempt and still prosper – drug dealing and football clubs.
WHAT TO DO
- Unless you have already done so, re-orientate your thinking. Stop obsessing over profits and start to think about how you can improve the service you offer customers. Satisfied customers will tell their friends about you. Dissatisfied customers will tell everyone!
- Treat existing customers as the valuable assets they are and not the annoying nuisance that many staff consider them to be.
- Train all your staff to recognise that customers are the organisation’s most precious assets and should be treated as such. This applies as much to the accounting staff chasing a debt as the sales staff pushing a new product.
- The main reason customers change suppliers is because they feel underappreciated and exploited. This is hardly surprising if you consistently offer new customers better deals than you do to existing customers. No one wants to feel exploited. Never offer better deals to new customers than those offered to existing customers – regardless of what your marketing team says about expanding market share.
- Keep in touch with customers. Use email, phone, newsletters and personal visits to improve and maintain your relationship. On these occasions don’t try to sell anything. Just try to create a relationship of trust.
- To build trust, always keep your word. Don’t renege on a deal or a promise even if it means you lose money. If you fail to deliver on your word you’ll lose the person’s trust and probably their custom.
- Be frank with customers. If there’s a problem or a delay, tell them. If you can’t answer a question, don’t invent one. Tell them you don’t know but that you’ll find out and get back to them.
- Listen to what customers say. Use their feedback to improve existing products and as a source of ideas for new and/or improved products.
- In particular, pay attention to what your customers say about your competitors. Avoid the mistakes your competitors make and don’t hesitate to steal their good ideas and practice. In particular, pick up any intelligence you can about new or improved products that your competition are developing and feed it back to your organisation.
- Reward customer loyalty and prompt payment by offering selected customers higher discounts, better payment terms, special deals and invitations to special events.
QUESTIONS TO ASK
- When was the last time I phoned, or met with, a customer to discuss how I could improve the service they receive without trying to sell them something?
- What percentage of complaints do we resolve on first contact with a customer?