I assume, as to you are reading this on CustomerThink.com, that you are interested in customers and the building of long-term relationships with them. You are likely committed to the concept of customer loyalty and have a healthy appreciation for the importance of long-term customer value.
If this is indeed the case, I would like to understand why more firms seem to emphasize such concepts in their public, customer-facing communications and then proceed to behave in an opposite direction. Why do they talk about being customer-centric and committed to the notion of loyalty and then reward their people for producing virtually the opposite?
The problem is an undue focus on short-term financials or, more accurately, the failure to strike a balance between short-term and long-term results.
Many companies that I encounter, particularly large, publicly-traded corporations are driven by what I refer to as the FISH model. They tend to focus almost exclusively on (and reward their employees and executives for their performance against) measures of performance that are:
FINANCIAL (are measured in the local currency)
INTERNAL (rely on internally-generated data)
SHORT-TERM (ask how did we do this quarter, month, week?)
HISTORIC (look at past performance, not at where we are headed)
This is how they measure success in such companies, and customers are typically paid lip-service. Their executives will maintain, of course, that they are customer focused, but their focus tends toward what we can extract from customers this quarter, month, week, so that they can meet quotas and their bonuses. These firms also are most likely to have a sales focus, rather than one that is aimed at building long-term customer loyalty.
Some try to balance the two, but often fall victim to the FISH model as they get near the end of the quarter, and quotas and bonuses hang in the balance. They are under pressure from boards of directors and financial analysts to deliver short-term financial results, period.
Customers notice such an orientation. One of their most damning comments about large companies, in particular, is “they aren’t really interested in me; all they want is to sell me something.” It explains why many customers prefer to deal with smaller, independently-owned, companies whose definition of success is very much different. It also explains why some very large corporations that have struck the balance between short-term performance and long-term loyalty are so successful.