Lessons Learned: Upset Customers = Business on the Ropes

January 13, 2012

Nashville Business Journal 

 

Wal-Mart founder Sam Walton is one of my business heroes for a simple reason: He stayed close to his customers and employees. Mr. Sam, as he was known, spent more than half of his working hours with customers and associates in Wal-Mart stores. Driven to understand the business on a deeper level, he was constantly inquiring about operations and products. And with this masterful grasp of the core business model, he set clear direction for what has become the largest company in America.
 
Companies that forget about customers will quickly unravel. Take last year’s major mismanagement at Netflix and RIM (Research in Motion), maker of the BlackBerry. Following some very public and poorly handled customer service issues, Yahoo’s Daily Ticker blog named the leaders at these businesses the top two Worst CEOs of 2011.
 
Both companies lost focus on a core business principle: customer satisfaction. Netflix tried to implement big changes accompanied by huge price increases. Customers immediately balked and canceled memberships—and the company’s revenues, reputation and stock price plummeted. The folks at BlackBerry simply lost touch with what customers wanted in a modern handheld device and have quickly fallen off the map in the smartphone world. While these businesses may survive, it is unlikely that they will ever regain their once-premier position in the marketplace.
 
The common thread for Netflix and RIM is a failure to fully grasp their customers’ needs and financial position. Mr. Sam would have known better because he stayed so close to his customers. The lesson for leaders at every level — CEO to front-line supervisor — is to stay as connected with customers as possible. Ask questions. Really listen. And never assume. The more clearly you understand how your customer thinks and what your customer needs, the better the direction you can set for your business.
 

Joe Scarlett is the retired chairman of Tractor Supply Company and the founder of the Scarlett Leadership Institute. He can be reached at 
joe@scarlettleadership.com

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