Last week The Social Market Foundation (a British think tank) issued a report saying a lack of competition in key markets in the UK was causing consumers to lose faith in business and in capitalism.
The picture was bleak, The Foundation said, Many big companies were treating us with contempt, because they were simply not worried about losing us as customers.
Scott Corfe, the Foundation’s chief economist, commented that big companies in sectors such as broadband, mobile telephony and banking did not face enough competition and were able to charge more while investing less.
The research finds that all too often, the markets that matter most to consumers are concentrated in the hands of a small number of large companies. That’s bad for customers and bad for the wider economy: where companies don’t have to fight hard to win and keep their customers, they face less pressure to reduce prices and to increase quality, to invest and to innovate.
The UK’s economic status quo is at a critical juncture, says the Foundation. Faith in a largely “free market” settlement is increasingly in doubt, as household incomes are squeezed and many fail to see economic growth translating into an improvement in their day-to-day lives. In this environment, it is more important than ever that consumer markets work well and deliver good outcomes for households. If they don’t, warns the Foundation, markets risk being replaced with state ownership as the electorate loses faith in private enterprise.
This report really hit home for me, having written recently about how powerful respect was as a mobilising force among employees. The truth is, it is just the same among consumers.
Creating value for customers is the only way to create value for shareholders and other stakeholders. No company can be a force for good for all of its stakeholders unless it makes a profit. Making good profits enables you to do good. Serving customers better than your competitors do helps to keep your business in existence, give employment, hire suppliers and provide value to local communities. In a world of connected consumers, whose publicly stated views on brands are far more powerful than any direct advertising a brand might do, resonance is everything. How you make them feel is critical to your success.
That is why I hear more and more leaders becoming obsessive about customer centricity, and ensuring that their purpose reflects this. Sadly, the big companies without competition may care less about it. They pay lip service, but do little to ensure it is embedded throughout their businesses.
But what is customer centricity? To me, it means knowing exactly who the customer is, what their needs are and what they are trying to do. If every person in the organisation knows and understands this, it shifts the emphasis from an inside-out focus to an outside-in one. It can help to make you more human, because everyone in the organisation thinks of the customer as a human, thus developing far greater empathy and respect for customers. Being able to do that brings huge dividends. By bringing the customer to life in these ways, organisations stand a better chance of driving greater engagement inside and outside the organisation, and improving trust and reputation.
Customers want to be respected
In 2014, Good Relations, part of Chime Communications (a global sport, entertainment and communications business) conducted research with more than 12,000 consumers in the UK to find out which brands they really loved, and why. As relationships with customers are, in particular, such a valuable asset, Good Relations asked themselves if they could create a way to truly understand the nature of relationships with customers, studying and contrasting the best- and the worst-performing brands to understand the key drivers of quality relationships today.
They created ‘Triple G’, a groundbreaking study that measured how good a business is in the eyes of the UK public. Where a Triple A rating in the City of London is used by the investment community as an aggregator of an organization’s ‘hard capital’ or financial performance, the Triple G rating scores a company’s ‘soft capital’. Soft capital does not appear on a company’s balance sheet, but reflects how ‘good’ a company is seen as being by the public – a true indicator of a company’s sustainability and future performance.
Relationships are a consequence of ‘what you do, how you engage with people, and then what they say about you’, which in turn determines your reputation. Good Relations, using Chime’s Insight and Engagement research division, asked consumers to score each brand on those three elements. They asked the 12,000 consumers about 120 brands and focused on:
1.good actions: ‘what the business does when no one else is looking’;
2.good engagement: how well the business communicated and listened to their consumers;
3.good recommendations: how strongly respondents were prepared to recommend the brand to friends, family and colleagues.
Brands that scored highly on all three dimensions included John Lewis Partnership, Amazon, Waitrose, Samsung, Asda, Kellogg’s, Cadbury, Virgin Atlantic and Johnson & Johnson. Out of the 120 brands tested, just 16 were awarded the Triple G rating for good actions, good engagement and good recommendations. The brands that did not do so well were – as the Social Market Foundation found – the mobile phone, utility, and banking sectors. Worst on the list was RyanAir – where consumers felt they were overtly disrespected.
An emotional bond is your Teflon layer
The research proved that creating an emotional connection of mutual respect with people offers a huge competitive advantage to brands. The Triple G research showed that brands that do this effectively show they share a customer’s values, generating a sense of closeness and real empathy. Today, consumers want to look behind the image and seek more substantial ways of choosing who to align with. Brands that create great relationships of respect with their customers create a Teflon-like ability to withstand uncomfortable scrutiny.
The research also showed that you need to give respect to get respect. Surprisingly, companies do not do this enough. Brands that performed well in the Triple G survey all showed respect and care for their customers in everything they did and said. And brands that achieved the highest Triple G ratings did this really well. They managed to convey that they really care, and created a mutual relationship that worked effectively for both parties.
Sectors and companies that either mindfully or inadvertently disrespected customers set up a cycle of destructive disrespect, creating high numbers of detractors, who we all know are more active than happy customers. Close analysis of more than 50,000 verbatim comments from the 12,000 consumers researched, showed that the three key lessons of the highest-rated brands were quality, respect and relevance.
First and foremost, a great product or service was the foundation for a great relationship. If it answered consumer needs better than anyone else, the brand was already at an advantage. Second, those brands that demonstrated active care and attention that went beyond expectations, and showed they respected their consumers, were able to capitalise on a good product and service and cement the relationship for the long term. Finally, those brands that did both the above well, and also constantly showed their compelling relevancy to their audiences, whether it was through products that answered needs or through being a force for good, had the highest rating of all.
I believe this is the best way for business to help increase prosperity and enable people to live well… and also maintain trust in capitalism!