Mr. Gulati shared the results of his research in which he studied the performance of 12 “customer-centric” organizations and tracked their performance versus the S&P 500 from 1999 to 2009.
His research showed that customer-driven companies were significantly more successful than shareholder-driven companies.
From 1999 to 2009, the S&P 500 experienced sales growth of 10% and shareholder return of -0.6%.
The 12 companies Mr. Gulati identified experienced sales growth of 233% and shareholder return of 134%.
In the event you want to rebalance your portfolio, six of the 12 companies are: Apple, Cisco, GE Healthcare, Jones Lang LaSalle, Lafarge (cement division) and Target.
Customers today have more information and more choices. When customers have more information and choices, they tend to gravitate to price to simplify their decision-making process.
Customer-centric companies are so in tune with their customers’ needs, wants and pain points, their customers tend to remain loyal.
If a current product or service is meeting the needs of the customer, the customer doesn’t have a need to consider another supplier or even compare prices.
Customer-centric companies solve problems versus sell products or services. This shift from selling products and service to solving specific customer problems also changes the corporate culture and the self-perception of the employees in the customer-centric company.
Employees at customer-centric companies know the importance of collecting consumer insights to determine current and future needs. Yesterday’s motivators have become today’s “table stakes” — or what Mr. Gulati calls hygiene factors.
Companies and their customer-facing employees must be willing to probe into what will drive value for the customer. Most companies will not do this because they thing they already know what the customer wants and they don’t have the innate curiosity to ask.
Do you have the humility and curiosity to have a dialogue and ask your customers if you are serving their needs and what you can do to improve?
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