Fairness for customers

Peter Drucker, the management education guru, was clear: “The purpose of business is to create and keep a customer.” There is no business without being able to serve a customer and deliver something to them that they value more than the cost of creation and delivery — that is what profit is, after all.

It is a shame that profit has become a dirty word, given that it is just the measure of the value that a business adds for its customers — or should be.

So customers matter, and businesses that want to prosper for the long-run must nurture their customer relationships. Hence the importance of a recent discussion ‘What does it mean to be honest and fair with customers’ fostered by the reliably thoughtful Blueprint for Better Business.Screen Shot 2018-11-18 at 18.22.38

Customers are central to any business, and serving customers well is vital for any business that wants to prosper for the long-run. Yet Citizens Advice recently used its new powers to launch a so-called super-complaint, requiring the Competition and Markets Authority to investigate the penalty that loyal customers apparently pay. According to Citizens Advice, who call it a systematic scam, customers who stick with their existing suppliers for mobile, broadband, savings, home insurance and mortgages, are losing more than £4 billion a year — in effect being overcharged by nearly £900 each. 

Loyalty does not pay, it seems — so why would any customer be loyal to such businesses? Not least, there is a clear benefit to companies from loyal customers as the cost of winning new business is always a significant one. Sharing part of that cost with those who are retained business might be a better way to engender trust and be seen to be acting fair. But without this spirit of fairness in relation to their customers, some businesses might find that they will not retain them — and that cost risks being far greater than any fine from the CMA.

For me perhaps the most powerful element of the write-up of the Blueprint discussion
 is the acknowledgement that being called consumers may not drive the right dynamic among customers: “The goal of activating ‘more conscious consumerism’ does not play to human instincts to collaborate – the data shows that when we identify as a person, a householder, a neighbour, we act more in group interest and have greater trust in the collective, than if we are approached and described as a ‘consumer’. The language matters.” It usually does.

Helping our customers to be active participants in long-term business success may be a bold step but perhaps it is one that every fair-minded corporation needs to take. After all, Drucker’s maxim includes keeping customers as well as creating them.

Blueprint is planning an event to discuss fairness in more depth, to be held at the RSA on March 9th 2019.

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