Saturday, 02 January 2016

Are Happy Customers The Key to a Successful Business?


Peter McNally, Purpose Growth Partners

I just watched an interview with Warren Buffett, where he weighed in that the key to a successful business was “happy customers”.   Here is the link to the short interview segment.

We have the utmost respect for Warren Buffett, and love what he is doing to support and encourage small businesses.  However, we have a slightly different perspective on what is takes to run a successful business in today’s environment.  Let’s call it the rest of the story.

Success requires the management and integration of three key focus areas.

High performing (or successful) companies do all three of these well.  And “happy customers” are one of three key priorities, but in our view not number one.

So what is?

Your people are # 1.   When we say people, we mean creating a high performing environment where you attract and engage people that have the skills, the tools  and the training to do their jobs.  Your people bring all of themselves to their work consistently, with a sense of purpose.

What is purpose?

A big part of purpose is priority #2, taking care of customers.  Training your people on what the desired customer experience is and providing them the tools and autonomy to deliver it.  That is first requirement to “get it right” for your people.

The reason we see people as the first priority is this:  If you don’t get it right for your people, you have little chance of getting it right for your customers.  We wish Buffett had started here because this is something we are certain is a truth in business, and in our experience, not well understood.  Think about your experience when visiting Chick-fil-A,  flying on Southwest Airlines, or shopping Nordstrom.

Happy customers are # 2.  With the right people, and their heads, hearts and hands connected, your people can focus on the reason your business exists… to serve and take care of customers.  When we say take care of customers, we mean challenging the organization to constantly innovate to improve the customer experience.  Customer expectations are a moving target and are constantly being reshaped by experiences that often occur outside your category.

Internal Results/Running the business well is #3.  By this we mean hitting your numbers and beating the competition on key metrics such as revenue growth, market share, and profit margins.   It is not good enough to just have happy customers.  You need to be achieving their “happiness” in a way that is profitable and leaves you with a superior return.

And what do you do with that superior return?

You invest strategically in your people and innovation for your customers.  A quick personal experience to illustrate this point.  In the early 1990’s, Roger Enrico became the CEO of Frito-Lay.   I had rejoined Frito-Lay as the VP of Brand Marketing in 1989.  Frito-Lay had been generating great financial results, but there were some disturbing consumer and marketplace trends.  Product quality had slipped and our marketshare was reflecting that decline.  Roger drove a reengineering of the company, and invested every dollar of the savings into product quality and innovation.  The organization was revitalized and Frito-lay regained its leadership footing. Roger was also intensely focused on people, investing his personal time to create an emerging leader development program, which he personally instructed.


We view delivering superior results as the outcome of getting it right for your people and your customers, and being smart about how you do that.   And yes, happy customers are a big part of the story.  But first step on the path to happy customers and superior results is getting it right for your people.

What does it take be successful in business in today’s environment?  It takes focusing intensely on all three of these areas, and aggressively managing the tensions between them.

We would love to hear your thoughts on what it takes to run a successful business.

Do you buy the premise of putting people first?

How are you investing in your people?