Chip Wilson, former CEO and founder of Lululemon, is a case study in how to alienate a target base. Instead of understanding the women to whom he was selling, he hyperfocused on the persona of a 32-year-old exercise and travel enthusiast he dubbed “Ocean” to build the Lululemon brand.
The now infamous author was so disconnected from his audience that he was pressured to resign amid controversial statements, outright lies and a public backlash from the company’s reluctance to stock sizes larger than 12.
But Wilson isn’t the only CEO to underestimate his customers’ wants and needs—61% of retailers do the same. They focus on new services and new toys without understanding how they impact the customer experience. I am sure there are many CEOs in your industry that similarly do the same thing.
This disconnect between CEO and client base is a dangerous chasm between the experiences that businesses think they are providing and the ones that clients are actually experiencing. In today’s digital world, CEOs can’t risk losing the trust and loyalty of their customer base over small inconveniences or bad customer experiences when 30% of customers who defect won’t just leave — they’ll tell the world why they left.
That’s why, now more than ever, CEOs need to prioritize client retention strategies over client acquisition. They can take their cues from Marvin Ellison, CEO of Lowes, who, in his first three weeks, reprioritized the organization toward customers, restructured the executive team and reengaged employees to the tune of a projected 2% boost in revenue for 2019.
Ellison isn’t an anomaly. All CEOs can take a page out of his book and drastically change the way they manage their companies with a simple three-step process:
1. Establish a new mindset. The traditional method for ensuring financial success centers on customer acquisition. This is a perfectly good approach to business, but it’s not the most profitable.
According to research by Frederick Reichheld, increasing customer retention by 5% can lead to a potential profit increase of 25% to 95%. All it takes is a shift in thinking from selling merchandise to helping customers.
When CEOs see the world through customers’ eyes, it helps their companies better organize and mobilize employees around client needs. Connecting with someone’s emotional needs will create brand loyalty.
2. Break down silos. Silos are the death of collaboration, communication and customer happiness. Unfortunately, it’s dangerously common — 50% of marketing departments are sending unqualified leads to their sales teams. That’s a costly mistake that hurts the sales team and the company’s bottom line.
True collaboration and communication bridge gaps among departments. They allow up to 5% of the hardest-working employees to get together at points of execution to reshape the way companies retain customers.
3. Empower change. The days of slow, methodical planning are over. CEOs must empower cross-functional teams to explore new tools or systems that increase efficiency. When they don’t, initiatives fail and business runs as usual.
The most successful brands, though, have CEOs who fight their instincts and champion risk-taking and collaboration. In fact, 90% of companies with CEOs who willingly get their hands dirty and empower their teams see continuous and sustainable above-market growth.
Aligning an organization with the customer experience as its focus requires quickly reorienting company culture and refining corporate values. It takes high levels of engagement across departments and the breakdown of established communication silos.
Only a CEO has the skills and influence to train an organization to see the world through the customer’s eyes and redesign the company structure to create value in a customer-centric way. It’s not just trendy; it’s the new way to do business.