By Rubens Pessanha Filho and Tiffany Scott
In today’s marketplace consumer experience can make or break a business. So what does being a better business mean? Here’s what consumers have to say.
Better Businesses, Better Lives
Here we are midway into the second decade of the 21st century and, if there is a shift to be noted in the marketplace, simply put, it is the expectation of customers for businesses to be better. Technological advances and increased competition have contributed to the expansion of consumer choices. The growing usage and influence of social media, online reviews and ratings have added transparency to the marketplace. Demographic shifts have expanded diversity and created new challenges and possibilities for businesses. These factors combined are resulting in a shift of power from businesses directly to consumers.
Many would say we are only at the beginning of this transformation in consumer expectations. According to the World Economic Forum, we stand on the edge of the fourth industrial revolution,1 which is characterized by emerging modular, decentralized and virtual manufacturing technologies that will fundamentally change the way we work, live and relate to one another. With this shift, there is no doubt that businesses will be asked to do more for society and to simply be better. Forward-thinking businesses are already on this path and not waiting for change to be forced upon them. They understand that the fourth industrial revolution will only accelerate change in the marketplace and consolidate the dominant position of consumers. They also understand that the risk of not paying attention to this shift is potentially costly — customers will take their patronage and dollars elsewhere.
If immediate action is a must, the question is, “What does it take to be a ‘better’ business today and for the future?” The seminal work of Jim Collins, author of the best selling Good to Great, helped us better understand why some companies last longer than others and shed light on how to answer this question. He found, for example, that there is no silver bullet or single program that transforms a business from good to great. Greatness rather is a result of disciplined people, thought and action. Contrary to common beliefs, organizations that last longer don’t start with a great strategy or vision. Instead, they begin with a different type of leadership that has enough humility to care first about the company and getting the right people on board and the wrong people out the door.
The topic of what constitutes a better business is part of the strategic research agenda of Council of Better Business Bureaus (CBBB). Approximately 80 percent of consumers agree that Better Business Bureau (BBB) helps businesses be better. But if we are to help companies be better then we need to fundamentally understand what this means.
In recent research, we took a closer look at what constitutes a better business through the eyes of the consumer. We discovered that more than 3 out of 4 consumers agree that better businesses are critical to a trustworthy marketplace, which in turn can improve peoples’ lives by bettering employee and consumer experiences for instance. Let this work serve as a reminder or blueprint for businesses that want to stay ahead of the competition and relevant in the marketplace.
Great vision without great people is irrelevant.”
– Jim Collins, author of Good to Great
Better Businesses Defined
We began our journey to improve our understanding of a better business from consumers’ point of view in 2015. First, we conducted interviews in Richmond, Va.
Intrigued by the initial responses, we continued our exploration of the topic via an online survey to almost 2,000 consumers in the United States. Approximately 20 percent of our survey participants were owners of small- and medium-sized businesses.
As part of this survey, we asked all participants to describe a better business in 10–20 words. In the responses, we consistently heard words such as honest, respectful, trustworthy and socially responsible. Great businesses were described as “Sustainable
Forward-thinking. Innovative. Creative. Caring. Environmentally conscious,” and “One whose primary focus is on benefiting the customer.” Many survey participants noted the trickle-down effect of how treating employees right benefits the consumer. In this context, a better business was described as “A business that treats their employees with respect. If a business treats them right, employees will have better attitudes and treat customers right, which makes the customers return and the business grow.”
We were surprised by how consistent our overall findings were across the United States. We were also intrigued that the findings confirmed our original assumptions and expanded our initial definition of a better business.
It also called our attention to the fact that making money was not a key consideration. It’s not that consumers don’t want businesses to be profitable, on the contrary, they know that businesses exist to have a profit, and they want them to be successful. But ultimately, profits are a result of how a business chooses to operate in the marketplace. It further became clear to us how being a better business means different things to different people and certain criteria holds different weight to different people. For instance, Millennials are more inclined to value employees, preserving the environment and giving back to society. Yet, overall common themes emerged in our research, too. Here, are the top factors that consumers told us contribute to the making of a better business.
Better Businesses Are Employee Focused
After surveying more than 43,000 Americans about their views on publicly traded companies, the independent and nonprofit Just Capital Foundation — an information group that measures and tracks corporate performance based on the American public’s definition of just business behavior — unveiled 10 factors that influence how a corporation is viewed in the minds of consumers. Ultimately, they learned that the most important factors in consumer perceptions are employer-employee relationship drivers like employee pay and benefits, employee satisfaction and fair hiring.2 The importance of being employee focused is also apparent in the popularity of newly created organizations such as Glassdoor (founded in 2008), a website offering anonymous employee and former employee reviews and Great Place to Work Institute (founded in 1992), a research and consulting firm that identifies and helps companies create great workplace cultures. Another important finding is the wide usage of the “Balanced Scorecard” (published in 1996),3 developed by Robert Kaplan and David Norton. This scorecard changed the way companies think about performance metrics by offering a way to account for intangible goals beyond just the numbers, such as how management communicates the company’s goals and strategy to employees. Accordingly, in our research, we heard that better businesses treat employees well, provide a positive work environment and have great employees. In a nutshell, better businesses are employee focused.
We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
— Jeff Bezos, Founder and CEO of Amazon
Better Businesses Are Customer Centric
We are living in the age of the customer, where the customer determines his or her experience with a brand. With so many businesses competing for the attention of this all-powerful consumer, the customer experience has become a critical factor when trying to acquire, retain and engage customers. Being customer centric is to have a deep understanding that this customer experience matters and that the customers are at the core of defining what it means to be better. Customer experience is the sum of how customers feel as they engage with your brand and business over time. It is the result of how well your interactions with them meet their expectations and fulfill their needs. According to the research and advisory firm Gartner, 89 percent of companies expect to compete mostly on the basis of customer experience in 2016, versus 36 percent just five years ago. It also is important to note that the correlation between happier, more productive employees and a better customer experience is strong.4
Better Businesses Are Trustworthy, Honest, Ethical and Possess High Integrity
In our research, we confirmed that consumers value integrity and, when asked to rank pre-determined standards of what better business means, this characteristic came out on top. In her recent book, Presence, Amy Cuddy describes how we ask ourselves two questions when we meet someone new, “Can I trust this person?” (i.e., warmth dimension) and “Can I respect this person?” (i.e., competence dimension).5 Cuddy explains how people tend to prioritize warmth over competence in relationships. Better businesses are no different. They understand the importance of starting with trust in their relationships with consumers. Better businesses possess integrity, are honest and adhere to the highest standards of trust.
Better Businesses are Forward Thinking, Innovative, Adopt Best Practices and Have Great Products and Services
Having great products and services is a known characteristic of a better business. Yet, our findings also revealed that consumers expect businesses to be forward thinking, innovative and to adopt best practices. Consumers expect to be surprised and this element of surprise is often what brings customers back and creates a positive engagement cycle. Innovation helps businesses stay relevant in spite of the ongoing changes expected in the marketplace. Better businesses follow best practices, are creative, innovative and attentive to the quality of products and services they deliver to customers.
Better Businesses are Environmentally and Socially Conscious
According to professional services and consulting firm PricewaterhouseCoopers (PwC), CEOs in the U.S. believe that a fundamental change is afoot in how companies should manage relationships with customers. Currently, 85 percent of United States CEOs agree that customers make purchasing decisions based on a mix of convenience, cost and functionality. But these same CEOs also believe that over the next five years, a greater number of customers will seek out products and services from organizations that address wider stakeholder needs, such as environmental responsibility or societal consequences.6 Our findings reinforced the nascent expectation of consumers that better business contributes to society by respecting the environment, creating jobs and giving back to communities.
Companies should not have a singular view of profitability. There needs to be a balance between commerce and social responsibility… The companies that are authentic about it will wind up as the companies that make more money.”
— Howard Schultz, Executie Chairman of Starbucks
Better Business By Choice
Being a better business has never been so challenging. And the better business journey is not for everyone. Yet, the rewards for pursuing the goal of being better are significant for those that try. Although there is no hard evidence that fulfilling the consumer expectations of a better business will guarantee superior results for your organization, there are many indications in the marketplace to support that this is the prudent move for a business to be sustainable and successful in the years ahead. Being a better business is a question of choice and risk. And, as greatness is a conscious choice, so is becoming a better business. Are you ready to start the journey?