Over the years Wall Street has been an exciting place. From its beginnings in the times of Alexander Hamilton it has been where businesses live and die. No one can argue that Wall Street has greatly affected business in the United States and in the world. There have been many benefits from the world of Wall Street. A great argument can also be made about the bad part of this famed New York based finance center. One of its negative aspects has been its effect on customer experience as a whole.
We live in a world that wants instant gratification. We have a love of the instant. We live in a world where people impatiently stand in front of a microwave because we can’t wait 60 seconds for our leftover instant rice to heat up. It's a worldwide phenomenon. Wall Street is no different. Wall Street is in love with the quarterly gain. So much so, that companies that don’t see increases quarter over quarter can have detrimental effects on their stock prices. This love of Wall Street has passed on to day to day operations as a deep seated fear from many CEOs and board members.
Customer experience is a long-term view of value creation. Customer experience rarely makes sense in the short-term. Loyalty is the focus of CX leaders and loyalty isn’t a quarterly play. Loyalty can’t be bought or bribed. Loyalty is earned one experience at a time. When you focus on customer loyalty, you focus on maximizing the value the customer receives. Putting the customer first treatment usually means that the customer receives value first. The intelligent companies know that their reward will be greater if they are willing to pay the cost customer loyalty first, but Wall Street analysts don’t like this mentality very much. They want to maximize earnings in the short term, customers (and long term value) be damned.
The Fall of K-Mart
K-Mart used to be a household name. Blue Light Specials were loved by everyone and just hearing “Attention K-Mart Customers…” in a store was enough to make kids’ grandmothers’ hearts race. Then...something happened. K-Mart lost its focus. They started caring more about buying expansion than caring for its customers. In 2006 their decline was evident. They had already dropped in revenue even with expansion. That year, in their annual report, the company’s CEO talked about the importance of differentiation and customer experience. None of this concern for the customer made it past the words on that report. This once giant has had negative revenue for the past year and is on financial hospice from which it will not return. They talked a lot about customers but their focus on increasing revenue conflicted with their desire to appease the Wall Street crowd.
Zappos: Long-term customer obsession
After that cautionary tale I thought we needed one we worthy to emulate. Zappos rise as an online shoe retailer (something everyone told them was impossible) is the perfect example of thinking long term. This is a company where call time isn’t monitored at their call center. An online company where they actually want you to call them if you have questions. Where the focus is put on doing right by the customer, even when the customer is wrong. Where they pay employees to quit if they don’t think they will be a good culture fit.
This is not a recipe for Wall Street happiness but Zappos is a company that would make any investor salivate. It made Amazon CEO Jeff Bezos want it for years. Even Though they rejected offers from the giant, Amazon eventually bought the retailer for $880 million dollars. What made Zappos so appealing? Zappos has a unique culture that has made a one of a kind business that creates customers experiences at scale and thus sells shoes and clothing (and whatever they want really) at levels people never thought possible. When they talk about customer focus it isn’t hyperbole. They really care about their customers, at levels that few companies ever reach. Few companies ever reach 800 million dollar valuations either...coincidence? It’s not.
What can you learn from this? Wall Street’s focus isn’t on good business sense. It’s hard to ignore but if you have the discipline and courage to do so they will come around. It won’t happen in a quarter but results start coming faster than you might think when you obsess over customers. Easy to say...hard to do. In other words Hard today...easy tomorrow. As company leaders you have to decide what camp you want to be in. I like long term thinkers...but I don’t work on Wall Street.