Put People in Your Plan: The Correlation to Financial Performance

“Anybody who doesn’t understand that companies are in business to make a profit isn’t plugged in right.”

That colorful sentiment was issued by a colleague to drive home his point that delivering great customer service isn’t an end unto itself. In far-reaching research for his book, “Firms of Endearment,” Dr. Raj Sisodia discovered that companies holding excellent customer service as one of their core tenets returned an average of 1,111% over a 10-year period as compared with 122% for the S&P 500 over the same period.

“What’s most significant about this is that we didn’t set out to find companies that outperform the stock market,” Sisodia said in a 2009 presentation. Sisodia was looking for examples of companies driven by passion and purpose when he found the corresponding impressive financial performance that also ties back to a relentless focus on the customer experience. The list of companies he identified as standouts includes brands such as Amazon, BMW, CarMax, Commerce Bank, Container Store,Costco, eBay, Harley-Davidson, Honda, IKEA, JetBlue, LL Bean, Patagonia, REI,Southwest Airlines, Starbucks, Trader Joe’s, UPS, Wegmans Food Markets and Whole Foods.

Among the practices Sisodia says these companies employ to ensure great customer experiences are the following:

• Hiring people with a passion for their work, resulting in better employee retention
• Paying relatively modest executive salaries, but giving rank-and-file employees more in salaries and benefits than comparable companies
• Cultivating a culture of openness from the top down
• Devoting time to training and developing employees
• Empowering employees at all levels to make on-the-spot decisions to ensure customer satisfaction
• Creating close relationships with customers
• Viewing corporate culture as a great business asset

Since publishing “Firms of Endearment,” Sisodia and Whole Foods founder John Mackey have authored a significant business movement called “Conscious Capitalism” based on the idea that companies who respect the interests of all of their stakeholders are far more successful than those who do everything to benefit their shareholders only.

WANT TO WIN A FREE COPY OF “CONSCIOUS CAPITALISM” THE BOOK? SUBSCRIBE TO OUR BLOG IN THE UPPER RIGHT CORNER OF THIS PAGE! WE’LL CHOOSE UP TO 5 WINNERS ON AUG. 1!

– Mike Sullivan is president of The Loomis Agecy, the country’s leading challenger brand advertising agency

For further insights, read our blog: 5 Ways To Make Advertising Work Harder For Your Challenger Brand