Putting People in Your Plan: Correlation to Financial Performance

July 19, 2010 | blog | By Mike Sullivan

Sustainability Model[Part Three of Six]

“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

Topics: Marketing

Mike Sullivan

President at LOOMIS, the country’s leading challenger brand advertising agency


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