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A Tale of Three Companies

and the future of business

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Amazon sells shoes. So does Zappos. Another company – where I have many friends, as I previously did significant consulting work for them – markets something entirely different. All, however, are particularly instructive about the future of business.

The company I won’t name is involved in financial services. They have decided to terminate their entire marketing effort, and focus on explaining their products to prospective investors. The CEO said, “Our greatest value proposition to investors and financial intermediaries is the institutional approach that’s at the core of (our) global business.”

Therefore, the company – according to its press release – stated that its “distribution network, meanwhile, will be revamped to provide more technical expertise, with traditional wholesalers being replaced by investment-oriented consultants.”

There is a glaring problem with that kind of thinking. There is neither a shortage of funds available for institutions to select from, nor a deficiency of advice provided. Anyone keeping up with what is really happening in this – or just about any other field – would understand that what is being sought is a higher level of something discussed in a previous post – “Relationship Alpha.”

“Alpha” is return on investment, and the managers at the vast majority of institutions are keenly aware of what products provide superior stability and growth. What they seek, more than ever before, is a return on the relationship – the opportunity to realize a return that transcends transaction. No product has a monopoly on performance; therefore, what a company brings in addition to its financial return is the pathway to creating distinction.

Which, unfortunately, is what this company seems to be sprinting away from – determining that a seat at the back on a ship in the sea of sameness will work for them quite adequately. Of course, it never does. This kind of thinking will, inevitably, cause organizational demise.

On the other front, take a look at Amazon. It sells shoes, as does Zappos. Because of their volume, they probably have a better shipping deal already in place than Zappos. Amazon has a higher level of technical infrastructure and expertise than Zappos. So why in the world did Amazon spend about $800,000,000 to purchase the online shoe retailer?

Because Zappos has an online customer experience second to none. And, brilliantly, Amazon knows that it’s worth almost a billion to get it.

It’s difficult to imagine a company with a closer relationship with its customers than Zappos – and with more visionary leadership. (I’m proud to follow them on Twitter – and prouder they follow me back!) Amazon knows that if they want to move to a higher level in terms of corporate culture and client connectivity, it’s well worth the enormous investment they just made to acquire it.

The fundamental reason is because ALL business – in EVERY industry – is moving toward the supremacy of the customer experience.

And, that does not mean we tell the client more about our product!

It means we create such a compelling experience for them that their loyalty becomes assured.

The best companies will spend their resources – both monetary and organizationally – to acquire and develop it.

The less than stellar ones…from Circuit City and Chrysler to Bear Stearns and Lehman Brothers…all have something in common…the woefully shallow belief that their products are more important than the people who invest their hard-earned money to purchase them.

Read the original blog entry...

More Stories By Scott McKain

Scott McKain is a business leader, bestselling author, and Hall of Fame professional speaker.
Scott's latest book, "The Collapse of Distinction: Stand Out and Move Up While Your Competition Fails" reached the #1 spot on Amazon.com list of Customer Service Bestsellers! He is the author of two #1 additional business bestsellers (Amazon.com & 800-CEO-READ): "What Customers REALLY Want" (currently available in trade paperback) and "ALL Business is Show Business."
He is the Co-founder and Principal of The Value Added Institute, a think-tank that examines the role of the customer experience in creating significant advances in the level of client loyalty, and has appeared on multiple occasions as a commentator and analyst on FOX News Channel. His platform presentations have run the gamut from the White House lawn with the President in the audience carried live on CNN and NBC's "Today" show...to a remote outpost near the Amazon...all 50 states, seven Canadian provinces...and from Singapore to Sweden...Mexico to Morocco.
An inductee into the Professional Speakers Hall of Fame, he is also a member of "Speakers Roundtable" -- an elite, invitation-only group of twenty of the world's top business speakers.

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