Stop The War on Customers -- by Asking The Ultimate Question

In anticipation of the January print-date of The Ultimate Question, I have begun visiting journalists at the major business publications. They all ask me some variation of the following question: So what made you decide to write another book? The honest answer is that although I am proud of The Loyalty Effect and Loyalty Rules, they have failed to accomplish my ultimate goal.

The Loyalty Effect startled many readers with the observation that companies lose half their customers every five years. It demonstrated that a 5% improvement in customer retention yields a 25 to 100% increase in customer profits. Even so, customer loyalty remains a pipe dream for most companies today—they lose half their new customers in three years! Loyalty Rules explained that the only way to earn customer loyalty is for leaders to inspire the loyalty of front line employees—yet at most companies, employees consider loyalty to their employer as detrimental to personal career success. In other words, my work has done little to reverse the decline of loyalty in our culture.

So The Ultimate Question represents my attempt to fix this problem. I realize that much has already been written on customer focus/satisfaction. Some research by my Bain colleagues found that Amazon.com now lists 9,200 books with citations on customer focus. Over 4,600 major publications discuss customer loyalty. The Harvard Business Review alone has published 366 articles on customer issues. I feared that there could be little chance that any meaningful stone has yet to be unturned. Is it really credible that we need another book on customer loyalty?

I don’t undertake research and writing projects lightly. Not only am I a slow writer, I don’t enjoy the process whatsoever (writing for me is like calisthenics—the activity itself is tedious and painful, but afterwards I feel better and sense that it was a good thing to have done). In any event, I was convinced that I could not rest until we had figured out the root cause of this profound irony. Company leaders realize that profitable growth is impossible without loyalty—yet they have failed miserably in their efforts to earn loyalty from either their customers or their front-line employees. After pondering this paradox for several years I finally began to realize the answer.

The first step is to set aside all that rosy rhetoric about customer focus. Most companies today are waging a war they cannot win—the war against their customers. They cut corners on product and service quality. They impose hidden fees and charges. They force customers to endure aggressive sales tactics, endless airport lines, and virtual or voicemail hell. They don’t tell the truth in their advertising and marketing, nor do they own up to their mistakes.

Ironically, this is a war most of the generals do not want to fight. CEOs spend countless millions of dollars on customer-focus initiatives, improved service quality, and enhanced customer experiences. They extol customer loyalty as the ultimate strategic advantage. Satisfaction surveys rain down on homes and businesses with implicit messages of care, concern, and promises of a better future.

Yet this undeclared war is escalating. Cellular phone providers trap customers in long-term contracts, and then abuse them with outrageous overage charges. Car dealers mislead and manipulate consumers. Banks charge unconscionable nuisance fees. Electronics store clerks flog extended warranties more desperately than their flat-screen TVs. Printer manufacturers price-gouge on refill cartridges. Computer companies make sure that calling their customer help-line is more painful than a trip to the dentist.

Yes, what is really going on is an undeclared war that is destroying corporate reputations, alienating employees, and decimating economic prosperity. It is the reason that nearly 80% of the world’s major corporations failed to achieve a modest 5% real, sustainable rate of growth over the past decade. This war is the reason why society has concluded that business ethics and good profits are both oxymoronic.

The reason I wrote The Ultimate Question was to expose this war and its full range of guerrilla activities. I hoped that I could provide a manual of the tools and tactics required to stop this war for good—and clarify how corporate leaders are unwittingly motivating their troops to book bad profits that destroy loyalty and growth. My goal is to help leaders revitalize good profits and true growth by showing them a practical path for holding organization members accountable for building good relationships and for standards of behavior that are consistent with the Golden Rule and respectful of human dignity (of customers, employees, suppliers and investors alike). We must all blow the whistle on bad profits.