Want to Be a Successful Business? Focus on Your Customers

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The difference between successful businesses and underperforming ones often lies in the way they treat their customers, new research finds.

In fact, companies that fail to focus their cultures, strategies and employees on pleasing customers are encouraging failure, according to a study from the Institute for Corporate Productivity (i4cp) and the American Management Association (AMA).

The best-performing organizations — as defined by their revenue growth, profitability, market share and customer satisfaction — understand that being customer-focused requires a blend of attraction, engagement, satisfaction, collaboration and retention, the study's authors said.

Overall, 40 percent of the business leaders and professionals surveyed admitted their organization doesn't know their customers well, with just 52 percent saying their companies are more customer-focused than their competitors are.

Jeremey Donovan, chief marketing officer for AMA, said that even though just about all businesses know that customer focus matters, they have to take that knowledge one step further. "High-performing organizations turn that knowledge into actionable business practices," Donovan said in a statement.

A big problem is that many organizations fail to live up to the guarantees they make to their customers, the study revealed. Nearly 35 percent of those surveyed said their organization doesn't keep the promises they make to customers.

"Failed promises can be as simple as poor service or unresponsiveness and may extend to more complex issues, such as inconsistent quality," Donovan said.

In addition to not living up to the promises of its customers, an even smaller percentage of companies — 40 percent — are keeping the promises they make to their workers.

"Organizations that fail to deliver for their employees are inviting comparable failure on delivering on promises made to customers," said Kevin Martin, chief research and marketing officer for i4cp. "The two are interdependent and cannot be viewed in isolation."

Researchers found that in order to become more customer-focused, there has to be a commitment from the people at the top of the organization. The study discovered that executives at high-performance organizations are three times more likely as executives at lower-performing companies to support the successful execution of customer-focused strategies.

Additionally, these organizations are four times more likely than lower performers to set clear customer satisfaction goals. High performers are also five times more likely to align internal systems and processes with customer needs, the study found.

The study shows that another way top organizations are focusing on their customers is by hiring employees with that goal in mind. High-performing organizations are three times more likely than lower-performing organizations to make new hires based on customer focus, the study found. In addition, the best companies are three-and-half times more likely to base promotion decisions, in part, on how employees perform at customer-oriented activities.

"Providing customer-focused training and development to employees will create brand value and drive incremental revenue," Donovan said

Top organizations also do a better job of taking what their customers say to heart. The study found that top-performing companies take advantage of customer feedback nearly twice as much as lower-performing businesses do. Additionally, high-performance organizations are twice as likely as lower performers to collaborate with customers on custom products, the research found.

The study was based on surveys of 1,333 business leaders and professionals worldwide, as well as secondary research and interviews.