Rediscovering business truths

Yesterday, I was fortunate to be invited by StartupSmart blogger Adam Franklin to his Social Media Down Under event.

I’m normally reluctant to spend a day locked in a room full of social media experts, but Adam’s line up featured some experienced business and new media people with views worth hearing.

Among them was Connection Generation author Iggy Pintado who made the point that the internet has moved business from being transaction orientated to relationship based. Rather than focusing on one sale, we now have to build a relationship with the customer.

Iggy’s point is right and it’s interesting how many enterprises lost track of this fundamental business truth about valuing customers that predates the internet by a few thousand years.

Those who forgot this truth are people like big retailers who thought in an advertising-driven society that all customer service sins could be forgotten by throwing enough advertising dollars at the problem.

As a consequence, retailers became stuck in the single transaction mindset and today we see businesses like Harvey Norman struggle, as customers don’t need big, loud advertising campaigns to tell them where the best deals are.

It’s not just price though, at the other end of the market, Myer and David Jones squandered their greatest assets as they forgot the value of customer relationship and looked upon loyal customers as just individual sales, albeit locked into store credit card schemes.

To be fair, it hasn’t been just the big retailers who forgot this truth, Vodafone’s recent dropping of sports sponsorship to focus on their mobile network illustrates the same mentality.

For several years, Vodafone ignored the wails of loyal customers who steadily abandoned the telco for a more reliable service. It was only with the rise of online campaigns like Vodafail that the company’s management realised they had a problem.

In the old days of broadcast media, customers struggled for a voice and, on the rare occasions they managed to get their complaints publicised, it was easy for big businesses to swamp the airwaves or press with advertising.

The broadcast model also made it hard for customers to compare prices within neighbourhoods, let alone across oceans. Now it’s trivial to check the price in Hong Kong or New York.

For the businesses that relied on controlling the message, the model is hopelessly broken and they have to now compete on service, price or their relationship with the customer.

There’s no doubt some of these businesses are too far gone, as they are stacked with executives and directors who think the internet is about cute cat pictures and social media is about telling people what you had for breakfast.

Most of those businesses will be gone by the end of the decade, regardless of their size.

The funny thing is that many businesses never forgot that it was their relationship with the customer that really mattered. Today is their time.

Paul Wallbank is one of Australia’s leading experts on how industries and societies are changing in this connected, globalised era. When he isn’t explaining technology issues, he helps businesses and community organisations find opportunities in the new economy.