You Might Be Running A Stupid Company If...

The phrase "this is stupid!" is not one you want associated with your brand. Here are five ways to determine whether your company is committing competitive suicide.

When either of us mentions the name of our new book, Smart Customers, Stupid Companies, we get the same reaction: a laugh, followed by a nod.

Everyone gets it. We all know that customers are getting smarter, thanks to smart phones, smart wireless devices, and millions of apps--the vast majority of which entrepreneurs created. But companies have not kept up, and many established firms behave in a manner that customers think is stupid.

Here's the thing: customers usually don’t take it personally. They just walk away, in increasing numbers: in 2011, nearly 90 percent said they’ll dump a brand after a single bad experience--compared to 68% in 2006.

At the same time, very few executives immediately think, "That's us, our company acts stupidly." They don’t see that the ways they’ve always done business are pushing customers out the door. Whoops.

So, to make matters crystal clear, here are five ways--leading indicators, if you will--to help you tell if you’re running a stupid company. Do any of these apply to your firm?

1) If your company closes--ever--you might be running a stupid company.

At many companies, customer service and support is provided only during certain hours: if you call after, say, 6 p.m. Pacific Time, technical support is closed. Seriously? Does the firm really expect that none of their products are installed or used after 6 p.m.?

One of us has a medical condition that requires regular testing, with weekly calls to the global medical device manufacturer to report results. Following a recent call, a fancy brochure was sent which extolled the convenience of their new web service. Imagine our surprise when we logged on for the first time--their online service only accepts results when their East Coast U.S. offices are open. This from a firm whose tagline is "We Innovate Healthcare" and operates in nearly every country worldwide.

These sort of time-based restrictions are going to disappear at companies that successfully embrace radically changed expectations of customer service and experience.

This is not because it suddenly becomes profitable to stay open 24/7. It’s because when you compete with firms like Zappos, which operates its warehouse 24/7 even though it is not the most efficient way to do so, the notion of being "closed" will be competitive suicide.

2) If you don’t incent managers and divisions to cooperate, you might be running a stupid company.

Stupid companies reward managers and employees for competing with each other, paying a few employees for their "best" performance. By doing so, they cause many unintended consequences, including siloed databases and product offers that sell what each division wants to sell instead of what the customer wants to buy.

Customers want seamless service, no matter how they interact with you. They don’t know it, but they really want all your divisions to have access to the same databases, so their information is easy to access.

From the customer perspective, it can be schizophrenic and annoying when the experience of working with the call center or a sales group is completely different from the experience of dealing with accounting, customer service, or installation.

Rewarding your employees for finding ways that both your customers and company profit--and giving them the tools to do so--is a critical element in keeping up with the needs of your smart customers.

But this is not how most companies operate. In most companies, employees aren't clear on which customers drive value, what touchpoints and experiences are most important to them, or what their roles and responsibilities are when it comes to delivering better customer experiences.

This is a problem.

3) If you forget anything your customers tell you (or do), you might be running a stupid company.

Every time we use a digital device, we create a record of our actions--a trail of digital breadcrumbs that create a complex and comprehensive tapestry of our life. They reveal where we go, with whom we interact and what we’re interested in, and in many ways, who we are.

These records, stored in databases around the world, document not only what is happening in your life, but also in the lives of most other people in the world. We call this "pervasive memory." The more digital devices that exist, the more pervasive memory will become. In fact, most companies have the ability to remember everything about their customers--but they don’t.

Most companies force customers to spend significant time repeating the most basic information: name, account numbers, passwords, and more, every time they transact on the web, over the phone and in person. Their websites don’t remember what you’ve purchased, what you did, where you looked, or what interests you.

Smart companies remember everything and know how to access and use it.

Stupid companies think: that sounds really hard. Or they don’t think about it at all. Which leaves a huge opportunity for smart, entrepreneurial competitors.

4) If you stalk customers like prey, you might be running a stupid company.

Have you ever noticed that if you search for, say, a kayak, online, that for the next week kayak ads show up on every website you visit? This is because marketers have a long history of targeting, tracking, and assaulting potential customers with the most attention-grabbing (translation: intrusive) ads possible.

They think they are acting smart, but in reality many are acting stupidly, because they’re using data to stalk customers online, or by phone, or through the mail--in other words, they’re selling to, not serving, their customers.

Smart companies will treat customers like partners, and will remember information for customers, instead of just about them. Consider for a moment what a company can do when you stop stalking and start serving your customers.

You can anticipate their needs. You can operate in a way that saves them money and time. You can provide them with better products and better information. You can provide insights about both their work and personal life. You can connect them with other people, organizations and events that will be of especially strong interest to them.

5) If you try to sell the same basic products or services to every customer, you might be running a stupid company.

The disruptive forces we track are pushing each industry closer to personalization, because tailoring products and services for customers--or allowing customers to personalize things themselves--is just part of acting smart.

An Intel executive, Mooly Eden, once asked an audience how many would give their smartphone to their spouse, should the spouse lose theirs. None would. "That is my point," said Eden. "That is personalization."

Personalization offers smart companies a whole spectrum of possibilities. You can develop a service or manufacture a product yourself, and then allow the customer to superficially customize it in ways that meet their unique needs. You can make a product and design it so customers can customize it in a substantial manner; this describes perfectly how customers install apps on smartphones, tablets, and computers.

Stupid companies, on the other hand, develop a product line, and then push as hard as they can to sell it. An executive at Pepsi long ago told us, "Pushing cases. That's what we do. Push cases."

The challenge most companies will face is how to act like a startup to conceive new ways to leapfrog your competitors by re-thinking generally accepted industry standards.

That’s because smart companies don't "push cases." They push boundaries.

Adapted from Smart Customers, Stupid Companies: Why Only Intelligent Companies Thrive, And How To Be One Of Them, co-authored by Michael Hinshaw and Bruce Kasanoff, (Business Strategy Press, 2012). Follow Michael and Bruce on Twitter.

[Image: Flickr user Amanda Tipton]

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3 Comments

  • Popo99

    If your name is Mark Pincus and your company name begins with a Z...you might be running a stupid company.

  • Loraine Antrim

    Communication is critical. And so is a two-way conversation with customers if you're a smart company. You might be running on stupid if your company messages are the same old tired corporate speak from 10 years ago and not an interactive dialogue via social media. Loraine Antrim