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Lessons in Leadership Tell two people The most powerful principle in business By Robert L. Bailey Your next customer has the power to affect your bottom line—to the tune of millions of dollars. This is the most powerful principle in business, but too few leaders recognize it. Let’s say your next client is totally pleased with the products and services you have provided. As a result, tomorrow he or she tells two people. The next day each of those two people tells two people; and the next day each of those two people tells two people, and so on. How many people will be reached in 30 days? The answer is 536,870,912 people. There are nearly 300 million people in the United States. This means that almost every man, woman and child in the United States would receive your message twice over the next 30 days. It’s an astonishing number. If you are mathematically inclined, you may wish to check my calculations. Of course, it can be argued that not everyone will tell two people. Some will undoubtedly break the chain. But giving outstanding service to a customer is not a one-time event. Making every customer contact a positive experience should be a way of life in your agency, with the “tell two people” principle being repeated many times over the course of a day. The total number of people who hear favorable comments about your business will rise dramatically. Note, however, if the primary reason that certain organizations are overwhelmingly successful is that customers tell others, then likewise this is the same reason that some businesses fail. As a matter of fact, negative experiences are passed on more often than positive experiences. Few businesses that treat customers poorly can survive for long. Gift of gab The most successful insurance agents tell me that their primary marketing technique is “word of mouth.” Simply put, happy customers tend to tell others about their favorable experience. Word-of-mouth campaigns, often called “buzz marketing,” are not just for small mom and pop businesses. This strategy works for big businesses too, and some large organizations have formally organized such campaigns to get through the clutter of some 250 television channels and to reach a generation obsessed with video games and surfing the Internet. Plus, it’s cheaper than paid advertising. For instance, Jaguar has provided cars free of charge to a number of people who are seen in the right restaurants and night spots in major cities in the hope that others will want to emulate that lifestyle. Procter & Gamble has recruited some 600,000 mothers to pass out coupons and talk up new products. These moms each speak to 25 to 30 other women during the day, while the average mom talks to five. Kellogg and Chrysler likewise have formalized programs of asking loyal customers to tell others about their products. Companies pay kids to wear their clothes, drink their beverages, eat their food, ride their scooters, play their games, and read their books, hoping other kids will want to be like them. The kids aren’t supposed to tell anyone that they’re getting paid (although the newly formed Word of Mouth Marketing Association-WOMMA—requires full disclosure). People exert incredible influence on one another. Psychologists tell us that some 90% of us follow the crowd. No form of advertising or marketing is more believable than a recommendation from a satisfied customer. Customers become evange-lists for the outstanding product or the fantastic service they receive. Branding How your agency treats the next customer—and every customer—over time creates a recognized brand that can rank well with the best known brands in America. Your firm becomes a respected and familiar brand name. When business people buy a franchise, they buy a brand that provides instant name recognition. A business reputation is associated with that name—good or bad. Several years ago, insurance agency franchising came into vogue. A very successful agent who represented my former company called and asked for my advice on buying a franchise. “Who is better known and has the most favorable reputation in your city,” I asked, “you or XYZ Insurance, the franchiser?” “I am,” he responded without hesitation. “I agree,” I answered, “so maybe they should pay you a fee for your reputation rather than you paying them.” Not every franchise offers the franchisee the desired name recognition and a favorable business reputation. Just one poor franchisee—or even one instance of poor service—can taint a brand name forever. About 35 years ago our family stayed at a well-known hotel. That night was one of our most horrible experiences. We have never stayed in a hotel in this chain since, although there are probably many good ones. I’m certain we have driven many extra miles and spent more money than necessary simply to avoid this particular brand. A tarnished brand name has negative value. And just one unfavorable customer experience can have a harmful effect for a lifetime. Brands have value when customers know what to expect. The brand should represent quality and consistency in every phase of business operations. If there’s not consistency from location to location and from customer to customer, the brand name may have negative value. A few bad apples can ruin the entire barrel. The real value of a brand depends primarily on a company’s people and their actions. America’s most successful businesses know that their actions—their relationship with the next customer and every customer—create respected brands that work for them 24/7. They know that their brands—their reputations—their names—are fragile and that one slipup can wreck a lifetime of work. The brand is an implicit promise of quality. The name creates a feeling of trust, comfort, security, convenience and service. The brand narrows the field, making the buying decision easier. The name has the power to command a premium price. Movie stars say, “Give me press. I don’t care if it’s good press or bad press. Just give me press.” This may work for movie stars, but only positive name recognition and an unblemished reputation works for successful businesses. Your organization’s brand is worth multi-millions of dollars. It starts with the next customer—and can be passed on to some 536,870,912 people. * |
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