Practice what you preach
In addition to being consistent, maintaining a positive public image is important for growing a business. The process of practicing what you preach sounds very basic and almost elementary on paper, but it’s fouled up quite a few retailers in the past.
Take Abercrombie & Fitch Co. (NYSE:ANF), whose CEO, Mike Jeffries, has stuck his foot in his mouth on more than one occasion. While insisting his company is nondiscriminatory and open to anyone wearing its clothing, Abercrombie & Fitch Co. (NYSE:ANF) provides XL and XXL clothing sizes for men, but not for women. In addition, Jeffries was quoted by news website Salon in an interview in 2006 as saying that Abercrombie & Fitch Co. (NYSE:ANF) is “exclusionary,” and “go[es] after the cool kids.” If you say one thing but your actions demonstrate another, you’re going to anger consumers!
Put the customer first
The customer may not always be right by any means, but they are still the livelihood of a business — even if they walk away. One bad experience could be enough to encourage them to tell their friends not to do business at a particular company, which, in today’s world riddled with social media content, can spread rapidly and virally in an instant.
Source: Sean MacEntee, Flickr.
One company that has taken this to heart and I’ve seen do right by customers, including myself, on more than one occasion is Apple Inc. (NASDAQ:AAPL). On a personal level, an Apple Inc. (NASDAQ:AAPL) store replaced the touchscreen in my iPhone 3GS after I accidentally dropped it in an asphalt parking lot two years ago, shattering the glass. The key words here being “I dropped it,” implying all fault lay with me and not the phone or Apple. Yet Apple Inc. (NASDAQ:AAPL) replaced the glass free of charge, in under 10 minutes, despite my lack of insurance on the phone. Do you think I’m ever going to buy a smartphone from any maker other than Apple again after that incredible act of customer service?
But this is more than just my personal opinion on Apple Inc. (NASDAQ:AAPL) — the data backs my point of view as well. For a second straight year, Apple has topped the American Customer Satisfaction Index — a measure of consumer happiness with a product — in smartphones while topping the list for a decade now in PC customer satisfaction. Happy customers tell their friends about the experiences and the products that make them happy, which has resulted in some of the best free advertising Apple Inc. (NASDAQ:AAPL) could ever hope for.
An interesting correlation
The three factors above might seem like no-brainers, but retailers and service providers that fail in one or more of these departments have often demonstrated very weak share price performance. Penney’s is down some 57% just since its 52-week high, while Abercrombie & Fitch Co. (NYSE:ANF) shares have retreated roughly 40% since 2008. Comparatively, Apple shares, even following their big retreat this year, are up about 270% since early 2008.
In the incident I mentioned above, Orbitz Worldwide, Inc. (NYSE:OWW) failed to deliver on the prior consistency I had become accustomed to, it didn’t practice what it preached by living up to its “lowest fare on earth” slogan, and it failed to put the customer first. Not shockingly to me, Orbitz Worldwide, Inc. (NYSE:OWW) shares have fallen 35% since the company IPO’d in 2007. By comparison, Priceline.com Inc (NASDAQ:PCLN), which touts its “name your own price” tool that empowers the customer to seek out his or her own deals, has delivered a 1,220% increase in its share price since Orbitz’s debut!
