While it isn't always top of mind for entrepreneurs caught up in the rush of running and growing their businesses, long term thinking, including thinking about relationships, is pretty important.
I attended a business presentation last week at Marquette University's College of Business. The speaker was John Schlifske, CEO of Northwestern Mutual. He spoke about the value of long term planning in his business and gave several examples.
At first, most of us think that we should of course keep our promises and so forth. John gave an example of a practice of theirs that rewards all of their current policyholders with upgrades as those are introduced to new policyholders. In other words, they don't ever use an upgrade to sell a new policy without also providing that benefit to existing policy holders.
Good idea. Excellent marketing.
His next example was of the young policyholder who'd died in a tragic accident and hadn't taken advantage of an available policy increase. He felt that the logical conclusion was that if she'd seen the offer, she would've taken it - so they assumed she had taken it and paid the higher amount.
These are great stories, but they come from an admittedly very strong company with tremendous financial assets.
Would they really apply to an entrepreneur with little or no assets faced with a similar situation?
I'm reminded of the first company I was involved with after I'd left GE. It was called RTMS and among other things, it provided CRM services that in one product became mailing labels for retail promotions.
The company prepared, as I recall, several million labels for their big customer (really their only customer) a major retailer based in the midwest. The labels were delivered, and the promotional material for the biggest event of the year went in the mail.
What RTMS missed was that instead of the boolean logic selecting the top 2MM customers, it had selected a random 2MM customers. They failed to mail a substantial portion of the best customers for the biggest event of the year. Again, as I recall, it was about 300,000 households.
The retailer figured it out through an innocent question that was something like "why didnt the CEO's wife get a promotional flier?" This led to a quick list check, followed by a rerun of the logic, followed by the discovery of the error.
At this point, RTMS had one customer paying them what amounted to all of their annual revenue - plus or minus $500,000 I think. And, now they come to discover that they'd created a problem that would cost their customer millions in lost sales.
This all happened on a Thursday at about 4pm with the sale starting the following Wednesday.
If they reprinted and remailed the missing material, (at a cost of about $150,000) the fliers wouldn't reach the customers across two states in time for the event because ofthe way the post office delivers what was called bulk rate mail.
If they mailed the catalogs at each individual city location from southern Illinois no northern Wisconsin, they'd get there in time. But they had to be at the post office within 18 hours or they'd be too late.
So RTMS chartered a DC3 and flew from city to city starting at 8am, calling ahead at each airport for taxis and hauling the material to each post office. They paid for the reprints, the mailing and the plane charter. The stuff got to where it was going and the sale went fine.
This whole thing was funded with a home equity line of credit and resulted in a substantial loss for the year of 1989.
However, last time I checked, 23 years later, that same retailer still buys CRM services from that same entity - which has been sold twice in the intervening years.
Lots of people over the years have provided great service to the customer, of course. It isn't as though this one event alone held their loyalty. But it was a cultural stake in the ground for RTMS that demonstrated to everyone involved that doing the right thing for the long term was paramount. It preserved their reputation. (They fixed the boolean problem too.)
For entrepreneurs, thinking about delivering on what people were not only promised, but also expected, is really important, I think. We all really know what promises mean and what people expect.