Any meaningful undertaking in a business takes time, and time is something most CEOs and executives don’t have. Specifically, they don’t have the lenience of multiple years to execute a large-scale plan or initiative. This time period is simply too long, and shareholders, owners and board members don’t have patience or flexibility to run a multi-year experiment that could result in failure.
Consequently, the exact opposite happens. Instead of long-term flexibility, there is short term rigidity in the form of quarterly growth evaluations. Those with the most responsibility are tasked to move the arrow incrementally and marginally quarter over quarter in order to reassure stakeholders that the company is moving in the right direction. While the importance of stability and incremental improvement is essential to most businesses, this short-term thinking turns a blind eye to the benefit of long term, strategic initiatives. And no initiative creates a greater competitive edge in the current marketplace than customer satisfaction across most industries.
The Fault in Quarterly Revenue and Growth
The biggest issue with quarterly revenue growth is that it can paint a false picture. Seasonality, large-scale economic changes and other unseen forces can affect quarterly growth. Additionally, this type of measurement encourages short term gimmicks to boost sales. Furthermore, this type of measurement discourages long term thinking when the CEO and key stakeholders are under constant, intense pressure to make marginal gains.
As a comparison, imagine if stock portfolios were evaluated on a quarterly basis. Political turmoil, natural dips or other factors that negatively influence the market might give the impression that the market as a whole is on the wrong course due to a temporary dip. This type of measurement doesn’t work, and it shouldn’t be applied to a business either. Year over year trajectory gives a better sense of the true direction of the company, and looking at it this way gives leverage to make long term investments.
A Case for Long Term Thinking
The reality of any customer experience improvement initiative is that it will take time. A few key steps have to happen, including:
- Consultation and identification of key customer touchpoints
- Initial measurement and development of a plan for improvement
- Coaching to improve behaviors
- Execution and ongoing measurement
Obviously, this doesn’t all happen overnight, nor should it be able to. Longitudinal growth has to be measured and evaluated over many months before any meaningful feedback can be gathered. However, the benefits of an initiative like this are immense and rewarding for the business willing to undergo the process. Customer experience directly leads to ROI in the form of passionate brand advocates and customer retention.
In fact, according to Fast Company, “a 10% increase in customer retention is roughly equivalent to a 30% increase in a company’s value.” This number is staggering — 30%. When a value increase such as this is brought into the perspective of quarterly revenue, it blows expectations out of the water. In fact, this type of steady growth would be appreciated and encouraged over multiple years.
The key takeaway is that quarterly revenue isn’t everything, and, in fact, can be harmful to the overall growth of a company. Major gains take major initiatives, and major initiatives take time. However, the huge upside of this ratio is that there is very little to gamble when considering customer experience. Customer retention is proven across a wide variety of industries to lead to more revenue and more passionate brand advocates, especially when customers are truly delighted. Work with a trusted partner to drive and measure customer experience, and make small but meaningful gains in order to improve the financial wellbeing of your company.