One of our core principles is about surfacing the value of the customer within an organization. We often do that with customer lifetime value, but the overall actions or applications of this math are rightfully called customer-centric. Sadly, in some companies, the phrase customer-centric is more hyperbole.
And when we talk about customer-centric thinking, we're talking about honoring the full spread of the customer base. 90% of the consumer businesses out there and probably 90% of overall businesses, there is a tiny percentage, 20% or less of customers that drive the business through regular repeat purchases. These are the customers who love you and love your brand. A separate group of customers has an irregular cadence of purchase behavior that's often driven by coupons or events or other marketing heavy activities. The bottom group is long gone customers that simply haven't removed themselves from your email list, but you're hoping that if you email them or advertise to them enough, they'll come back and be good customers again.
Because true customer-centricity is a long-term strategy, addressing specific customers by listening to them, then learning from them is for a mutual benefit.
The Business Roundtable was founded as The March group in 1972. The members were and are exclusively CEO's who meet on a regular cadence to consider public policy issues such as controlling construction costs. Its primary responsibility to give a good return on investment to the shareholders.
Full statement issued by the Business round table:
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free market system is the best means for generating good jobs, a strong and sustainable economy, innovation, healthy environment, and economic opportunity for all.
We will further the tradition of American companies leading the way in meeting or exceeding customer expectations. Number two, investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that helped develop new skills for our rapidly changing world. We fostered diversity and inclusion, dignity and respect. Third, dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to other companies, large and small that help us meet our missions. Fourth, supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses. And last fifth, generating long term value for shareholders who provide the capital that allows companies to invest, grow, and innovate. We are committed to transparency and effective engagement with shareholders. Each of our stakeholders is essential.
We commit to deliver value to all of them for the future success of our companies, our communities, and our country.
Nothing's wrong with this statement on the surface. I'm personally pleased to see a statement like this come out because it is a step in the right direction.
But if you are the organizers of the B Corporation movement who were featured in Fast Company last week, they make an excellent point:
Dear Business Roundtable CEO's,
We are part of a community of certified B corporations who walk the walk of stakeholder capitalism. We are successful businesses that meet the highest standards of verified, positive impact for our workers, customers, suppliers, community, and the environment. We operate with a better model of corporate governance, benefit corporate governance, which gives us and could give you a way to combat short-term-ism. Again, another push-back on Wall Street and the freedom to make decisions to balance profit and purpose, a good call on their part.
As you know, with continued resistance from investors on this new definition of business, we've got work to do to help them see that stakeholder governance builds trust and builds value. More importantly, it also ensures that the purpose of capitalism is to work for everyone and for the long-term, let's work together to make real change happen.
To be truly customer-centric is to be the result of digital transformation. It's to be data-driven, individually customized, immediately responsive, all the things that are the promise of those transformation efforts. It is to listen, learn, and then lead your competition.
Change, in any case, is a result of many forces coming together until a tipping point is reached and the new becomes the new normal. Ultimately this is just one more force from the Business Roundtable and the B Corp organizations pushing in the right way.