The New Era of Doing Business

On Friday, 14th December 2012, Straits Times ran an article entitled “Don’t Pee in the Pool” in the “Opinion” section. It was about Don Peppers and his philosophy of doing business. Don Peppers is a marketing guru and was named among the world’s “Top 50 Business Brains” by Times of London. The article struck a chord with me and thus, I will be sharing some of the theories that the article talked about together with my own thoughts.

Don Peppers has said that in the future, the fate of a business doing well depends on how much their customers trust them. This is due to the reason that rapid changes in technology have made consumers spoiled for choice that they filter what is good and what is not good based on how much they trust the business. In the past, many businesses kept hid information about hidden fees from the consumers and made a lot of money in the process. While that behaviour is not deceptive or dishonest per se, customers nowadays shun such businesses.

If there’s a company with a bad reputation for service, there is already “pee in the pool” (which means that the company has behaved shabbily towards its customers). One cannot get rid of the pee but one can dilute it with more trust-building activities. One such example cited in the article was Amazon. Amazon alerts any customers if he tries to buy another copy of a book he has already bought before. Amazon does not have to do such a thing which actually “hurts” its revenues. It can earn more by not having this extra service and charging the customer for the book he already owns. Even though taking the customer’s order is not dishonesty, by alerting the customer, Amazon actually wins the trust of the customer.

Peppers went on to compare two other companies, AOL and Apple. In 2000, AOL had 30 million paying subscribers and a market capitalisation of US$222 billion. However, it was widely known to take unfair advantage of customers by tricking them into paying higher fees than needed or making it extremely hard to terminate its services. Now, AOL has around four million paying subscribers and its market capitalisation has plunged to US$1.5 billion. In comparison, Apple is the most valuable company today and if it were to go bust tomorrow, he said that people would dress in black for months.

Another example comes in the form of Vodafone in Turkey. Vodafone introduced a policy for its customers where it would track and automatically replace a customer’s current contract with a lower-priced one with sustained quality, whenever it was available. This prompted its competitor, Turk Telekom to follow suit so as to prevent a massive customer exodus from Turk Telekom to Vodafone.

Peppers went on to say that the future of marketing will be less about a unique selling proposition and more on authenticity, accreditation and verifiability of the business. Do unto others as you would have them do to you rings true here.

On a side note, Peppers also gave insights about various aspects of business. On those who are in business only for the profit, he said, “If the customers don’t like you, they will put more pee in the pool as rapidly as you take it out”. On why trust is the new competitive edge, he said, “If I’m your customer and I think you are always acting in my interest, then I want you to succeed because if you do so, that helps me too”. Now, here’s the best insight I feel was divulged by Peppers. On what company culture is, he said, “It’s simply what employees do when they think no one is looking”.

In conclusion, I agree with what Peppers has said about building trust and winning customers in the process. As a customer, I would be more inclined to shop in Amazon than another online shop, especially if I buy lots of books and cannot remember if I had purchased previously the book I am about to purchase. As they say, little things go a long way.

Author: Sudhan P

I simplify investing concepts to help you navigate the stock market jungle.

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