Integrity as a Competitive Advantage
Just as companies have various levels of integrity so do entire industries. Certain industries seem designed to exploit their customers—or are at least centered around a cold, nonhuman transaction.
Who has an emotional connection with their phone company or health insurance provider? Most of us have horror stories with at least one major phone company (and some people even create websites like Hate Verizon) or have had trouble getting reimbursed for a legitimate medical claim.
Industries with low integrity need artificial tactics to reduce their customer attrition rate, like one to two-year contracts in the case of your mobile service provider. These low integrity players, however, offer opportunities for competing businesses with higher integrity to grab—and keep—market share.
Virgin Mobile entered a well-saturated U.S. wireless service market in 2002 with a different game plan. They offered pay-as-you-go pricing with no hidden fees, no restrictions and no contracts. With an annual budget less than one-tenth of the larger providers, Virgin Mobile acquired 1 million subscribers in 5 quarters. Today, Virgin Mobile has over 5 million subscribers.
What’s more interesting is that most wireless providers use annual contracts to reduce their churn rate (or attrition rate—the rate at which customers leave you within a given time frame). Virgin Mobile doesn’t use contracts and yet they have a lower churn rate (4.9%) than the industry average (5.4%). (For more examples, see “Companies and the Customers Who Hate Them” by Gail McGovern and Youngme Moon in Harvard Business Review.)
Profitability is built on loyalty (because loyal customers buy from you more often and help create new customers via word of mouth). Loyalty is a result of integrity.
Want to operate your business with high integrity? Remember that your business is made up of real people who serve real people. Don’t let policies and rules strip the human element out of your business. Build a thriving culture that centers its efforts on the needs of its customers.
Related posts:
Scott,
Great thoughts here. Integrity is one of the pillars of inspiration. We need it in our lives in order to inspire others. Without integrity, everything else we do doesn’t matter. In the past 30 days, our family has witnessed some wonderful examples of Integrity in business both with Bed Bath & Beyond’s Garfield, OH store and Chase Bank’s North Columbus branch. They both have our loyalty!