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Leaders Letter 198 – Who Do You Serve & What’s The Prioritisation?

Dear leaders, who do you serve? 

And in what order do you serve them?

I remember an all-hands I attended and the EVP stood up and read from a very simple slide:

“We serve the shareholders first, then customers second and then the staff” 

It stuck with me, I was in a follow-up meeting and the same priorities were repeated, followed by:  

“We have to remember who we are serving”.

Whenever I brought this up with leadership colleagues they failed to remember this, not just because we were clearly saying we serve two other layers of the business before the staff but because it was quite subtle, despite the slide being clear for all to consume. 

This prioritisation isn’t uncommon but isn’t spoken enough in businesses.

Survive — Thrive 

Survive: As a business when you are trying to survive you do everything you can with conversion rate optimisation (CRO), take rate (if you have a checkout) and inside of the CFO’s spreadsheet including its complex formulas to drive the most value for the shareholders (or for the owners).  

Thrive: When you are thriving you do the same, however, you do have the luxury to add more value through your product or pricing to make it more equal, and the customers tend to get a slightly better value exchange.

CVO aka Customer value optimisation was a trendy phrase towards the end of last year and at the beginning of this, it’s essentially how you get the most amount of value from your customer, increasing subscription prices, creating surge (demand-based) pricing or reducing down the basic packages to drive upgrades. 

Some brands will use shrinkflation (making items smaller) to drive up efficiency. 

Rightly or wrongly – all of this is business first and as a business performance is paramount.

Netflix Competing Priorities

Netflix has been doing this for the last few years and it’s worked wonders for their share price but not necessarily for their customers. 

Netflix is even trying to remove the basic entry-level package and recommending downgrading the user experience (yes making it a worse experience) to fulfil their advertiser numbers – adding ads for £3 less per month. This tactic has proven price elasticity studies lower quality tariffs improve subscriptions numbers.

Advertising is a way these platforms make more money, paying a high subscription to move away from ads was the way streaming enabled customers to move away from the burden of ads and cheap/low-quality content. 

Netflix is now TV (adding live content like sports into your schedule) without it calling itself TV now. 

Is this smart? Or is this market dominance pushing for more that may lead to less for consumers? 

Managing Expectations & Packaging Prioritises + Problems

Having led Product teams, a startup within a company, big company changing pricing projects and helping subscription businesses to switch their business models, the common theme is putting the business first and constantly trading what you can do for your customers, your external customers through product improvements and your internal customers (staff) by helping them manage workloads and managing their expectations on the tradeoffs. 

It’s now Q2 and most businesses start to find out where they are and what they need to do to improve the business or push harder on what’s working. 

Enter Answer Engine Vs Search Engine 

I am a user of perplexity answer engine, it’s not replaced Google completely for me but it has replaced the need to refine my searches for the right answer. 

In a recent podcast (embedded below – start at 13:45 “The Importance of Aligning Shareholder and User Interests” if prefer the audio-only experience) their CEO Aravind Srinivas calls out why Google isn’t incentivised to always offer the best answers and why their business model isn’t geared towards their customers. 

This Google example is a great example of how businesses set out on a mission and then when successful, they diversify. 

Once this shifts you then serve different stakeholders in different orders. 

Google was released in August 1996 and then went public in 2004. = Shareholders had to come first. 

>> I have an upcoming post breaking down the evolution of search engines and what we will see in the near future with “engines” and why Google’s business model is under intense threat. Teaser below 

This week’s focus action is to: Consider the prioritisation of your business and associated priorities. If you are a smaller business how can you look to serve your customers first and improve your service to a point that they will continue to use you and keep recommending your product or services. 

Thanks and have a great week, 

Danny Denhard 

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