Blog #2: Follow the Golden Rule as the Path to Growth

In our last blog, we introduced you to the age-old concept of "The Golden Rule", which is about treating people how you'd like to be treated. It's a philosophy that most people can get behind from a human point of view. In this blog, we'll explain why it's also the key for businesses wanting to deliver superior financial performance.

Growth matters

We believe superior financial performance is best described as growth. Growth in sales, profits, market share, cash, market capitalization, and so on. Growth is massively important. Everyone loves a winner, and customers want to be part of a success story. Growth also gives a company the freedom to act. This means they can hire top talent, pay well, reward success, invest in future growth, and make their organization a great place to be.

At Eagle Eye, our growth objective is to be what is called a "rule of 40+" business. What does that mean? Well, the rule of 40 says you add your percentage sales growth and EBITDA margin percentage, and if that total is over 40, you are doing well. In our last set of results, we added our 36% sales growth to our 20% EBITDA margin to achieve a score of 56, which is heartening.

The Path to Growth: Loyalty

While this objective speaks to our ambition to scale through quality growth, it says absolutely nothing about how we do it. This is where Fred Reichheld comes into the picture. His thesis is simple but powerful: the best way to achieve growth is through loyalty. He splits this into three core groups: loyal customers, loyal employees, and loyal shareholders. Briefly, we will explain why.

Customers

Loyal customers are much more valuable than most businesses give them credit for. 20% of customers will account for 60-80% of sales. These customers extol the virtues of your product to others; they recommend and refer; if you launch something new, they try it; they just get you and your products, and they are significantly more profitable. Most of a company’s work should be in knowing these customers, nurturing them, and finding look-a-likes who can become like them.

The trouble is that many businesses do the opposite. They spend too much time and money chasing an increasingly disloyal customer base, resulting in insufficient funds to nurture and reward those customers who matter. But the power of personalization is starting to change that, with many businesses now focused on harnessing their customer data and working with companies like Eagle Eye to get the right messages in front of the right customers, flexing their marketing investment on specific customers and moving away from "spray and pray" tactics.

Employees

Loyal employees just get it. They understand the story, the mission, teammates, and the customer base. They know how to contribute effectively and what it takes to get the job done. They are more productive. Being part of a winning team makes them happy, and a happy workforce translates into a positive experience for your customers.

But creating engaged and loyal employees doesn’t happen by accident. They are the product of good leadership and thoughtful day-to-day management. It’s about creating an environment where individuals can enjoy their work, get on well with their boss and their team, and be satisfied to do their job well.

Being a marketeer by origin, all my early success was based upon creating value for customers. As a General Manager, I am increasingly clear that I create the most value by building an environment in which employees thrive.

If I am honest, I started down this road because I believed it was the right thing to do. I think life is too short not to enjoy your work, so I set about creating a place where people would enjoy working and gain satisfaction from it, not least because they earned a good living and were treated with respect. I use the techniques I learned to research and innovate for customers to do the same for my team members.

Personally, I believe that developing a business around customer loyalty is the best strategy, and I am certain that whatever your strategy, the right place to start is with a loyal and committed workforce. Loyal employees create more value, better, faster, and at a lower cost. It's a win-win.

Shareholders

Loyal shareholders back management. They believe in the story. If the results align with their expectations, the forecasts are believable, and the plans to deliver look sensible, you will gain shareholder loyalty. You’ll hold onto it by ensuring that you underclaim and over-deliver, never disappoint, make the shareholders money, and make them feel smart for having picked your stock in the first place.

If you can build a loyal shareholder base, they will support your plans and, in effect, give you permission to do the right things for customers and employees so that you can earn their loyalty.

The following is a slide from Eagle Eye's current results deck. It demonstrates the Golden Rule in action across all areas of our business. We have created a platform that powers personalized experiences for hundreds of millions of consumers every week. It also illustrates how we are achieving customer, staff, and shareholder loyalty. We are delighted for this to be happening contemporaneously; it's exactly what we want to do and hope to be able to continue to do.

So, what’s the Golden Rule got to do with it?

You might wonder where the Golden Rule fits into all of this. We said at the start that the destination for a successful business is growth. The vehicle by which growth can and should be delivered is through loyalty. And the fuel that powers the vehicle is the Golden Rule.

It's the way people need to behave to be most likely to create value and earn loyalty. Treat customers like employees and shareholders, the way you would like to be treated, and you will grow.

In our next blog, we'll delve deeper into how we've equipped our employees to live and breathe the Golden Rule in their daily work. Stay tuned for more insights and anecdotes as we continue our journey down the Golden Rule rabbit hole.

Join the revolution

As with last time, we invite you to participate in the #GoldenRule revolution. Leave your comments and share examples of where you've experienced the Golden Rule in action. Let's celebrate those who are embracing this principle and making the world a better place, one act of kindness at a time.

Another example…

I was in Minneapolis on a business trip to the US. It was a Saturday night, and I was a long way from home. Travelling had left me hungry, so I arranged to take a colleague to a Ruth Chris Steakhouse as a treat.

As we were shown to our table, I noticed the waiter at an adjoining table deftly replacing the starched white linen napkin with a black one as he offered it to the diner. When he came to our table, he did the same thing. I asked him why they did this, and the response was, "Oh sir, we do it if our guest is wearing a dark colour as the white linen can leave lint on their clothes."

Considering this level of thoughtfulness, my mind boggled at the lengths they would go to to serve the perfect steak…I think the trick at Ruth Chris is the butter, but I’ll leave it at that as this isn’t a food blog.