An exclusive focus on the short-term bottom line is the hallmark of brands that will never be great. We call this the merchant mindset.
As long as your operation is too tightly focused on generating the next transaction, from the perspective of building brand loyalty, you’re headed in the wrong direction.
Let Go of the Merchant Mindset if You Want to be a Cult Brand
It’s good to be a Cult Brand, very good, indeed. But we’re not going to kid you: Transforming your organization means making some fundamental changes, starting with the way you think about your company and your customers.
Just as there are certain traits, qualities, and practices that unite Cult Brands, there are pervasive unifying tendencies that define companies that aren’t nearly as successful.
The big one—the stumbling block that sits directly in the middle of the path to greatness—is known as the Merchant Mindset.
(Star Trek fans, we can make this easy for you. Everything we’re about to say in this next section can be summed up with a Star Trek reference. The Merchant Mindset = The Ferengi.)
Winning the Battle, But Losing the Brand Loyalty War
There are people who will tell you that brand loyalty is a myth, a lie, a sheer figment of the capitalist imagination. These people (we hesitate to call them experts, because that implies a certain level of value in what they have to say) will tell you to do whatever it takes to squeeze one more sale out of your customer.
If that means cutting prices, cut prices. If lower prices necessitate lower quality, so be it. Customer service and support are expensive endeavors—operate both at bare-bones levels so you can be as profitable as possible. Nothing is off the table when you’re battling for the next sale.
This is all really, really bad advice. Sun Tzu said it best: “If a battle cannot be won, do not fight it.”
If you’re battling for the next transaction, you may win the day, but in the long term, you will lose everything. Customers who will choose you based on price will leave you for the same reason.
Kmart is standing on that battlefield right now. The retailer is notoriously famous for their cost-cutting strategies. Historically, they invest less in the shopping experience than any of their competitors, and it shows in their stores.
Kmart (and Sears, their parent company) are ranked #7 on 24/7 Wall St’s “Worst Companies To Work For” in 2013 list in part due to their low compensation and miniscule raises.
This cost cutting has resulted in prices that are comparable with Walmart. Yet, in market after market, customers have demonstrated that they’re willing to drive past Kmart to shop at Walmart, even if that decision added as much as 20 miles to their trip!
Kmart has the Merchant Mindset. Walmart doesn’t.
Businesses with passion and heart build relationships with their customers. There are decision-making factors that far exceed price, selection, and location.
A company like Walmart has been masterful at connecting with customers and offering them an intangible benefit they can’t get anywhere else.
Walmart made the customer its boss: this was founder Sam Walton’s personal philosophy and it’s been a fundamental principle guiding the company as it’s grown. Today, Walmart is the world’s leading retailer.
Kmart, on the other hand, isn’t. The brand’s market share has dropped off precipitously, going down faster than a Winnebago over the side of the Grand Canyon.
The Cult Brand Alternative
A pivotal moment happens in the life of a company when its leadership realizes that the Merchant Mindset is no longer serving the best interests of the brand and the long-term value of the business.
It takes courage, vision, and dedication in order to successfully change how your business operates. History has proven that it’s a worthwhile investment.