– How to Understand Your Company’s PurposeEstimated Reading Time: just 3 min

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No question about it: the “purpose driven company” is hot these days. Two-thirds of consumers prefer to buy products from companies whose “purpose aligns with their beliefs.” Price and quality will only get your business so far, the argument runs–people want to know what you stand for. And if they don’t like what you have to say, apparently 1 in 5 will walk away.

Maybe that’s why big brands have been so eager to trumpet their mission statements. Apple “strives to bring the best personal computing experience to…the world through [innovation].” Ford’s purpose is “to drive human progress through freedom of movement.” But Southwest Airlines says something a little different. Sure, they want to make people feel good by connecting customers “to what’s important in their lives.” But they also aspire “to be the world’s most loved, most efficient, and most profitable airline.”

How is it that companies become both loved and efficient? SWA isn’t afraid to say it, and neither should you be: Profits. This is clear to any small- to medium-sized business owner. The only way to continue serving your existing customers and to attract new ones is to generate a profit. It’s the only reliable indicator of your efficiency and effectiveness in delivering what customers value. 

But what about purpose? Well, what your customers value will inevitably change, as new technologies, new competitors, and new trends emerge. Your purpose must evolve as theirs does.

One of our partners is Post Form Laminating (PFL), a custom counter and cabinet manufacturer in Australia. David and Prue Pring are joint owners. For several years the business struggled with marginal profits, despite plenty of efforts to improve operations and apply lean manufacturing principles.

Things changed 18 months ago. As part of the planning process, the Prings and their staff began speaking directly to customers to find out what they really valued. Many naturally mentioned price. But the customers–most of them contractors, who rely on suppliers for high quality and timely delivery–appreciated the company’s focus on customer service more than anything.

The Prings decided that if service mattered most to the customer, it mattered most to their business. Sales reps did away with the standard pitch, and instead became problem solvers for their customers. John, the lead salesperson, regularly loaded his truck to make a personal delivery. When a rush order came in from a big client, David Pring himself took the call. He worked with the whole team to adjust production scheduling, find the right materials, and squeeze the job in without creating delays for other customers. Since employees share in the company’s profits, everyone had a reason to get involved. Even with business conditions the busiest they’d been in years, PFL came through with next-day delivery. 

In a thank-you note, the customer remarked that PFL’s level of service made choosing them “unquestionable.” Local competition and a growing Chinese market necessitate that PFL stand out to survive. Customer service–PFL’s purpose–isn’t just consistent with what customers value. In a tough market, exceeding customer needs is the only way the company prospers. Today, repeat and referral business make up nearly 90% of PFL’s sales. They rarely lose a customer, and now are consistently winning new clients and growing market share.

PFL’s purpose–to serve its customers with superior service–is the very thing that confirms the company’s profitable growth. In turn, the profits fund a future of promising service to the customer.

In the simplest terms, every business has the same purpose: to sustain itself. In the pursuit of the customer, a high-minded manifesto may seem like a good idea. But it’s just that–an idea. Without knowing exactly what your customer wants, you can’t be sure how you’ll make money. And maybe your purpose doesn’t need to go any further than that. After all, a company’s success can hardly be measured by what its leaders say. But it can certainly be measured by what its customers do.

Author: Bill Fotsch and John Case
Date: 2020 12 22

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