Prioritizing relationships in the short-run can lead to more revenue in the long-run

Even in a time of social distancing, it's hard to imagine a world without Disneyland. The iconic California park has been a global landmark for well over half a century now, drawing crowds from around the world and inspiring countless other amusement parks, both Disney-owned and otherwise. Its slogan is "the happiest place on earth," and for many people, that's not hyperbole.

Yet Disneyland — and thus, the modern amusement park — very nearly never existed. The reason it came to be, and has subsequently been so successful, is perhaps paradoxical. Instead of putting profit margins at the center of his vision, Walt Disney focused on creating an unmatched experience that he could leverage into a long-term relationship with each and every guest.

According to my favorite book about the creation of the park, Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World, Walt Disney was once asked, "Why would you want to get involved in an amusement park? They're so dirty and not fun at all for grown-ups." He responded, "That's exactly the point! Mine isn't going to be that way. Mine's going to be a place that's clean, where the whole family can do things together." Disney knew he had to build something different from the world fairs and amusement parks of the era — something clean, beautiful, and otherworldly that would create an instant and binding connection with his guests.

"Clean" and "beautiful" and "otherworldly," however, all come at a cost. Disney knew that to make good on his word and create something truly spectacular, he would need to invest more time, energy, and money into his park than any developer in history. So that's what he did. His initial budget for bringing Disneyland to life was $1.5 million. By the time he opened his park on July 17, 1955, he had spent at least $17 million ($160 million in today's dollars).

Disney could have opened faster and spent far less money than he did to bring the park to life. However, he believed that by investing heavily to create a magical experience for his guests, he could foster positive relationships with them. Further, by prioritizing the quality of each customer interaction and emphasizing the long-term value those relationships could create, Disney was convinced his park would prosper in the end. He was right, and the decision to focus on the company's most important relationships over the bottom line in the short-term paid off handsomely.

(It's worth noting that Disney also placed a high priority on his critical vendor relationships in much the same way. Instead of focusing exclusively on vendor pricing, he chose to obsess over quality and attention to detail; two of the hallmark traits of the Disney experience.) 

I've been thinking about Disney a lot recently, and not only because I read that book. For starters, the impact of the COVID-19 pandemic has given me more reasons than ever to consider my relationships with family, teammates, and customers. Another reason I've been thinking about Disney so much these days isn't shocking given my work.

I'm the CEO of a software company in the investment management industry called "Imagineer" Technology Group. (Note: it is tough to win an SEO battle with Disney!) I'm also the co-founder of The Forge: Lemont Quarries, an outdoor adventure park opening in Chicagoland this summer. I can't escape Disney even if I want to! All kidding aside, Disney's experience provides an inspiring example of how to put customer relationships first, whether you're operating an adventure park, selling software, or hocking Mickey Mouse ears.

In business, it's easy to prioritize revenue and growth above all else. But if we want to achieve lasting growth and maximize profitability, it is often better to prioritize relationships over revenue in the near-term.

At the highest level, this means proactively checking in with your customers to hear what they have to say and how they are feeling as often as you can without being obnoxious. Disney understood this principle well, so he tapped Van Arsdale France to build a training program for Disney cast members, turning them into “ambassadors of happiness.” France's school became one of the most successful customer success and relationship building programs the world has ever known.  

Borrowing a page from France's playbook, after the first week of quarantine, I sent a personal note to every one of our thousands of users to check on their transition to WFH. Since then, I've been following up with phone calls — lots and lots of phone calls! These calls not only provide our customers with an opportunity to share crucial feedback, but they give us a perfect chance to check-in and hear about what's going on with them. This practice is all about adding a human element to our business relationships, and that's what I believe people value most.

Often, checking in during times of crisis helps to surface specific measures you might need to take to strengthen a relationship. You may surface lingering frustrations or service issues and opportunities your customer hasn't had time to bring to you. Of course, in times like these your customers may also ask for reduced prices in the short term, or perhaps for flexibility concerning payment or contract terms. When you reach out with empathy to offer a helping hand, people will take it! You need to be ready to deliver to the extent you are able.

There is no magic formula to determine whether or not to make concessions. Each business is different, and you will have to weigh the long-term benefits against the short-term costs in every case. As an econ guy, I generally follow the TANSTAAFL (There Ain't No Such Thing As A Free Lunch) school of thought and focus on finding creative ways to add value to customers who may be struggling instead of cutting prices. After all, you can't help your customers if you can't stay in business yourself! Examples in our business include things like offering a complimentary account review, website design, SEO, and Google rank analysis, customized user training sessions, or a discount on a professional services project. 

What I can say for sure is that you need to look at both sides of the equation. The short-term costs to the top and bottom lines are obvious, and you have to do what you can to keep your business afloat. But by helping your customers when they need it most, you will develop goodwill, loyalty, and trust, leading to lasting relationships and long-term success.

Goodwill, loyalty, and trust earned Disney some of the most passionate customers in the world. Today, 65 years after opening Disneyland, Disney parks have an incredible estimated return rate of 70% of first-time customers. (That figure is even more astonishing when you consider that these parks are drawing visitors from all over the world!) It's not Tinker Bell's fairy dust that creates that kind of long-term success - it's Disney's fanatical focus on customer relationships in the here and now.