Trent Innes: Why the 1 per cent is an important element of business

- September 10, 2018 2 MIN READ

“Someone recently shared a story with me about a restaurant they went to in Melbourne. They said they had amazing food, amazing service and a fantastic bottle of wine but after dinner, when they ran out of wine at the table, the staff tried to push them off to get the next lot of customers in” says Trent Innes MD of Xero.

“So, while I’d heard good things about this restaurant – the food was fantastic and the wine was great – it made me think twice about going there. They had forgotten the one per cent.”

Customer retention plays a big part in any small business success. We have all read the stats that show retaining just 1 per cent of your existing customers can pay dividends on your bottom line – so why did this restaurant have such an epic fail? According to Innes, they had skimped on the details.

“Customer advocacy is one of the biggest ways to get business and that is about driving the one per cent,” Innes says. “It is about exceeding expectations and incremental improvements.”

Interestingly in an age of machine learning and artificial intelligence, Innes suggests humans are crucial in creating an environment where you can create the one per cent.

‘You can’t leave the one per cent to machines to process,” Innes says. “It all starts with your business purpose. The purpose is critical. You need to have a clearly defined purpose for your organisation. When you talk to the next generation and millennials, they want to work for purpose.”

Knowing the values your business stands for allows you to attract employees and customers who share your beliefs.

“Do you have clear values? Innes asks. “These are our values: beautiful, ownership, human, champion and challenge.”

He says at Xero, the company hires with these beliefs in mind.
“We hire for attitude. Businesses are often great at hiring for skills and knowledge. I can teach skills and acquire knowledge. You can either have a great attitude or you don’t.

“Six years ago when I started at Xero, people used to say ‘you hire weird’.

“What I learnt was I looked for other attributes as I couldn’t afford the skills and knowledge. There are amazing people who come in with an awesome attitude.
And don’t think that you can’t hire a graduate – give them exciting stuff to do. Empower them.

“At Xero we have two rules – we probably have a whole lot of policy, I don’t know what they are. But my rules are: there should never be a dirty coffee cup and you can’t have lunch at your desk. Because I want people to respect each other and I want them to collaborate and have conversations. If you’ve got great values, you don’t need rules. If you hire people and treat them like idiots they will be idiots, but 99 per cent of people want to do the right thing.”

So how does this all fit in with Innes’ theory around the one per cent? It’s simple, Innes suggests you should support your team to talk about and strive for incremental improvement in the business.

“If I say you have to improve yourself by ten per cent each month – you would say that’s really hard – but one per cent – it’s about breaking it down into manageable bits. And anyone who has money in a term deposit knows the power of compound interest… So it’s about setting the challenge of incremental improvements… taking care of that one per cent.”

The author was a guest of Xero at Xerocon.

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