We’ve seen some pretty interesting decisions from three very large and respected companies these past several weeks that have had a significant impact on literally millions of customers.  

First there’s Quantas where CEO Alan Joyce decided to ground all his airplanes betting that a temporary shut down would force the government to send their labor dispute to the FWA who would, in turn, impose a binding arbitration (in their favor) on both sides.  According to the Economist the move “delighted rival airlines” who “welcomed their defecting customers with open arms.”  The longer strategy apparently is a major restructuring (layoff, route reductions) so that they can set up a a new premium airline based somewhere in Asia along with a joint venture to operate a low-cost carrier in Japan.  

Then we have the Bank of America (they weren’t the only bank just the poster child) who after implementing a small monthly fee for debit card use decided it wasn’t such a good idea after all as customers expressed their anger and frustration in a variety of public ways, the most notable being with their feet.  Apparently credit unions and smaller, local banks gained a fair amount of new customers this past few weeks.  David Darnell, co-chief operating officer said, “Our customers’ voices are most important to us.  As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so”, according to a recent USA Today article on the subject.

And then, the “old news” of Netflix’ subscriber loss from one-two punch of increased prices (I wrote about this in a previous blog)and aborted plans to split off the DVD rental service into a separate company called Quickster.  In a rather terse email from the “Netflix Team” customers were told “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.”  Netflix has thus far lost 800,000 customers from these moves, (200,000 more than they estimated), and it’s share price has been hammered falling from a high of $298.73 to $75.28, a plunge of 37% according to Bloomberg.

Desperate times require desperate measures?  Calculated risks?  What were they thinking?  

All these questions come to mind when considering these three separate, but in my mind, related, situations by companies each in very different industries.  In all three cases the companies have made significant changes to their respective customer experiences.  One by leaving customers stranded in airports, another by charging an additional $5 monthly fee and yet another by changing their service offering’s packaging and pricing.  All experience significant customer backlash, trashing hard won loyalty and, in two cases publicly backtracking on their decision in whole or in part.

These are not small, insignificant decisions, so what’s going on here?  Sure, no one is perfect and not every decision works out 100%.  But this seems, to me, like a gross lack of understanding of their customers, even contempt for them.  I have no idea what internal studies, research, focus-groups, consultants, etc. were brought in to justify such moves.  But, it wouldn’t surprise me to hear that they spent hundreds of thousands of dollars on the research that led to these decisions.  And still they each got it wrong, terribly wrong.  

When B of A’s Darnell said that their customers voices are “most important” to them, I wonder.  What voices were they listening to before they made the decision?  Clearly it wasn’t the customers that caused them to backtrack.

These are all good companies, providing valuable services to millions of customers.  I choose not to believe the are the “dark side” as represented in the “occupied” streets and parks in cities across our nation.  But they clearly are not making decisions that are leading to anything close to a superior customer experience.  And, increasingly customers are becoming "mad as hell and not going to take it anymore."  

How do companies lose touch with their customers so badly as to make these kind of decisions?  I don’t pretend to have inside information on these decisions and companies but this all looks to me like customer experience is taking a backseat to the shorter term economic interests of the company.  The paradox is that in making these decisions, without a true understanding of their customer experience, they are shooting their own economic interests in the foot.  I believe that the primary job of every company that cares to provide differentiated value and reap the rewards of growth in brand preference, revenue and profitability is providing a consistently superior customer experience.  The alternative just isn't very appealing.

At the same time, there is a dramatic shift in power taking place.  Many have indicated that this is going on, one being Glen Urban in his book first published in 2007 called Don’t Just Relate - Advocate.  In his book Urban describes five sources of increased customer power:
  • Increased access to information
  • Access to more alternatives
  • More simplified direct transactions
  • Increased communication between customers
  • Increasing control over contacts
The following year Li and Bernoff’s book Groundswell, laid out a strategy for addressing the growth in customer power through the effective use of social media for both listening and responding to customers.  This shift in power is not new news.  

The plain fact of the matter is companies, now more than ever, can’t afford to be ignorant or indifferent to their customers’ experience.  If they don’t continually improve it they will quickly and, sometimes, dramatically hear about it - only it will be too late.  

Customers (B2B & B2C) are more attuned to value as never before and they won’t settle for less than the best their money can buy.  The question is are you listening, learning and responding now more than ever?  

Scott Herzog
11/4/2011 10:59:12 pm

Good article and you have to wonder what the decision making process looks like within the four walls. Are these organizations really that blinded from past success that they can whiff this big?

11/6/2011 04:04:04 pm

interesting thoughts. I wonder a few things

I wonder if any of these companies did test their ideas with customers and found the majority to not have a problem but then once they enacted their plans a vocal minority made a difference and swayed opinion.

At my company we have learned that some opinions get over-represented by a vocal minority. It's hard to know what is genuine sentiment for a group.

I would like to learn more about how to stay more in tune with customers to avoid situations like this. How do you know when you are doing enough listening and learning? How do you know when you are listening to the right people?


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    John Geffel

    Value is a much abused, misunderstood and misused word, everyone thinks they provide it but so few show real evidence that they do!

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